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Posted at 9:13 AM ET, 03/ 9/2011

Bowles and Simpson vs. do-nothingism

By Jennifer Rubin

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.

By Jennifer Rubin  | March 9, 2011; 9:13 AM ET
Categories:  Budget  
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Comments

What happened to discussions about not increasing the Debt Ceiling,in fact,why don't we actually lower the Debt Ceiling,in effect not allowing the Fed to "create"new funds until target reductions are met.

Posted by: rcaruth | March 9, 2011 9:38 AM | Report abuse

So what if debt is 90% of GDP in nine years? Japan is already at 225%. The voters want entitlements, and politicians will give it to them as long as they can. And that is many more decades.

Posted by: Inagua1 | March 9, 2011 9:40 AM | Report abuse

@Inagua1

Japan has been a special case and has been able to maintain a ZIRP (zero interest rate policy) for two reasons, neither of which apply to the US. First, Japan is still a net exporter so their trading partners need to exchange their currency to Yen to pay the Japanese exporters. Second, the Japanese citizens have been willing to buy their own bonds at very low interest rates. However, they are the most rapidly aging country in the world and Japanese households will become met sellers of Japanese bonds. Hence, Japanese interest costs will skyrocket and the US rates will skyrocket at an earlier debt to GDP ration than the Japanese. The conundrum is know as the Keynesian endpoint.

Posted by: RickCaird | March 9, 2011 9:55 AM | Report abuse

baraq obama works for no one but baraq obama! Everything else will be under the bus in a blink of an eye including the future prosperity of the United States of America.

Posted by: pouran-doukht | March 9, 2011 9:59 AM | Report abuse

Rick - You are of course correct. I choose the Japan example only to keep it simple. My point is the the US has literally decades to go before a true crisis is at hand. Look at the debt of the other G7 countries.

Posted by: Inagua1 | March 9, 2011 10:13 AM | Report abuse

Furthermore,since we have the Perfect monetary system,(Our Central Bank has unlimited,unrestricted authority to do whatever it wants without interference),let's not change it,consider changing it,even discuss the possibility of changing it. "If it ain't broke",but even if it is broke,it's perfect,so leave it alone. And,because,Ron Paul is "wrong"on everything else;he's wrong in trying to audit,reign in the Fed.

Posted by: rcaruth | March 9, 2011 10:18 AM | Report abuse

It wish it were many more decades, but it isn't. The Chinese could start dumping their bonds at any time. Bond prices would drop like a rock, interest rates would skyrocket, and inflation would go through the roof. It will take years, not decades. Maybe even months.

Posted by: Larry3435 | March 9, 2011 11:01 AM | Report abuse

Democrat Senator Manchin hit the nail on the head. How can the President distance himself from the debate after appointing a deficit and debt commission; present a flaccid budget; dispatch the feckless Joe Biden to negotiate (after he returns from abroad); flits about the countryside for what amounts to very expensive photo-ops; and be considered SERIOUS about the enormity of the deficit and national debt?

The answer is: we have a Poseur President. Leadership just isn't his strong suit. never was, never will be.

Posted by: TheStatistQuo | March 9, 2011 11:56 AM | Report abuse

Every time Obama has tried to lead, he gets slapped down by a senate minority misusing an arcane, destructive filibuster rule, Wall Street/Treasury Department revolving door thieves, the Chamber of Commerce, Fox News, and the Israel First establishment.

He wanted to do the right thing by putting the terrorists, unconventional fighters, and goatherders on trial and close Guantanamo but the congress shot that down.

He wanted a workable national health care program that the country needs badly and the Republican minority, bought off Democrats, and business interests screwed it up so badly that it is probably unworkable.

He wanted to do something about Wall Street raping the taxpayers but Wall Street and his own Treasury Department officials enroute to or coming from Wall Street jobs, and the Republican minority, screwed that up terribly.

In order to soften the Neocon's and Republican's, pardon the redundancy, attacks that he was soft on national security because he called for withdrawal from Iraq, he cravenly pushed to continue the war in Afghanistan.

He wanted to get the Mideast peace problems settled and offered everyone hope that it could and would be done but then he was publicly humiliated by the Israel First establishment and shown who really runs America's foreign policy.

All the bad compromises, failures, and defeats amplified and cheered on 24/7 by Fox News, an arm of the Republican Party.

So now Jennifer and those same people want Obama to get out front on spending cuts, become a Wisconsin Governor Walker, so they can scream that he wants to take away granny's social security.

As president, Obama is supposed to lead but when you can count what is stacked against you the tendency is to lick your wounds and let someone else take some licks. Unfortunately, that is what is now called democracy.

Posted by: Lazarus40 | March 9, 2011 12:28 PM | Report abuse

Lazarus: So according to you: Obama's promise to close Gitmo, his health care "reform" plan, and financial regulation proposal were rejected by a House and Senate overwhelmingly controlled by his own party; Obama continued a war in Afghanistan because he was afraid of criticism from the other party; and Obama's plans for Mideast peace were derailed by Jews and their supporters.

And this is the mark of a President who is trying to "lead"?

Leaders surmount opposition, particularly from members of their own party (you ignore the fact that the Dems had a filibuster-proof majority in the Senate for almost a year); they don't give in, whine, blame others and deny responsibility.

Posted by: paco33 | March 9, 2011 1:08 PM | Report abuse

Our only hope is that there are enough responsible grown-ups among the Democrats to work with the Republicans.

