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Epilogue: Erskine Bowles

by Dr. Hamid Zangeneh, Professor of Economics at Widener University

Erskine Bowles spoke with wit, humor, and the steadfast belief that the United States economy is suffering, not from sluggish growth, but from high debt/deficit that, quoting former Joint Chiefs of Staff Chairman Admiral Mike Mullen, "is the single biggest threat to our national security." Bowles suggested that if we do not follow a different course, we can expect a very dire future, unlike any other financial calamity before.

Bowles, as one would expect, put most of the blame on the rising cost of entitlements. He made the case by dividing the current situation into five categories: cost of healthcare, defense spending, inefficient tax code, Social Security, and compound interest on debt. He suggested that we can neither cut our way to prosperity nor can grow the economy fast and large enough to balanced budget and lower the debt/gross domestic product ratio. We need to attack the problem by undertaking a grand and multifaceted scheme.

Before he engaged the audience with what he called the new Simpson-Bowles plan, he labeled the coming sequestration as dumb and mindless cuts in expenditures. Sequestration is not smart, he repeated, it is dumb. We need to be smart and plan smart cuts that will not hurt the economy.

Bowles suggested that the new Simpson-Bowles plan would reduce the debt to gross domestic product ratio to 70 percent, reform the tax code, reduce the inflation in health care costs, and make Social Security solvent for the long run. He insisted that whatever we do must be phased in over years to avoid a real shock to the economy, must not hurt the poor, must bend the health care cost curve, and overhaul the tax code.

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