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Senior citizens protest against cuts to federal safety net programs, including Social Security, Medicare, and Medicaid in Chicago.

That’s the amount of deficit reduction projected over 10 years under a new proposal from Erskine Bowles and Alan Simpson.

Bowles and Simpson, who led President Barack Obama’s 2010 deficit commission, introduced a plan yesterday that would achieve savings in a series of steps. It would capture half of the deficit reduction through spending cuts, one-fourth from changes to health-care programs including Medicare and Medicaid, and one-fourth by amending tax laws.

Bowles, a former White House chief of staff for President Bill Clinton, and Simpson, a Republican former Wyoming senator, issued their new proposal as Obama and congressional leaders clash over how to avert $1.2 trillion in automatic spending cuts set to begin March 1.

“Nobody should want these cuts to go through,” Obama said yesterday, Bloomberg’s Margaret Talev and Roger Runningen report.

Obama is pushing Congress to consider a plan that includes paring tax breaks for top earners. Republicans are pushing for more spending cuts.

Obama “still prefers campaign events to common sense, bipartisan action,” Senate Minority Leader Mitch McConnell, a Kentucky Republican, said yesterday.

Original post is Bloomberg by the Numbers: $2.4 Trillion by Political Capital.

Photograph by Charles Dharapak/AP Photo

President Barack Obama and Vice President Joe Biden leave the podium after Obama made a statement regarding the passage of the fiscal cliff bill in the Brady Press Briefing Room at the White House on Jan. 1, 2013.

The tax deal approved in a bipartisan vote of the Senate and House and ready for President Barack Obama’s signature is a far cry from any “grand bargain” on the federal debt.

It’s a long way from what Alan Simpson and Erskine Bowles, co-chairmen of the president’s deficit commission, recommended as a formula for addressing the annual deficit now in excess of $1 trillion and the accrued federal debt of more than $16 trillion.

It is, they say “truly a missed opportunity.”

Simpson, a retired Republican senator from Wyoming, and Bowles, a chief of staff to former President Bill Clinton, never got the super-majority vote of the presidential commission needed to endorse their proposed $4 trillion mix of spending cuts and tax increases in a ratio of about three-to-one. The White House, too, left the co-chairmen’s report on the table.

They have gone on to lead an organization called “Campaign to Fix the Debt.”

This is what they have to say, today, about the deal struck by Congress on New Year’s Day:

“The deal approved yesterday is truly a missed opportunity to do something big to reduce our long term fiscal problems, but it is a small step forward in our efforts to reduce the federal deficit. It follows on the $1 trillion reduction in spending that was done in last year’s Budget Control Act,” the two said in a joint statement released by the campaign.

“While both steps advance the efforts to put our fiscal house in order, neither one nor the combination of the two come close to solving our Nation’s debt and deficit problems. Our leaders must now have the courage to reform our tax code and entitlement programs such that we stabilize our debt and put it on a downward path as a percent of the economy.”

“Washington missed this magic moment to do something big to reduce the deficit, reform our tax code, and fix our entitlement programs. We have all known for over a year that this fiscal cliff was coming. In fact Washington politicians set it up to force themselves to seriously deal with our Nation’s long term fiscal problems. Yet even after taking the Country to the brink of economic disaster, Washington still could not forge a common sense bipartisan consensus on a plan that stabilizes the debt.”

“It is now more critical than ever that policymakers return to negotiations that will build on the terms of this agreement and the spending cuts in the Budget Control Act. These future negotiations will need to make the far more difficult reforms that bring spending further under control, make our entitlement programs sustainable and solvent, and reform our tax code to both promote growth and produce revenue. We take some encouragement from the statements by the President and leaders in Congress that they recognize more work needs to be done. In order to reach an agreement, it will be absolutely necessary for both sides to move beyond their comfort zone and reach a principled agreement on a comprehensive plan which puts the debt on a clear downward path relative to the economy.”

Original post is Simpson-Bowles: `Truly Missed Opportunity to Do Something Big’ by Political Capital.

Alan Simpson is not only co-chairman of a presidential fiscal commission whose leaders offered a way out of the nation’s deficit.

He’s also, along with fellow co-chairman Erskine Bowles, a member of the board of TheCanKicksBack, a nonprofit group promoting the opposite of kicking the can down the road (motto: “The debt is too damn high.”)

And the retired Republican senator from Wyoming has some Gangnam-styled advice for young people about what they can do about the deficit:

“Stop Instagramming your breakfast.”

“Start using those precious media skills” to sign up people for TCKB.

