October 21, 2014

A fiscal commission: liberal or conservative plot?

It’s a little amusing to see how badly the idea of a bipartisan fiscal commission has frightened some partisans at both ends of the political spectrum. That alone indicates the idea may have merit.

Some skeptics, of course, doubt that a special bipartisan panel would have any hope of success in steering the government onto a more responsible fiscal course. And there’s no question that this would be a very tough assignment.

But the strident opposition to a bipartisan commission from some critics on both the right and the left is rooted in fears that such a panel might actually succeed. They describe commission proposals in conspiratorial terms, as though serious bipartisan planning for the nation’s future would be merely a cover for shady plots to sneak reprehensible policies past Congress and the American public. Oh, the deceit of it all...

The Wall Street Journal, for example, recently ran an editorial conceding that “current federal commitments are unsustainable, starting with $37 trillion in unfunded Medicare liabilities.”

Yet the editorial ruled out a bipartisan commission that could tackle this problem as “nothing more than a time-tested ploy” to raise taxes: “We only hope Republicans aren’t foolish enough to fall down this trap door, though some are already tempted.”

If this is a trap for Republicans, however, it should be noted that some Republicans are helping to design it. Both of the major legislative proposals for a special commission or “task force” have GOP co-sponsors and supporters.

The Senate Republican leader, Mitch McConnell, also wants to make sure tax increases stay off the table. But this would either derail the commission plan immediately or guarantee its eventual failure because it obviously invites Democrats to demand their own preconditions.

On the left, Dean Baker, co-director of the Center for Economic Policy and Research, denounces the commission idea and finds it “especially troubling” because it would “place major cuts in Social Security on the table.”

Social Security, however, is clearly part of the government’s long-term fiscal problems. That isn’t some right-wing fantasy; the Social Security and Medicare trustees themselves note in their 2009 annual report: “The financial difficulties facing Social Security and Medicare pose serious challenges. Projected long run program costs are not sustainable under current program parameters.”

The trustees’ language seems clear enough. Yet a fiscal commission shouldn’t be allowed to even consider trimming entitlement benefits for, say, wealthy retirees?

Baker even goes so far as to argue that any cuts in Social Security benefits would “amount to an effective default on a portion of the national debt.” That’s quite a stretch.

Nobody, after all, refers to Social Security checks as “loan repayments” because, well, they aren’t. They are government benefits that have been adjusted in the past and can be adjusted in the future.

Some people also fret that the commission process could succeed in producing so much speedy deficit reduction that it could jeopardize the economic recovery. But, the commission plans call for recommendations to go to Congress late in the year, not next week. If the economic recovery falters this year, the commission could obviously take that into account as its work progressed.

In any case, the commission’s primary assignment would be repairing the long-term structural problems in the federal budget. That process, by its very nature, would be a gradual one.

So we’re confronted with a curious pair of conspiracy theories about the commission idea: It is either a dastardly liberal plot to raise taxes or a nefarious conservative scheme to devastate Social Security and Medicare that might also drag the struggling U.S. economy back under water. And the critics on both sides fear that whoever represents them -- on the bipartisan panel as well as in Congress – would somehow be tricked into terrible decisions. 

Kent Conrad, chairman of the Senate budget committee and a co-sponsor of the Senate legislation, summed up the situation well in challenging The Journal’s editorial:

“If both sides continue to draw lines in the sand, with those on the left arguing there is no crisis in Social Security and Medicare, and those on the right arguing no changes are needed in revenues, the country's debt will continue to soar.”

The status quo obviously isn’t working. It’s time for a new approach.