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President Obama’s Budget Proposal and Bowles-Simpson

Overall Spending and Revenue Levels Are Pretty Similar in Both Budget Plans

SOURCE: AP/J. Scott Applewhite

President Barack Obama, flanked by former White House Chief of Staff Erskine Bowles, left, and former Wyoming Sen. Alan Simpson, discusses the need for a bipartisan resolution to our budget issues.

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President Barack Obama’s proposed budget for fiscal year 2013 sets a responsible course for rebuilding the economy so that it works for everyone, not just the privileged few. Our middle class is the engine of economic growth, but is threatened by dwindling public investments, a tax system increasingly rigged to benefit the wealthy, a fraying safety net, and assaults on what should be the bedrock guarantees of Medicare, Medicaid, and Social Security.

The president’s budget protects those guarantees, boosts critical investments, and takes steps toward rebalancing the tax code so that all pay their fair share. And it does this in a fiscally responsible way, charting a path that nurtures the economic recovery while reducing the federal deficit, all without asking the middle class to shoulder a disproportionate share of the burden.

The overall levels of spending and revenue contained in President Obama’s fiscal year 2013 budget proposal are very similar to those proposed by Erskine Bowles and Alan Simpson, the bipartisan chairmen of the president’s 2010 fiscal commission. The levels of spending on entitlement programs such as Social Security, Medicare, and Medicaid, are nearly identical, as are the overall levels of spending on discretionary programs. Indeed, the only major divergences between the Bowles-Simpson plan and President Obama’s budget proposal are that the president has more spending on so-called “other mandatory” programs, and he has proposed less new revenue than the Bowles-Simpson plan.

President Obama’s newly released budget plan calls for overall federal spending to decline from 24.3 percent of gross domestic product—the widest measure of total economic activity—to 22.7 percent by 2021. The Bowles-Simpson plan has spending at 21.8 percent of GDP in 2021, a difference of less than 1 percentage point. Both Obama’s budget and the Bowles-Simpson plan call for 5.1 percent of GDP in spending on discretionary programs. Both have Social Security spending in 2021 pegged at about 5.3 percent of GDP, and both would spend about 6.3 percent of GDP on mandatory health care programs such as Medicare, Medicaid, and the Children’s Health Insurance Program. On the revenue side Bowles-Simpson calls for 20.3 percent of GDP, whereas the president’s budget calls for just 19.9 percent.

Similarities abound

It’s also worth noting that the similarity between the president’s budget plan and the Bowles-Simpson plan is not something new to this year’s proposal. His recommendations to the congressional “super committee” in the fall of 2011 also largely mirrored the broad strokes of Bowles-Simpson, as did an offer from the Democratic members of that committee. Even President Obama’s deficit reduction framework from April 2011 shared many of the same characteristics.

That hasn’t stopped the president’s critics from attacking him for failing to “embrace” Bowles-Simpson. Here’s House budget chief Rep. Paul Ryan (R-WI) on Fox News just yesterday: “Look, the president not only didn’t deal with these programs, which are the drivers of our debt. He punted to a fiscal commission, and then he just didn’t even embrace the fiscal commission.”

Coming from Rep. Ryan that critique is especially rich. First of all, he himself served on that same commission and voted against its recommendations. Second, the president’s budget plan is leagues and leagues closer to Bowles-Simpson’s proposal than Ryan’s own budget plan. (see Chart 2)

A completely different approach

For the past year Bowles-Simpson has been praised as a realistic vision of a “grand bargain” on the federal budget deficit. Whether that characterization is right or not, the fact is that the president’s budget plan is—in the aggregate—very similar to Bowles-Simpson. Those who have been so vocal in supporting Bowles-Simpson should be pleased.

Michael Linden is Director of Tax and Budget Policy at the Center for American Progress.

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