MY VIEW: Erskine Bowles and Alan Simpson December 2013

The budget agreement reached by the Senate and the House last week both has some good elements and bad elements. In particular, it replaces some of the sequester in 2014 and 2015 with targeted and permanent savings policies like reforming military and civilian retirement and improving the Pension Benefit Guaranty Corporation but does not do enough to make the long-term debt sustainable.

But Fiscal Commission co-chairs and CRFB board members Al Simpson and Erskine Bowles wrote in the Los Angeles Times on Friday that the greatest accomplishment of the agreement might be a demonstration of bipartisanship. Write Bowles and Simpson:

Perhaps most important, this agreement demonstrates that leaders in Washington can actually work together to reach some agreement on fiscal policy. The sad lack of trust between the two parties has been perhaps a greater obstacle to a "grand bargain" than the policy details themselves. We hope that this agreement can serve as a confidence-building measure that will lead to compromise on significant deficit reduction, as other lawmakers follow the good example set by House Budget Committee Chairman Rep. Paul D. Ryan (R-Wis.) and Senate Budget Committee Chairwoman Patty Murray (D-Wash.).

This symbolic victory is important, as going forward, most of the easy decisions have been made and lawmakers are left with only tough choices. Tax and entitlement reform cannot wait, say Bowles and Simpson.

Policymakers should take advantage of the need for legislation to fix the flawed Medicare payment formula — which is scheduled to cut physician payments by almost one-quarter — by enacting changes that make Medicare more cost-effective. In avoiding this cut, we must start paying doctors based on quality rather than quantity of care, and we must fully offset the costs of this "doc fix" with structural reforms that slow the rate of growth in federal healthcare spending.

At the same time, Congress should follow the lead of Senate Finance Committee Chairman Max Baucus (D-Mont.) and House Ways and Means Chairman Dave Camp (R-Mich.) to enact comprehensive tax reform that promotes growth and makes the U.S. more globally competitive globally. With $1.3 trillion of annual "tax preferences" in the tax code, there is plenty of money that can be raised from eliminating or scaling them back to reduce rates and deficits.

Policymakers should also go further in paring back the sequestration cuts. They should pay for that additional relief by eliminating unwarranted subsidies and low-priority spending, further reducing Medicare costs and improving the way we measure inflation in the federal budget and tax code.

Finally, we must reform Social Security to make the program financially sound for future generations.

Lawmakers clearly have a great deal left to do. Hopefully they can take advantage of this new momentum.

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"My Views" are works published by members of the Committee for a Responsible Federal Budget, but they do not necessarily reflect the views of all members of the committee.