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Photo credit: Jeff Malet Photography/Newscom

Erskine Bowles and Alan Simpson, former co-chairs of the 2010 White House deficit-reduction panel whose plan failed, released an outline for a new proposal on their own today. A Bipartisan Path Forward to Securing America’s Future ^[2] lacks any significant details but does include a $600 billion tax increase in addition to the $618 billion already being raised from the fiscal cliff deal. Here’s a brief rundown:

• Doubling down on sequester cuts. The outline suggests a total deficit reduction target of $2.4 trillion over 10 years. The proposals would replace sequestration (the automatic budget cuts set to strike on March 1) and double the deficit reduction amount to $2.4 trillion. Replacing sequestration with concrete spending cuts in other areas of the budget is a laudable proposal, but with only 10 days left and a President who insists on more tax increases at every turn, sequestration might just happen—at least in 2013. Further cuts should build on sequestration, not postpone it.
• Doubling down on tax increases. The outline disguises a tax increase in the language of tax reform. Like a wolf in sheep’s clothing, the proposal to eliminate or reduce many unidentified tax expenditures would consume an additional $600 billion of taxpayer’s money—on top of the $618 billion already enacted in the fiscal cliff deal. Simpson and Bowles suggest lowering marginal tax rates slightly as well, but only to call this a bipartisan proposal in name. The substance amounts to another massive tax hike on investors and small businesses that would drag down growth.
• No structural entitlement reforms. On Medicare, the outline calls for some of the very same price-fixing policies that we know don’t work. There is some common ground on increasing Medicare premiums for higher earners, reforming cost sharing ^[3], and adjusting benefits to account for population aging—if that means increasing the age of eligibility. On Social Security, adopting the chained consumer price index (CPI) as a more accurate inflation measure would help program finances. But much more needs to be done.

Overall, the proposal is more of a vague outline than a concrete roadmap. Simpson and Bowles argue this is by design ^[4] to receive feedback from policymakers on the general direction. But Congress’s failure vis-à-vis the “super committee” to come up with cuts is why the country now faces sequestration.

On the positive side, the outline sets a higher deficit target, yet one nowhere near big enough to balance the budget in 10 years. However, it’s $600 billion in the wrong direction. Spending, especially on the entitlement programs, is at the core of the nation’s budget problems. Instead, the outline asks for another massive tax hike in what would amount to “tax deform ^[5].”

The lack of structural entitlement reform and the few workable details on Medicare and Social Security are woefully inadequate to curb the spending growth in these programs. Heritage has put forth 6 bipartisan entitlement reforms ^[6] that would help steer the nation off the fiscal collision course it is currently on.

Simpson and Bowles have reappeared on the scene most likely only to see their proposal ignored once again.