He also has a warning for what Congress will do with the nation’s money if someone doesn’t do something about it: “These old coots will clean out the Treasury before you’ll get there.”

Original post is Gangnam of One? Simpson’s Advice by Political Capital.

That’s how Erskine Bowles, co-chairman of President Barack Obama’s fiscal commission and a former White House chief of staff for Bill Clinton, rates the chances of approval of an agreement this year to avert the so-called fiscal cliff.

Bowles isn’t involved in the budget negotiations, though he says he met with Obama yesterday. He also plans to join a group of company leaders in a meeting with House Republicans today, as CEOs from major companies visit the Hill and White House today.

The “sticking points” for a budget deal are the president’s call for $1.6 trillion in new tax revenue and the fact that “there’ve been no serious discussions” so far over changes to entitlement programs, Bowles said at a breakfast in Washington today sponsored by the Christian Science Monitor.

It was Bowles and fellow co-chairman Alan Simpson, a retired Republican senator from Wyoming, who recommended a package of spending  uts and tax increases as a long-term solution to the nation’s budget deficits.

That failed for lack of support in Congress — with even the White House backing away from its own commission chairmen’s plan.

Original post is Bowles: One-in-Three Chance of Deal by Political Capital.

Photograph by Andrew Harrer/Bloomberg

Erskine Bowles, co-chairman of President Obama's deficit commission, right, and Alan Simpson, fellow co-chairman of the deficit commission, pose for a portrait at the Russell Senate office building in Washington.

For nearly three years Alan Simpson and Erskine Bowles have been joined at the hip.

Simpson the Republican, former Wyoming Senator with the sharp wit, and Bowles the Democrat, former Clinton chief of staff with the investment banker pedigree, formed a political odd couple when President Obama called them back into public service as the co-chairs of his deficit commission.

Since then they have spoken with one voice on the need to put America’s fiscal house in order. They have agreed that any plan must include tax revenues and deep spending cuts, and they have taken aim at Democrats and Republicans in Washington for not getting the job done already.

But they don’t agree on everything.

When asked today on Bloomberg Television whether he would be open to serving as President Obama’s next Treasury Secretary, Bowles said he wants to return to his native North Carolina and wasn’t the best choice.

“I think there are a lot better candidates than I am,” Bowles said. “If he wants to move the Treasury to Charlotte, I’d be glad to think about it but otherwise I am going home.”

Simpson was quick to disagree.

“He would be the best one that ever did anything in that arena because he knows the numbers,” Simpson said.

“He is a sensitive, wise, savvy guy with guts and courage and patriotism. They could stack them all end on end all the way back to Alexander Hamilton and not find a guy as good as this.”

Bowles’ response: “I thought you were my friend.”

Original post is Simpson, Bowles Divided on One Issue by Political Capital.

Photograph by Norm Betts/Bloomberg

Lloyd C. Blankfein says he would be willing to pay higher taxes if he felt the increase was part of a solution aimed at helping reduce the national debt.

Goldman Sachs Group Inc. Chief Executive Officer Lloyd C. Blankfein says he would be willing to pay higher taxes if he felt the increase was part of an overall solution aimed at helping reduce the national debt.

“No one is so unpatriotic that they wouldn’t pay a little bit more to resolve it,” Blankfein said in an interview today on CNBC. He added that no one would be willing to pay higher taxes unless they were sure it was part of a comprehensive solution to country’s budget.

In today’s discussion, Blankfein joined Erskine Bowles, a Democrat and former White House chief of staff, and Alan Simpson, a former Republican senator from Wyoming, who led a deficit-reduction committee that failed to win congressional support in 2010. All three emphasized the importance of reaching a compromise agreement in Congress to cut spending, raise revenue and encourage economic growth.

If there were “some compromise laid out, what kind of a stimulus do you think that would provide?” Blankfein asked. “I’d be a buyer of the market.”

Blankfein and JPMorgan Chase & Co. CEO Jamie Dimon, both of whom have been grilled by members of Congress in recent years about their own businesses, have turned the tables recently — publicly urging politicians to reach an agreement to reduce the U.S. debt. Dimon said yesterday the economy “would be booming” if Congress had passed the so-called Simpson-Bowles plan last year — a solution offered by the commission co-chairmen that included a mix of one dollar in new tax revenue for every three dollars of spending cuts. They couldn’t obtain the super-majority vote of the commission required to present it to Congress.

