August 30, 2014

New Congressional Committee Must Put National Interest First

Members of the new Congressional Joint Committee on Deficit Reduction will have a threshold decision to make: Do they want to take their mandate seriously?

If the answer is yes, they will likely have to make decisions in the public interest that will not sit well with the party leaders who appointed them. If the answer is no, they will heighten public frustration with the political process and risk deep automatic cuts in programs many of them care about.

Which should it be?

The answer is obvious. In hard times, the national interest always tops narrow or partisan concerns. And yet, pressure on members of the committee to fiercely protect the interests of favored constituencies will be enormous. It has already begun in the form of intense lobbying of party leaders to only appoint “safe” members who are firmly opposed to compromise. 

Arrayed against this pressure is the stark reality that we can’t fund future spending commitments with today’s level of taxation. Unless someone steps up to the challenge of reconciling the competing values and needs of a diverse society, our nation will suffer the consequences -- not just within some artificial 10-year “budget window,” but for decades to come. 

Failure to confront this challenge got us into the fiscal ditch we’re in. The Joint Committee has an opportunity to change that dynamic. To do so, however, it must reach for a more ambitious goal than it has been given ($1.5 trillion of deficit reduction over 10 years) and break out of the partisan trench warfare that has come to define Washington politics. 

In many ways, the debt limit deal that established the committee seems specifically designed to avoid the two greatest fiscal challenges – entitlement and tax reform. Both were omitted from the 10-year $917 billion deficit reduction down payment and largely exempted from the automatically triggered $1.2 trillion in further deficit reduction that will lock in if the new committee fails to do its job or if its recommendations are rejected by Congress.

In other words, the nearly $2.1 trillion of deficit reduction assumed to occur as a result of the deal includes no revenue increase and only minor savings from entitlement spending. The vast majority of the deficit reduction mandated by the debt limit deal would come from discretionary spending, including defense. And even if all this comes to pass, it would be just a bit more than half the size of the $4 trillion “grand bargain” President Obama and Speaker Boehner were contemplating a few weeks ago. 

It is little wonder that the deal has been widely criticized as failing to stabilize the federal debt by the middle of the coming decade.

No bargain will be grand enough if it omits entitlement and tax reform.

The good news is that if the committee wants to do something serious, it need not start from scratch. It’s true that time is short. Recommendations are due by November 23, with an up-or-down vote in Congress by December 23. However, there are at least three bipartisan templates to guide the committee should it choose to go for the grand bargain (or be forced into it by further negative external events). These are the recommendations of the President’s National Commission on Fiscal Responsibility and Reform (Bowles-Simpson), the Bipartisan Policy Center’s Debt Reduction Task Force (Domenici-Rivlin) and the Senate’s so-called “Gang of Six” (Chambliss, Coburn, Conrad, Crapo, Durbin and Warner).

What is critically important about these proposals is that they don’t pretend there is a magic solution that will preserve everyone’s favorite programs and simultaneously cut taxes. While differing in details, they reach substantially identical conclusions about where solutions must ultimately come from.

Aside from tough constraints on discretionary programs, including defense, the bipartisan plans would limit the growth of federal health care, retirement and farm programs, and reform Social Security. They would also bring in higher revenues, mainly by flattening rates and eliminating, or greatly restricting, a wealth of exemptions, deductions and credits. 

Certainly, these proposals contain some politically difficult options. Social Security changes relating benefits to life expectancy increases, the home mortgage interest deduction, the exclusion of employer-provided health insurance and a national sales tax were all thrown into the mix. However, less controversial options -- such as cracking down on waste, fraud and abuse, raising taxes on millionaires and withdrawing troops from Iraq and Afghanistan -- are not enough to get the job done.

Maybe members of the Joint Committee will be more interested in positioning for the 2012 election than in solving problems. We’ll know soon enough by what they deem to be on or off the table. But for those who think a partisan standoff would be just fine, it might be worth asking what victory in the elections will be worth if, come 2013, the nation has plunged into a fiscal abyss.