Last week Senate Finance Committee Chairman Max Baucus (D-Mt.) said “A debt reduction trigger could be an important part of passing legislation to reduce our debt and move our economy in a positive direction toward growth and job creation.” He spoke at a committee hearing that also included testimony from former Sen. Phil Gramm (R-Tx.), the Government Accountability Office (GAO) and the Center on Budget and Policy Priorities (CBPP).
Reflecting on his experience with the Gramm-Rudman deficit reduction legislation in the 1980s, Gramm argued that stricter enforcement mechanisms should be added if similar legislation is used to address the current fiscal crisis.
Susan Irving, director for federal budget analysis, strategic issues at GAO, said: “To change the fiscal path requires hard decisions about what government will and will not do and how it will be funded.” Irving added that “a process may facilitate the debate, but it cannot make the decision.” She concluded that process proposals can be useful in enforcing agreements, but have been less successful in forcing action before there is an agreement on the details.
Paul Van de Water, senior fellow at the CBPP raised concerns about proposals that impose arbitrary limits on spending without addressing revenues. He cautioned that such an approach could threaten the economic recovery and make deficit reduction less likely.
In an issue brief released last week, The Concord Coalition concluded that for a process proposal to have a meaningful effect on trillion dollar deficits, it should limit exemptions, consider the entire federal budget to be on the table, include realistic targets, and be accompanied by a bipartisan commitment to enforce the targets and support the specific spending and revenue policies necessary to meet them.