New Simpson-Bowles plan includes cuts, ending to some tax breaks

>> former clinton white house chief of staff erskine bowles and, of course, former republican senator alan simple son have modified their budget reduction plan outlining it today at a politico breakfast. joining us politico -- jim van de hye.

>> these two have been -- the simpson bowles plan was considered the gold standard . the president kind of, sort of didn't really endorse it or embrace it. they've been very clear that they felt they did not get what they expected, which was the boost from the white house . they still had a lot of democrats and even republican or two going along with them, but it never took off. what have they done now to the plan to try to get a new lift?

>> what they're trying to do is modify the plan. for one, the reality we just had, the tax increases in december, and also, as sort of a middle ground call between what the white house has put on the table in terms of deficit reduction and what republicans want in essentially they're calling for an additional $2.5 trillion in deficit reduction. they would get that through a combination of changes to intilgsment programs, discretionary cuts, in some tax increase, tax reform . if you listen to that full breakfast either read it or watch the full video, it's clear they're not optimistic at all that this can get done in this political environment. they felt the window was wide open in december, that there was the momentum was there to actually get a deal and the deal didn't get done, and now they're very down beat about the capacity of this congress, this president to work together to combat what they consider a huge, huge issue.

>> now, they -- i know they were on the daily rundown today, and they were pointing out that what they're proposing in terms of retirement is hardly radical. it is changing the medicare age one year, 40 years from now. that's correct. that's really a down payment for a four decades from now on doing anything significant on entitlement.

>> that speaks of the complexity of getting anything done. you know, when -- even before when they were talking about raising the medicare age last year when it was more central to the negotiations behind the scenes , they're still talking about doing it over 25 years and not starting for a long, long time. you can't even get that done. the other idea that they threw on the table was this idea of a chain cpi of just changing the indexing for the rate that these programs grow and the benefits grow and, you know, that idea at some -- had some backers inside the white house for a little while, but now democrats seem very cool to that. there's just not -- there's no consensus about what to do on entitlement reform even if there was consensus to do something on entitlement reform, and republicans have no interested int whatsoever in raising tax,s, and that's the whole purpose of tax reform . they want more revenue, which means for taxes through reform, and so there's not a middle ground . there's a middle ground before in december. it doesn't seem like there's a middle ground . i think that's why they were down beat. that's why sec west rags is probably going to happen in a couple of weeks. that's probably why we're going to have another budget fight when you have to do the continuing resolution a month later. there's just no -- there's no middle ground . there's very few people who even want to get in the same room and try to find that middle ground right now.

>> do you have any confidence that -- let's assume that the sequester is going into effect because that's what everybody expects on both sides, that after that there will be an appetite for real negotiations that could involve some revenue, because without revenue, there is no deal as far as the white house is concerned.

>> yeah. i think that's the big sticking point. the white house keeps saying, well, let's replace sec west rags with spending cuts and tax increases. what republicans say is we just did tax increases to the tune of $600 billion in december. we're not doing anymore. they have no interest. republicans have no interest in putting tax increases on the table, so that's where i'm saying. where is the middle ground if you don't want to do on one side, no tax increases. on the other side, you don't want to just do spending cuts. it's not -- there's not a split -- split this one in the middle type compromise to be had. sec restoration, it will be about the political pressure once it kicks in. does it really affect the economy? does it affect jobs? we already know a lot of contractors are not hiring or getting rid of people because they're not going to have as much money coming in from contracts they had with the government. if that stuff starts to hit home in the districts, maybe it bubbles up and it puts pressure on these members, but quite frankly, they felt that pressure for several weeks, several months now because people have been talking about sequestration for some time, and they haven't done anything. i'm not optimistic that they'll undo sec restoration.

>> thanks very much.

>> take care.