Erskine Bowles Says There's Just A One-Third Chance Of A "Fiscal Cliff" Deal This Year
"I'm hopeful, but boy, I wouldn't put me down in the optimistic category," Bowles said.
WASHINGTON — Erskine Bowles and Alan Simpson, who chaired a commission that proposed a package of cuts and tax increases to reduce the American deficit, said Wednesday that they think a deal to avert the fiscal cliff is within reach before the end of the year and that there have been encouraging signs on both sides — but neither man was quite optimistic.
"I think there's only a one-third probability we'll actually get something done before Dec. 31," Bowles told reporters at a breakfast hosted by the Christian Science Monitor.
"I'm hopeful, but boy, I wouldn't put me down in the optimistic category," he added later. "Ten more legislative days? There's a lot to be done."
Nevertheless, after meeting yesterday with President Barack Obama and a group of CEOs, Bowles said he walked away "feeling that these guys really were serious" about addressing the range of problems presented by the fiscal cliff and about entertaining compromise.
"I don't think they would have said it to this group if it wasn't real," Bowles said. At the meeting with the president, Bowles said, "They talked about, we aren't getting to get a deal done if both sides are 'absolutist.'" He had saved the word "absolutist" in his Blackberry, he said, because it so struck him.
But the late start to fiscal cliff discussions, which were held off until after the election, and the slow pace of those talks during the past two weeks, means the likelihood of a timely deal has diminished — and the same sticking points, particularly concerning revenue and reforms to entitlements, remain, Bowles and Simpson said.
At risk, the men reiterated, is not only the fiscal cliff itself — an ill-timed combination of spending cuts and tax increases that would likely plunge the economy back into recession were it to go into effect — but also skittishness within the markets.
Even in the absence of a fiscal cliff agreement by year's end, market uncertainty could at minimum be quelled by a tentative deal in principle, Simpson said.
"They don't need to come out with legislation right now — that would be great — they just need to come out with a paper signed by Republicans and Democrats in each house," Simpson said. "If you did that, the markets would get off your case."
Bowles and Simpson, who led the president's commission to propose a deficit-reduction plan, have plenty of firsthand experience with stalemates: The $4 trillion plan recommended by their commission was publicly criticized by members of both parties, even as an alternative solution was unable to be agreed upon.
The difference this time around might be more willingness by members of both parties to discuss previously untouchable policies: revenue increases for Republicans and entitlement reforms for Democrats.
The "tipping point," Simpson and Bowles noted, is yet unclear. But the mere fact that those issues are still on the table, they said, is important.
"The guys who have the guts to go big or go home, we will protect them," Simpson said. "I know that's corny as hell, but that's where we are right now."