Video: Now Is 'Magic Moment' for Debt Talks

(CNN) -- One of the co-authors of the Simpson-Bowles deficit-reduction plan, which failed to gain the approval of President Barack Obama in 2010, said now that Obama has won a second term in the White House, the political climate will be friendlier to a debt deal.


"I think this is truly the magic moment. We've got a second term Democratic president who's willing to put entitlements on the table," Erskine Bowles said on CNN's "Erin Burnett OutFront." He also praised House Speaker John Boehner as someone "who really gets it" and who is "willing to put revenue on the table."

Congress faces an end-of-the-year deadline to find a deficit-reduction plan in order to avert the fiscal cliff, a massive amount of spending cuts and tax hikes scheduled to take place at the beginning of 2013 if no deal is reached.

The Simpson-Bowles plan was a bipartisan proposal commissioned and then ignored by the president. The model, which would eliminate tax loopholes so that more people and companies pay taxes, also failed to get enough votes from the 18-member presidential commission appointed to propose a plan.

The blueprint also called for a 15 cent increase in federal gasoline tax as well as across the board tax rate reductions.

Some of the options have already been mentioned in a possible plan this year. Boehner last week said he favored reforming the tax code, specifically limiting deductions.

Democrats, however, insist on an increase in the tax rates for the wealthiest Americans.

Bowles said the urgency of the situation will bring renewed interest to the plan. "Most importantly, we have this fiscal cliff, this crisis, which really will create chaos if we go over."

He also hit back against New York Times economic columnist Paul Krugman, who argued recently that Obama should hold firm in the negotiations and allow the economy to go over the so-called fiscal cliff if Republicans refuse to cede any ground in their opposition against tax hikes.

"Nothing very bad will happen to the economy if agreement isn't reached until a few weeks or even a few months into 2013. So there's time to bargain," Krugman wrote.

Bowles on Monday staunchly disagreed. "I think that's crazy. Why would you bet the country--really bet the country--by going over this fiscal cliff?"

The Congressional Budget Office last week reiterated its warning that the fiscal cliff would remove $7 trillion from the U.S. economy and set off another recession. The contraction could cause the unemployment rate to jump to 9.1% by the end of 2013. Last month, the jobless number was 7.9 percent.

Obama is scheduled to meet with leaders from both parties and both chambers on Friday. Beforehand, however, the president will hold talks with business and labor leaders, according to the White House.

Bowles also weighed in on his political future. Asked if he would consider taking the job of Treasury secretary after Tim Geithner retires from the post following Obama's inauguration in late January, the North Carolina businessman said he would do so on one condition.

"Well if they'll move the treasury to Charlotte, I will," he said, smiling. "Otherwise I think I'll stay at home. I've been married for 42 years; I've lived in the same town as my wife for 22. I think it's time for me to stay home for a while."

CNNMoney.com's Charles Riley contributed to this report.

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