Obamacare, Host of Others Need Slashing: Simpson-Bowles

CHICAGO — Americans interested in getting the national debt crisis under control likely will have to endure cuts to popular programs like defense, Social Security — and the nationalized health insurance program known as Obamacare.

CNBC Alan Simpson and Erskine Bowles

That's the conclusion of Alan Simpson and Erskine Bowles, authors of the widely disseminated report commissioned to devise ways to unwind the $16 trillion national debt and $1 trillion-plus government budget deficits.

Speaking in stark terms and folksy language, the duo laid out the dire reality of the situation to 4,000 investors at the Charles Schwab Impact conference Thursday.

"Who the hell is kidding who on what this is going to cost?" Simpson, the former Wyoming senator, said of the Patient Protection and Affordable Care Act, aka "Obamacare." "We haven't found any constituency yet who wants to cut anything back anywhere."

A persistent lack of support from Washington to get a handle on the debt and deficit problem took focus of much of the pair's remarks.

For Simpson, the problem is especially apparent in health care, which they identified as one of five key areas where debt-reduction has to focus. Congress in 2010 passed President Barack Obama's national health care plan that will go into effect fully in 2014. (Read More: Health Law Has States Feeling Tense Over Deadline)

"This baby is on automatic pilot," he said. "It can't possibly succeed. There is no cost containment in this baby until down the road, and we know what will happen down the road — nothing."

In addition to health care, the other four targeted areas are defense, the tax code — Bowles called it "the most ineffective, inefficient, globally anti-competitive tax code that any man could dream of" — Social Security and compound interest on the debt.

In defense, the U.S. spends more than the next 17 countries combined.

"I think we've been disproportionately responsible for world peace and I don't think America can afford to be the world's policeman," Bowles said.

On the tax code, they recommend cutting taxes to promote growth but eliminating many deductions in order to broaden the base of who pays. (Read More: Obama: Ending Tax Cuts for Rich Resolves Half of 'Cliff')

"We think that would promote dynamic growth in America and put people back to work," Bowles said.

Social Security, he added, is "$900 billion cash negative" over the next 10 years and adjustments need to be made in eligibility. He noted that when President Franklin Delano Roosevelt created the program it kicked in at age 65 when the average life span was 63. Now, the plan kicks in at 62 when the average life span is 75.

"Al and I don't want to throw grandma over the cliff, but we do want to make Social Security solvent," said Bowles, chief of staff under former President Bill Clinton.

Both bemoaned the lack of action in Washington to get anything done, and urged Washington to get past the Nov. 6 presidential election, in which President Barack Obama gained a second term, and move forward. (Read More: Romney Blames Loss on Obama’s ‘Gifts’ to Minorities and Young Voters)

If Congress and the White House fail to act on deficit-reduction targets by the end of the year, a slew of tax increases and spending cuts will take place automatically and likely put the country into recession.

"Today, because we have done nothing — nothing — we have this 'fiscal cliff,'" Bowles said, using the term coined by Federal Reserve Chairman Ben Bernanke.

"We've got to get these people to put partisanship aside. We've got to get them to pull together instead of pull apart," he added. "While the rest of the nation has been having a fragile recovery, they've been having an election."