BIO President and CEO Jim Greenwood kicked off a keynote discussion with Sen. Alan Simpson and Erskine Bowles at the BIO International Convention, saying public policy can make or break the biotech industry’s best efforts to deliver innovations that make our world a better place, and then asked the esteemed duo if our government can make the tough choices needed to keep our economy strong.
“You can’t tax your way out of this hole, you can’t cut spending your way out of this hole, and you can’t grow your way out of this hole,” Sen. Simpson said. “You need to do all three.”
And there can’t be any sacred cows, agreed Simpson, a former Republican Senator from Wyoming, and Bowles, former Clinton White House Chief of Staff, calling for a slowdown in healthcare spending, sweeping tax reform, and changes to Medicare and Social Security.
Simpson and Bowles were appointed by President Obama in 2010 to co-chair the Commission on Fiscal Responsibility and Reform. While their plan to reduce the federal deficit won a bipartisan majority (11 out of 18) of the commission, it failed to get the required 14 votes to send the budget for Congressional approval. Last week, they released a revised plan that would lop more than $5 trillion from deficits over the next decade when combined with other cuts enacted since their 2010 proposal.
“We just keep plowing,” said Sen. Simpson of their proposal. “Like a stink bomb at a garden party, it just won’t go away.”
Bowles called healthcare spending the nation’s biggest fiscal challenge. The United States spends twice as much on healthcare as other developed nations, which he said he’d be fine with if healthcare outcomes were twice as good but our nation ranks 25th-50th on measures such as life expectancy, infant mortality and preventable deaths. Healthcare spending currently accounts for a quarter of the budget and is expected to grow to one-third of the budget by the end of the decade – a pace of spending growth that Simpson called unsustainable.
Greenwood noted the disproportionate focus on cutting drug costs in the President’s proposed budget, which calls for $400 billion in cuts to healthcare spending, 30 percent of which is aimed at drug spending despite the fact that innovative prescription drugs account for only 6 percent of healthcare spending. Meanwhile, Greenwood said, the biotech industry is working to treat and reduce the toll of diseases such as stroke, heart disease and cancer that drive up healthcare costs.
“We agree with that,” Bowles said, pointing out that their original plan proposed $200 billion more in healthcare cuts than the President’s proposed budget but takes one-third less out of drug spending.
Asked if they thought a grand bargain could be struck while dueling political parties control the White House and Congress, Bowles noted that the Balanced Budget Amendment of 1996 was passed while a Democrat was in the White House and Republicans controlled Congress.
“If it’s all Republicans or all Democrats, then they do something extreme and that is not good for the American people,” Bowles said. “A split government enables you to get something done that is more in the sensible center.”
“If [President Obama] doesn’t slow healthcare spending and address the solvency of Social Security, then he will have a failed presidency,” Sen. Simpson said. “He knows that, he doesn’t want that and he will do anything to avoid that.”
While they see seeds of hope of a compromise in the President’s proposed budget, they still put the odds of getting something done in coming months at north of zero but not north of 25 percent.