Statement: Robert Greenstein, Executive Director and James Horney, Director of Federal Fiscal Policy, on the Final Report from the Co-Chairs of the Deficit Commission
[i] See James Horney, Paul N. Van de Water, and Robert Greenstein, “Bowles-Simpson Plan Commendably Puts Everything on the Table But Has Major Deficiencies Because It Lacks an Appropriate Balance Between Program Cuts and Revenue Increases,” Center on Budget and Policy Priorities, November 16, 2010.
[ii] These calculations do not include reductions in interest costs, which result from both the proposed changes in spending and the proposed changes in revenues. They also do not include savings from the plan’s Social Security proposals, which are not included in the deficit reduction amounts shown in Figure 3 in the Bowles-Simpson document. The report states that Social Security should be reformed for its own sake, not for deficit reduction. Including the effects of the Social Security proposals would not significantly affect the calculations.
[iii] In calculating the balance between benefit cuts and tax increases, we exclude the proposal to expand Social Security coverage to newly hired employees of state and local governments, which affects revenues and benefits roughly equally in the long run. Including the coverage proposal, provisions that directly affect benefit levels account for about 63 percent of the improvement in Social Security’s 75-year actuarial balance and 82 percent of the improvement in the 75th year. See Stephen C. Goss, Chief Actuary, Social Security Administration, Letter to Erskine Bowles and Alan Simpson, December 1, 2010.
[iv] See James Horney, Paul N. Van de Water, and Robert Greenstein, “Rivlin-Domenici Deficit Reduction Plan Is Superior to Bowles-Simpson in Most Areas,” Center on Budget and Policy Priorities, November 30, 2010.