Sins of commission
If you're one of the literally tens of people who've been anxiously waiting for the president to sign an executive order forming a fiscal commission with little actual power and a slim likelihood of working, then yesterday was your lucky day, as the president put pen to paper and formed the National Commission on Fiscal Responsibility and Reform. OMB Director Peter Orszag explains how it will work:
With members appointed by the leaders from both political parties in both houses of Congress as well as the President, the Commission’s objective is to put forward proposals to balance the budget excluding interest payments on the debt (the so-called primary budget) by 2015 and to meaningfully improve the long-term fiscal outlook. Meeting the medium-term target means that by the middle of this decade, we would be paying for the operations and programs of the federal government and not increasing our debt relative to the size of the economy; under current projections, the result would be stable overall deficits (including interest payments) hovering around 3 percent of GDP. The Commission will also examine changes to address the growth of entitlement spending and the gap between the projected revenues and expenditures of the Federal government over the long term.
To report out a recommendation, the Commission would need 14 out of 18 votes, ensuring that any report will have bipartisan support. The Commission will issue its recommendations by December 1, 2010, and the leaders of both the Senate and the House have assured us that they will bring these recommendations to a vote before the end of the current Congress.
To say a word more on the membership, there will be six members appointed by congressional Democrats, six members appointed by congressional Republicans and six members appointed by the president. As of now, only two appointments have been made: The president has named former senator Alan Simpson (R) and former Clinton chief of staff Erskine Bowles to lead the commission. Harry Reid and Nancy Pelosi have pledged to bring the final recommendations to a vote, but they're not exempt from the filibuster or other efforts to procedurally impede the package.
There's nothing magic about a commission. Like a congressional committee, it puts together legislation that Congress later votes to accept, reject or delay. And as of now, there's simply no reason to believe that the votes exist for any serious compromise. Republican leaders, for instance, are arguing that the commission simply shouldn't consider tax increases, which makes a deal impossible. That was their rationale for filibustering the very formation of a commission, which is why Obama had to do this through an executive order.
But elites still like the idea, in part because elites can see the outlines of a deal that elites would make. Greg Mankiw for instance, thinks Republicans should demand that the commission include a value-added tax and a carbon tax. I would support that. The problem is that the Republican Party opposes both policies, and there's no reason to believe they're going to change their minds.
To date, the best argument I've heard in favor of the commission is that it's a good insurance policy. If the bond markets do turn on a dime and the federal debt becomes a crisis-level problem, then we've already got a process that we can use to address the problem. But outside an external crisis that would force action one way or the other, there's little reason to believe this commission's final package will be any more successful than the legislation to create this commission was.
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