Simpson and Bowles Unveil a New, Wealth-Friendly Austerity Plan

As the prospects for a “Grand Bargain” fade, additional European-style austerity on the American economy is becoming increasingly uncertain. That has meant a greater likelihood of a reappearance by Erskine Bowles and Alan Simpson, the two Washington power players whose names have become synonymous with the Deficits First approach to our economic woes.

Today they appeared, right on schedule, bearing yet another plan – and this time it's even more heavily skewed toward the financial interests of larger corporations and high-earning individuals.

Simpson and Bowles bring a powerful brand to the American austerity effort, which is largely funded by wealthy individuals and large corporate interests: And yet, despite a number of revelations about their funding sources and the economic flaws in their proposals, they’re still capable of being described by Politico as “the wise men of Washington whose deficit-reduction plan has become a frequently invoked Washington shibboleth.”

They’re also capable of getting this kind of coverage from a publication on the same day that they’re speaking at an event sponsored by the same publication – in this case, at a “Politico Playbook Breakfast" which was interrupted by a group made up primarily of African-American demonstrators from the District of Columbia's OurDC organization.

In truth, the latest Simpson-Bowles “proposal” looks less like a plan and more like a lobbying tactic – one which changes their own position substantially. As President Obama has met the demands for austerity – unwisely, in our opinion – this new move suggests that the demands will just keep escalating. This new plan keeps up the pressure for government spending cuts that heavily outweigh tax revenue increases. And it heavily weighs those revenue increases in a way that would protect the wealthy and corporations while requiring the middle class to carry most of its weight.

As ThinkProgress' Jeff Spross notes notes, Simpson and Bowles are “moving the goalposts.” Spross comments that their new proposal “adds an additional $2.4 trillion in savings onto the approximately $2.4 trillion in deficit reduction the United States has already carried out since 2010." He then explains why their new plan “represents a massive shift away from their own previous target and towards even more spending cuts.”

Simpson and Bowles are re-emphasizing another old theme, too. They're still singing the gospel of revenue increases funded by “closing loopholes,” an amorphous plan that’s likely to hit the middle class with much more force than it would higher earners. They claim that the tax code is "riddled with well over $1 trillion of tax expenditures – which really are just spending by another name."

And then they repeat their call for lowering tax rates for corporations and the highest-earning individuals.

Their $1-trillion-plus target for "tax expenditure" elimination can only be reached by targeting employer health plans, home mortgage interest deductions, and other policies that would disproportionately hit the already-beleaguered middle class.

That emphasis is in the best interests of Simpson and Bowles’ primary funders, including billionaire Pete Peterson and the large corporations behind an interlocking web of groups such as “Fix the Debt” and “The Committee for a Responsible Federal Budget.”

Simpson and Bowles are reiterated their call for benefit cuts to Social Security, using the technique known as “chained CPI” to cut that program’s already-inadequate cost of living increases by 3 percent for the average retired recipient, and considerably more for the disabled and the very elderly. This proposal also uses this mechanism to cut federal employee retirement plans and “the farm program.”

Their proposal repeats the mantra that benefit cuts should include “protections for the most vulnerable,” which would repeat earlier definitions of the “vulnerable” that ignore economic realities for most seniors and disabled Americans. The truth is, a large portion of the elderly is already economically vulnerable.

Their approach would convert a social insurance program into a welfare program – but one which is solely funded on income below the payroll tax cap (roughly $110,000 at the moment). That plan targets everyone BUT the wealthy in the name of deficit reduction. That fact, coupled with Simpson and Bowles’ continued insistence on lowering tax rates for corporations and the wealthy, illustrates the right-wing thinking that underlies this supposedly “bipartisan” approach.

So does the public support that both Simpson and Bowles have offered to far-right politicians like Rep. Paul Ryan, and even to Tea Party extremist candidates like former New Hampshire Republican Rep. Charles Bass.

But their “centrist” reputation remains unshakable in certain circles. Their plans remain heavily skewed against the middle class, the poor, and minorities, each of whom would bear the brunt of their plans. And they continue to studiously ignore the trillions of dollars which Wall Street misdeeds cost the economy.

The cost of those misdeeds is, according to the latest estimates, probably well above $10 trillion. And yet the Simpson/Bowles plan pushes a Social Security cut that, according to the White House, will deprive the elderly and disabled of $130 billion in benefits over the next ten years.

That’s not just “penny-wise and pound foolish.” It’s cynical and manipulative. And yet their plan will undoubtedly be hailed as another opportunity for Washington to come together over a “centrist” plan.

“Shibboleth,” in case you were wondering, has several definitions. The one Politico probably intended is “a widely held belief.” But that, according to Merriam-Webster, is the second definition. The first is “a word or saying used by adherents of a party, sect, or belief and usually regarded by others as empty of real meaning.”

The words of Simpson and Bowles are widely respected in certain political and journalistic circles. But outside the confines of Washington, and within the corridors of serious economic thought, they are seen as empty of real meaning.

Expect to hear much more about the words of Simpson and Bowles in the days and weeks to come.