Obama reminds me of my sister-in-law a couple of years ago. As long as she had room on her credit cards and home equity line, what's the problem. Like individuals, nations eventually reach their credit limit.

We're already paying over $200 billion a year in interest at historically low interest rate levels, about 3.4%. What happens, as our debt level increases by 10% a year, if these rates go north of 7% or even 10%, as happened to the profligate European nations, such as Greece?

It's unconscionable that our political class will not address this reckless spending -- deficits exceeding 10% of GDP -- before our credit line is used up.

Posted by: eoniii | March 9, 2011 1:38 PM | Report abuse

Almost a year? The 60th vote:

".......Kennedy suffered a seizure while attending the luncheon following President Barack Obama's inauguration." (ABC News)

And then there was Holy Joe Lieberman (I-Tel Aviv), a "reliable" Democratic vote.

Do you read much?

Posted by: Lazarus40 | March 9, 2011 1:45 PM | Report abuse

Almost a year? The 60th vote:
".......Kennedy suffered a seizure while attending the luncheon following President Barack Obama's inauguration." (ABC News)

And then there was Holy Joe Lieberman (I-Tel Aviv), a "reliable" Democratic vote.

Do you read much?

Posted by: Lazarus40 | March 9, 2011 1:45 PM
----------------

Kennedy was voting until about March, 2009 and his vote to invoke cloture was needed to end the filibuster on Obama's stimulus package. Paul Kirk was appointed by Gov. Patrick to replace Kennedy on Sept. 25, 2009 and served until Scott Brown was sworn in on Jan. 20, 2010. And as far as I can tell the number of filibusters in 2009 was ZERO.

As for Lieberman's record, he voted with the Dems 90% of the time: http://projects.washingtonpost.com/congress/members/l000304/

Your ignorance is matched only by your arrogance.

Posted by: paco33 | March 9, 2011 3:04 PM | Report abuse

paco33, great post. Let's not give Lazarus a pass on his anti-Semitism either: "Joe Lieberman (I-Tel Aviv)". The disloyalty card is one of favorite ploys of the Jew hater. Always has been, always will be.

Posted by: eoniii | March 9, 2011 3:26 PM | Report abuse

Paco33: "And as far as I can tell the number of filibusters in 2009 was ZERO."

Well I count about 68 Cloture Motions filed in 2009 which doesn't count the filibusters for which there were no cloture motions filed because the leadership knew it didn't have the votes so didn't waste the time or didn't think there was political advantage to file a motion.

You really should look before you leap.

http://www.senate.gov/pagelayout/reference/cloture_motions/111.htm

Posted by: Lazarus40 | March 9, 2011 3:38 PM | Report abuse

Paco33: "And as far as I can tell the number of filibusters in 2009 was ZERO."

Well I count about 68 Cloture Motions filed in 2009 which doesn't count the filibusters for which there were no cloture motions filed because the leadership knew it didn't have the votes so didn't waste the time or didn't think there was political advantage to file a motion.

You really should look before you leap.

http://www.senate.gov/pagelayout/reference/cloture_motions/111.htm

Posted by: Lazarus40 | March 9, 2011 3:38 PM
----------------
Just remember the five D's of dodgeball: "Dodge", "Duck", "Dip", "Dive", and..."Dodge".~
Patches O Houlihan

Nice sleight of hand - we were discussing filibusters, not cloture motions and Lieberman's voting record. But what we were really discussing was Obama's inability to lead on any meaningful issue. He deferred to Pelosi and Reid on health care and the stimulus, he couldn't get any Dems to support his closure of Gitmos - at least none were willing to house any of them, he lauded the financial regulation you decry, he (according to you) decided to continue the war in Afghanistan with the accompanying casualties because he didn't want to be criticized, and the failure of his lame attempt at a Middle East peace was derailed by a Palestinian Authority that refused negotiate because Obama was more critical of Isreali building in a Jewish neighborhood of East Jerusalem that the PA had never made an issue.

These are failures of leadership. Just like Obama and the media, you can try to excuse his failures by pointing at circumstance and political opposition (which all democratic leaders face) but real leaders put themselves on the line, they move heaven and earth to get their priorities enacted, they use every device in their sizable political arsenals to convince, cajole, co-opt, compel. They get things done. They don't make lame excuses, deny and abdicate responsibility, blame others and obfuscate.

But I can see why you wanted to change the subject.

Posted by: paco33 | March 9, 2011 4:47 PM | Report abuse

In my original comment on the subject I conceded that Obama, having read the tea leaves, has basically given up getting out in front on budget matters after having suffered so many bad compromises and defeats on other matters. Many would call that a lack of leadership but many would call it politically foolish to waste what little political capital he has left in an essentially ungovernable situation.

Obama wanted the job, he got it, and he is paying the price. Republicans in their nightly prayers give thanks that McCain and Palin weren't elected because if those two had inherited the same situation and after voters' response to the Bush years, we wouldn't be able to find a Republican in office throughout the land with a magnifying glass.

Posted by: Lazarus40 | March 9, 2011 5:15 PM | Report abuse

Republicans in their nightly prayers give thanks that McCain and Palin weren't elected because if those two had inherited the same situation and after voters' response to the Bush years, we wouldn't be able to find a Republican in office throughout the land with a magnifying glass.

Posted by: Lazarus40 | March 9, 2011 5:15 PM
------------

If...if....if my bubba had baytzim....

Posted by: paco33 | March 9, 2011 9:11 PM | Report abuse

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