“We have a stake in this country like everybody else and I think we have the experience and the competence to let people know the consequences” of failing to address deficit spending and the national debt, Blankfein said. Blankfein, who endorsed  Secretary of State Hillary Clinton’s campaign for president in 2008 and hasn’t revealed whom he supports this year, said he’s “on the left-center side of things” politically.

Employees of Goldman Sachs have been contributing in greater dollars to Republican Mitt Romney this year than to Obama .

Original post is Blankfein: Tax Me, If It Will Help by Political Capital.

Photograph by Saul Loeb/AFP/Getty Images

President Barack Obama in Arlington, Virginia.

President Barack Obama misrepresented the majority recommendation of the bipartisan deficit commission he appointed in an interview the president gave to journalist Bob Woodward for a book released today.

Obama is quoted in “The Price of Politics” telling the famed Watergate journalist that he did not endorse proposals from the commission chaired by former Senator Alan Simpson, a Republican, and former Bill Clinton White House chief of staff Erskine Bowles, because they “involved eliminating the home mortgage deduction, health care deduction, charitable deduction, etc.”

The commission’s deficit proposal wouldn’t have eliminated the tax breaks, though it would have scaled back their value to taxpayers.

White House spokeswoman Amy Brundage wouldn’t give any ground after being contacted about the discrepancy, e-mailing back a response that the Simpson-Bowles Commission’s recommendation would “gut” the tax breaks.

The majority of the panel recommended an overhaul in the tax code that would have raised tax revenue while reducing tax rates. In order to accomplish that, it recommended cutting back tax breaks.

An “illustrative” option, intended to provide an example of a workable tax reform, would have changed the charitable and mortgage interest deductions to a 12 percent tax credit, reducing the value of the tax break to most taxpayers. Taxpayers also only would have been allowed to deduct charitable contributions after they exceeded 2 percent of their adjusted gross income.

Tax breaks for employer provided health care also would have been reduced.

Original post is Obama’s Book Explanation Doesn’t Reflect Plan by Political Capital.

Photograph by J. Scott Applewhite/AP Photo

House Budget Committee Chairman Paul Ryan puts up a chart as he gives the GOP response to President Obama's budget submission for Fiscal Year 2012.

Representative Paul Ryan was a pivotal figure in killing the 2010 Bowles-Simpson agreement, which Republican presidential candidate Mitt Romney now holds out as a model for putting America’s fiscal house in order.

The 18-member panel needed 14 votes to send a 10-year plan to trim the debt to Congress for a vote. As his party’s then- ranking member on the House Budget Committee, Ryan led a bloc of three House Republicans who denied the additional votes needed.

All three Senate Republicans on the panel backed the plan and one of them, former New Hampshire Senator Judd Gregg, said he believes the House Republicans who rejected it were beholden to an argument by anti-tax advocate Grover Norquistthat the measure was tantamount to a tax increase.

“All of the House Republicans were disproportionately affected by the Norquist group on the issue of tax reform,” said Gregg, now a senior adviser at New Mountain Capital LLC. Ryan “clearly was the leader” of House Republicans in setting the terms of a grand debt bargain, said Andy Stern, a panel member and Democrat.

Ryan, now Republican Mitt Romney’s vice presidential running mate, was joined by Representatives David Camp of Michigan, Jeb Hensarling of Texas and four Democrats in opposing a blueprint that would have reduced the federal debt by $3.8 trillion through a three-to-one mix of spending cuts and tax revenue increases. Ryan’s support would have likely drawn votes from Camp and possibly Hensarling and made it all but impossible for the president to reject a plan created by his own self- appointed commission.

The Romney campaign didn’t respond to a request for comment.

Instead, the efforts by the commission, comprised of 12 members of Congress and six outside officials, set the stage for a series of failed attempts over the next year by the White House and Congress to reach a bipartisan deal to address the debt, including an ill-fated try late last year by a congressional supercommittee that ended in deadloc

Illinois Representative Jan Schakowsky, a Democrat on the panel who opposed the plan because of cuts in Social Security benefits, said she believes Ryan became less inclined to compromise following the November 2010 election that had handed Republicans control of the next U.S. House session and put him in line to advance his plan to overhaul Medicare as the new House Budget Committee chairman.

“As his perception of the politics became clearer, I don’t think he felt any need to go with anything less than he would propose,” she said.

See the full report on Ryan and the deficit commission at Bloomberg.com. 

Original post is Ryan Nixed Debt Deal Romney Touts by Political Capital.

Photograph by Andrew Harrer/Bloomberg

David Cote, chief executive officer of Honeywell International Inc., right, talks to Alan Simpson, co-chairman of President Obama's deficit commission, left, and Erskine Bowles, fellow co-chairman of the deficit commission, in Washington.

