Simpson and Bowles offer up new deficit cutting plan

Democrat Erskine Bowles (R) and Republican Alan Simpson speak to reporters after their meeting with President Barack Obama at the White House in Washington, DC, on April 14, 2011. - 

Alan Simpson and Erskine Bowles -- the bipartisan pair that brought us a multi-trillion-dollar deficit reduction plan that was never enacted -- are out today with a new plan.

It targets Medicare and Medicaid for cuts, and curbs a number of tax breaks. It would reduce the deficit by about $2.4 trillion -- about halfway between what Democrats and Republicans want.

This proposal is their fourth effort in three years to drum up support for a deal to shrink America's debt. So, is there any reason the dynamic deficit reduction duo's plans could get traction now? 

Economist Gary Shilling says the political gridlock of today may actually make the new Bowles-Simpson plan more alluring.  With “neither side willing to budge” in the Whitehouse or Capitol Hill, Shilling says Bowles and Simpson may be able to play something of the knight-in-shining-armor role, “stepping in and offering a compromise that both sides will look at seriously.” 

Mark Zandi, chief economist for Moody's Analytics, doubts that Simpson and Bowles will have any impact on the immediate issues we're facing, such as the looming across-the-board budget cuts known as the sequester, set to hit in March.

“I think that's a train that's already left the station,” Zandi says of the sequester. But Zandi does think the new Simpson-Bowles plan could have an impact on future deficit negotiations.

“There's a lot more work to be done, and they could have a big role to play.”

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