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Over the Cliff: Alan Simpson and Erskine Bowles
on the Looming Deficit Crises
By Michael Skocpol
November 27, 2012


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As President Obama and Congressional leaders hurtle Thelma-and-Louise-style toward a budgetary precipice, another deficit-tackling duo hit the road earlier this month to deliver a simple message: This all could have been avoided.

Pushing their plan for reigning in deficits before big automatic spending cuts and tax hikes drive the economy over the so-called “fiscal cliff,” the two men – former Senator Alan Simpson, a Wyoming Republican, and Democrat Erskine Bowles, who served as White House chief of staff under Bill Clinton – spoke to advisors on Nov. 15th at the Schwab Impact conference in Chicago, discussing the current budget crisis and their long-term concerns for the national’s fiscal health.

Simpson and Bowles

Simpson and Bowles are best known for co-chairing Obama’s 2010 bipartisan Presidential Commission on budget reform. Though the commission’s so-called “Bowles-Simpson” plan failed to garner unanimous support from its members and went unheeded by Congress, the two men made clear that they still hope both parties will come around to their approach.

In their remarks, the duo cast themselves as practical thinkers pedaling a common-sense cure for our national’s fiscal ills in a Washington that is hogtied by partisan bickering and unable to embrace practical solutions. Both Simpson and Bowles said that Americans should be alarmed and infuriated that leaders in Washington haven’t gotten serious about budgetary reform until the last few weeks.

The stakes, they said, are high – including the possibility that the country could plunge back into recession early next year.

Perhaps sensing an easy target, they painted a dim portrait of Congress, chastising it for its failure to enact any bipartisan plan – especially theirs. In their view, the Bowles-Simpson plan failed not on its merits, but because spineless and self-serving politicians on both sides of the aisle, unwilling to look past the next election to forestall a looming crisis, were too short-sighted to perceive its bipartisan brilliance.

There’s plenty of reason to believe that Simpson and Bowles are being uncharitable – and perhaps a little self-serving themselves. Before addressing their diagnosis of the immediate situation in Washington, however, let’s first review what they see as the five big challenges to the nation’s fiscal health, what they’d like to see done about them, and why they worry that – fiscal cliff or no fiscal cliff – we can’t afford to wait any longer.

The five horsemen of the debt-pocalypse

Simpson and Bowles sounded a warning that we’ve all heard many times before – the US, they argued, is on a trajectory toward an unsustainable financial future, and the problem will only get worse over time if we don’t address it sooner rather than later.

Bowles laid out the five major drivers of budgetary imbalance that he and Simpson believe any long-term fix must address:

  1. The first and biggest problem Bowles identified is runaway health care spending. According to Bowles, the U.S. spends twice as much as any other developed country on health care, but ranks between 25th and 50th when it comes to important criteria like life expectancy and preventable deaths.

    “In 1981, we spent 10% of the budget on health care. Today we are spending 25% of the budget on health care. By 2020 we will be spending a third of the budget on health care, and it won't be long before all we can do is take care of a couple of old coots like me and Al,” Bowles said. “Health care is by far number one.”

    Simpson said that the recent health care reform legislation, whatever its pros and cons, did not seriously address the problem of rising costs. “There is no cost containment in this baby until down the road,” Simspon said. “And you know what they will do down the road? Nothing.”

  2. The second problem we must confront, according to Bowles, is defense spending, an area where US spending is even more out of whack with the rest of the world – America, he said, spends more than  the 17 next-largest countries combined.

    “We are bearing a disproportionate responsibility for global world peace,” Bowles said.

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