Once rejected, Bowles-Simpson proposals back in play

(CBS News) WASHINGTON -- Two years ago the Fiscal Commission, chaired by Democrat Erskine Bowles and former Republican Sen. Alan Simpson, proposed every basic element of the fiscal cliff solution being discussed today.

Their plan was a mixture of higher taxes, lower spending and the reform of Medicare and Social Security. Both men told us that sacrifice has to come from everyone.

"All of us have to have some skin in the game to get it done," Bowles said.

"It's called, 'If you want something, pay for it,'" Simpson added. "It's a sick idea, but it is an interesting idea."

Their biggest idea was to increase revenue by combining both President Barack Obama's demand for higher taxes on the rich and the Republican proposal to get rid of tax loopholes. The Bowles-Simpson proposal would eliminate almost every tax deduction for individuals and corporations, with only a few exceptions for charity donations and home mortgage interest.

"This stuff goes to the wealthiest people in America -- 20 percent of the American people use 80 percent of that stuff," Simpson said.

"We have $1.1 trillion of loopholes, of backdoor spending, in the tax code," said Bowles. "And that's what we said -- let's start with a plan that wipes those out."

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The plan also called for deep spending cuts -- $200 billion a year -- and streamlined both the Pentagon and the federal bureaucracy. Medicare and Social Security would, over time, reduce benefits given to higher-income families.

"I think most people understand that Medicare has to be part of the deal, and most people believe today that you ought to do Social Security on a parallel track," Bowles said.

Both men blame the death of their report on lobbyists and warn that special interests are lined up again to fend off the budget cuts coming their way.

"Everybody is just like my momma, they are," Bowles said. "She turns to me and she says, 'Your daddy would be proud of you. You're putting our fiscal house in order. You have to stay at it. But don't mess with my Medicare.'"

Bowles-Simpson went nowhere two years ago, but its essential ideas are now back in play, and the basic tax reform it called for -- once politically impossible -- is being embraced by both parties today.

  • Wyatt Andrews

    Wyatt Andrews is a CBS News National Correspondent based in Washington D.C. He is responsible for tracking trends in politics, health care, energy, the environment and foreign affairs.

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