While the American Taxpayer Relief Act has put off worries about the fiscal cliff for a month, it is clear that we missed a clear opportunity to do something about our unsustainable fiscal path. Fiscal Commission co-chairs and Fix the Debt co-founders Al Simpson and Erskine Bowles made it clear that more will need to be done on the debt after missing a "magic moment" in these fiscal cliff negotiations.
Appearing on Meet The Press this Sunday, Simpson and Bowles argue that lawmakers are now left with the really tough decisions because most of the low-hanging fruit are already gone, having been picked during previous negotiations. Further, when both also also said that the sequester is not good policy for reducing the debt; rather, lawmakers should look toward reforming our tax code and entitlement programs if we are going to be able to stabilize the debt and put it on a downward path as a share of the economy. Said Bowles:
First of all, we've done all the easy stuff. All of the hard decisions lay ahead of us. We have got to reform the tax code to make it more globally competitive. We have got to reduce entitlement spending, particularly as it relates to health care. We have to slow the rate of growth of health care to the rate of growth of the economy or it will eat the rest of the budget alive. And we've got to make Social Security sustainably solvent. If we do these things, we can go a long way to stabilizing the debt and keeping it on a downward path as a percentage of GDP. But it's got to be growth. It's got to have some revenue. But the big part going forward has got to be spending cuts.
Simpson was also disappointed lawmakers did not go further with the fiscal cliff compromise. While we may have avoided some of the short-term harm of the fiscal cliff, Simpson argued that there were roadmaps for a bipartisan solution should both sides put everything on the table:
Well, the sad part of it is that the mountain roared and gave birth to a mouse. This thing isn't going to do anything really. Erskine is so correct. And don't forget in our commission we got five Democrats, including Dick Durbin, five Republicans, including Tom Coburn, and one Independent, how do you do any better than that? And the President ignored it, and the Congress has ignored it, because they won't do the big stuff. And the big stuff has to get done. This other stuff is nothing.
We may breathe a sigh of of relief that a deal has been reached to avert a cliff, but this can only be temporary. Projections of debt in both the medium term and the long term show that the fiscal cliff package did not go nearly far enough in terms of deficit reduction. Hopefully, lawmakers listen to the Fiscal Commission co-chairs and start new negotiations now. The full video is below.
Click here for a statement from Simpson and Bowles on the fiscal cliff deal.