Today’s Washington Post contains a very welcome front-page headline, “Obama Pledges Entitlement Reform.” The article explains that President-elect Obama plans to convene a fiscal responsibility summit in February. According to the Post story:
President-elect Barack Obama pledged yesterday to shape a new Social Security and Medicare "bargain" with the American people, saying that the nation's long-term economic recovery cannot be attained unless the government finally gets control over its most costly entitlement programs.
That discussion will begin next month, Obama said, when he convenes a "fiscal responsibility summit" before delivering his first budget to Congress. He said his administration will begin confronting the issues of entitlement reform and long-term budget deficits soon after it jump-starts job growth and the stock market.
"What we have done is kicked this can down the road. We are now at the end of the road and are not in a position to kick it any further," he said. "We have to signal seriousness in this by making sure some of the hard decisions are made under my watch, not someone else's."
Details are yet to come, but this strikes me as a very positive development and very consistent with the message of the Fiscal Wake-Up Tour. My enthusiasm for the idea is reflected in comments I made to The Note yesterday afternoon when I first heard about it.
President-elect Obama's attention to the nation’s unsustainable fiscal policy is particularly timely given the current climate where deficit-financed spending has been relied on to bolster the economy. The federal deficit could surpass $1.5 trillion this year and remain above $1 trillion next year. Right now, there is no “exit strategy” to get us back to a more sustainable path. It is thus crucial for Obama and the new Congress to find policy solutions addressing the longer-term fiscal challenges of rising health care costs and an aging population--so that persistent deficits of this year’s magnitude beyond recovery from the recession are avoided. Attention to sustainability over the longer-term outlook is the appropriate counterbalance to the immediate borrowing needs during this economic downturn.
To be clear, one fiscal responsibility summit is not going to solve all the problems. It would, however, be a good first step.
As for next steps, that will depend on President Obama’s determination to put in place a process leading to action. In other words, the summit should not be a one-and-done event. Since the regular legislative process has been incapable of dealing with the impending fiscal crisis, some have suggested that a new bipartisan commission be appointed. This could be a useful mechanism to break the gridlock, but only if it recognizes fiscal and political realities. In fact, the same can be said for the summit itself. The process must be truly bipartisan and have a broad mandate to examine all aspects of fiscal policy -- without preconditions. Public engagement is also critical, as Congress found out last fall when the original TARP bill met with so much hostility (an effect that still lingers). Finally, the process Obama and Congress ultimately agree to should include a commitment for legislative action. The last thing Washington needs is another Commission to nowhere.
The Concord Coalition has published, testified and held events discussing such commissions over the years. If you would like to review these materials, you can visit our "Fiscal Commissions" page.
In any event, with or without a commission, The Concord Coalition applauds President-Elect Obama’s call for a fiscal responsibility summit. As we say on the Fiscal Wake-Up Tour, this is not just about numbers. It's a moral issue about the legacy we're leaving to future generations,