Walker objects on two grounds to a proposal by Sens. Bob Corker (R-Tenn.) and Claire McCaskill (D-Mo.), which is gaining strength in Congress, that would automatically cut spending if it exceeded 21.5 percent of GDP (it’s now 24 percent).
He thinks 21.5 percent is too low, considering that the population is aging and health costs are rising, and he prefers allowing for tax increases as well as spending cuts.
There’s no bill in Congress yet targeting debt-to-GDP, but Walker says he’s working with both White House officials and Members to advance one.
Walker said he hoped Congress and the White House would tackle Social Security reform before the 2012 election “to show ourselves and the world that we can solve our problems,” but he fears that idea was set back by Ryan’s proposal on Medicare, which has agitated seniors.
For the long term, Walker’s June proposal will contain plans A and B.
Plan A will be mix of entitlement and spending cuts “more aggressive” than those proposed by Simpson-Bowles and options for tax reform and health care re-reform all designed to bring the debt-to-GDP ratio down to 70 percent by 2020 — it’s now scheduled to be 100 percent by then — and 50 percent by 2035.
He’ll also propose a “small” consumption tax to close the gap, but only if all spending targets have been met.
Plan B will be a “draconian” set of options for what will need to be done if debt targets aren’t met — such as reductions in Social Security and Medicare payments.
Walker said that his principles for long-term budget reform are that it make economic sense and be socially equitable.
“It’s got to be politically feasible in Washington and understood outside the Beltway, so that people will accept the kind of reforms we’re talking about and elected officials will be able to make them without fear that they’ll lose their jobs.”
For years, Walker and his allies weren’t listened to. Now they are, but politicians want things done their way and their way only. Walker now is offering ideas that bridge the gaps. Unless the gaps are bridged, the country could fall into a fiscal chasm.