Simpson-Bowles Redux And The Not-So-Fierce Urgency of Now

The fact that the release of a much-touted-by-the-debt-reduction-industry Simpson-Bowles long-term budget plan coincides with the dramatic events in the Boston area underscores a point that’s right here on Page 14 of their own plan. There’s no particularly urgen reason to be talking about this right now.

As you can see in this chart, under the “no prior savings” scenario we would arguably be in the midst of a debt problem right now in 2013 (personally I doubt it but we’ll never know for sure). But right now in 2013, interest rates are low inflation is below target and there’s no concern about crowding out or growth. What’s more, though those problems could arise in future years the project is that the debt:GDP ratio will fall steadily for the next several years. At some point in the 2017-2019 range we’ll either need to catch a lucky break in terms of health care costs or economic growth, or else enact additional deficit reduction measures—perhaps measures along the lines of what Simpson and Bowles are proposing. But there’s no particular urgency around this. Congress might as well focus on immigration reform or anything else.