Bowles and Simpson vs. do-nothingism
Erskine Bowles and Alan Simpson, the co-chairs of the debt commission, testified before the Senate Budget Committee on Tuesday. Their opening remarks are noteworthy and highlight the unfortunate gap between their serious efforts to stave off a fiscal debacle and the current do-nothingism coming from the White House and Senate Democrats. They were blunt about what is at stake:
Over the course of our deliberations, the urgency of our mission became all the more apparent. The contagion of debt that began in Greece and continues to sweep through Europe shows us clearly that no economy will be immune. If the U.S. does not put its fiscal house in order, the reckoning will be sure and the devastation severe.
We believe that if we do not take decisive action our nation faces the most predictable economic crisis in its history. The current fiscal path we are on is simply not sustainable. Spending is rising rapidly, and revenues are failing to keep pace. As a result, the federal government is forced to borrow huge sums each year to make up the difference. In bad economic times, such borrowing might make sense in order to soften the blow of a recession. Our concern is not so much the record deficits we face today, although they do cause us real worry. Our [principal] concerns are the prospects that borrowing will remain high throughout the decade, and rise substantially as time goes on. Under a reasonable set of assumptions, our national debt will surpass 90 percent of Gross Domestic Project (GDP) by the end of the decade, a level not seen since just after World War II, and a level most economists find problematic.
Ironically, the author of the commission's plan, Bruce Reed, now sits in Joe Biden's office. That would be the Joe Biden who was put in charge of the negotiations over the remainder of the 2011 budget and promptly left town.
Bowles and Simpson also reminded the Senate that President Obama gave them a mission, they completed it and now the president is sitting idly by:
In establishing the Fiscal Commission, President Obama gave us a two-part mission: to bring the budget into primary balance (balance excluding interest costs) by 2015, and to meaningfully improve the long-run fiscal outlook. Our recommendations accomplish both of these goals through an aggressive, fair, balanced, and bipartisan proposal -- a proposal as serious as the problems we face.
The Fiscal Commission put forward a comprehensive fiscal plan that included over sixty specific recommendations for reforms of spending programs and the tax code, and many other illustrative options. The plan would achieve nearly $4 trillion in deficit reduction through 2020, more than any effort in history, by going after every sacred cow, while protecting the most vulnerable and prioritizing investments in education, infrastructure, and high value-added R&D. The plan would stabilize the debt beginning in 2014, one year earlier than the President's goal, and reduces debt to 65 percent of GDP by 2020 (and 60 percent by 2023). It cuts our deficit in half by 2015 to 2.3 percent of GDP, surpassing the goal of 3.0 percent. By 2020, our plan cuts the deficit by three-quarters to 1.2 percent of GDP. Over the long-run, the plan makes additional reforms to ensure lasting solvency for Social Security and put in place tools to control federal health care cost growth. Though long-term projections are always far less accurate than short-term ones, we estimate the commission plan would balance the budget and bring the debt down to 40 percent of GDP by 2035. To the extent our plan results in faster than projected economic growth, we could reach a balanced budget sooner.
Unfortunately, the president is now refusing to do what is required: lead. They concluded:
The American people must join us in demanding that the President and leaders of both parties in both Houses begin the honest negotiations needed to ensure enactment of a comprehensive bipartisan fiscal reform plan by year's end. The Fiscal Commission's plan can serve as the starting point; the ending point must be something equally ambitious, with broad support from both parties to ensure passage. We believe neither party can fix this problem on its own, and both parties have a responsibility to do their part. The American people are a long way ahead of the political system in recognizing that now is the time to act. We believe that far from penalizing their leaders for making the tough choices, Americans will punish politicians for backing down -- and well they should.
Republicans have made a stab at significant discretionary cuts for the 2011 budget. Rep. Paul Ryan (R- Wis.) will present a serious budget. But there is no sign, none at all, that the White House is interested in risking the ire of its liberal base. The name of the game for the White House is to make the Republicans be the bad guys and prepare for the 2012 campaign.
Bowles and Sen. Joe Manchin aren't the only Democrats dismayed by the president's inactivity. The Washington Examiner reports:
With no real compromise in sight on a 2011 budget, lawmakers are growing frustrated with President Obama, saying he failed to take a leadership role to help resolve the months-long fiscal stalemate.
"The president ought to play a much greater role," said Sen. Dianne Feinstein, D-Calif., following a closed-door meeting of the Democratic caucus Tuesday that centered on the budget. "I think the president doesn't want to be engaged in this kind of fight, and it's not right. He has to step up."
Unless Obama changes his approach, the commission's suggestions will therefore remain dormant. Unless, of course, Republicans take the Senate and the White House and carry through on their promises of fiscal restraint.
| March 9, 2011; 9:13 AM ET
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