Republican Mitt Romney has talked before, as he did this week, about Simpson and Bowles.

They were the co-chairmen of the deficit commission that President Barack Obama appointed, the co-chairmen who issued their own set of recommendations for lack of a super-majority consensus of the commission — a plan promptly shelved.

As Obama prepared to campaign for re-election in Iowa today with his plan to tax the wealthiest Americans and spare the middle class, Romney — who campaigned in Colorado today– gave an interview on Radio Iowa yesterday about extending Bush-era tax cuts for all.

“I’ve already laid out my plan, which is that we should have an extension of the current tax code over a sufficiently long period for us to put in place a restructuring of our entire tax code, to bring down the rates in the country, at the same time to limit some exemptions for people at the high end, so we keep our code progressive,” Romney said on Radio Iowa.

“Remember the Simpson-Bowles commission?” he asked. “It laid out a plan to do just what I described, to get the rates down but to keep the revenue for the government strong — and that’s the place that I would go.”

Except he wouldn’t go all the way.

The plan advanced by Alan Simpson, a retired Republican senator from Wyoming, and Erskine Bowles, a onetime chief of staff for President Bill Clinton from North Carolina, would have increased tax revenue by $1 trillion by 2010 by scaling back or eliminating hundreds of tax deductions, exclusions or credits such as those allowing homeowners to write off interest paid on their mortgages. It would have cut Social Security benefits and reduced discretionary spending by $1.6 trillion and pared Medicare by $400 billion.

It would have lowered individual and corporate tax rates, while near-doubling federal gasoline taxes by 15 cents per gallon. And it would have taxed capital gains as ordinary income — hardly appealing to a presidential candidate whose own effective 14 percent tax rate is a product of his significant income from capital gains.  (Romney has said he parts ways with Simpson and Bowles on capital gains.)

Overall, that plan would have taken $4 trillion out of the nation’s debt over 10 years, with one third of that coming from revenue increases.

Romney has not accepted all of this. While talking about curtailing exemptions — yet refraining from saying which ones and by how much — he is not proposing to raise taxes.

Making matters more complicated, the 20 percent reduction in individual income tax rates Romney proposes cannot easily be offset by curtailing or eliminating many popular tax breaks, according to a nonpartisan study by the Tax Policy Center in Washington today.

Romney would need to eliminate $320 billion in tax breaks, or 30 percent of the total, to pay for his proposed 20 percent reduction in tax rates, as Bloomberg’s Richard Rubin reports on the study. Taking tax breaks for retirement savings, capital gains and employer-provided health insurance off the table would make the task more difficult, according to the study.

“It is possible to maintain revenues in the face of large marginal tax rate cuts by paring back tax expenditures, but it would be very difficult,” the study concludes. “The task becomes much harder if another objective is to maintain the progressivity of the federal income tax.”

Original post is Romney Touts Simpson-Bowles — Doesn’t Totally Mean It by Political Capital.

Photograph by Melina Mara/ The Washington Post via Getty Images

Before an afternoon meeting at the White House with Congressional leadership and the President, a member of the Gang of Six and chairman of the Senate Budget Committee, Senator Kent Conrad with reporters concerning a bipartisan deficit-reduction package put forward by the six Senators.

The ‘Gang of Six’ is back.

And bigger.

The six senators who proposed a bipartisan, $3.7 trillion deficit-reduction plan last summer have doubled their core membership and are working to reach consensus on a legislative draft, Senator Kent Conrad said today.

The North Dakota Democrat, a member of the original Gang of Six, said today in an interview that principles released in July had been translated into legislative language on which an expanded, 12-member group is working to agree upon.

They haven’t named the added six yet, and they have a lot of work to do.

“We have a draft,” he said. “It’s not agreed to. It’s not signed off on, but we have a draft.”

Conrad said the core group of 12 plus other interested senators met last night and will meet periodically over the coming weeks to build momentum for their proposals. Their next meeting is scheduled for June 19, when former New Hampshire Republican Senator Judd Gregg and former Democratic White House Chief of Staff Erskine Bowles will brief senators.

Bowles and former Republican Senator Alan Simpson of Wyoming co-chaired a budget and deficit task force appointed by President Barack Obama and advanced their own proposal which never was embraced.

“We’re trying to make progress,” Conrad said. “So that we’re able to do something after the election or before, if people were ready to move.”

Original post is ‘Gang of Six’ Rides Again, as 12 by Political Capital.