A First Step Toward Fiscal Responsibility
Monday, January 26, 2009
Congress should establish a bipartisan commission to address our long-term fiscal imbalance.
President Obama has signaled his intention to focus on one of America’s most intractable problems: the long-run imbalance between federal revenue and federal entitlement spending. Noting that “we have kicked this can down the road,” Obama declared, “We are now at the end of the road.” He expressed a determination to see that “some of the hard decisions are made under my watch,” and announced plans to hold a “fiscal responsibility summit” early next month.
We congratulate President Obama for committing to tackle this issue. But the problem calls for more than just a summit. Rather than merely acknowledging the problem, Washington must move toward real and responsible action. While setting a pathway toward reform does not guarantee meaningful results, it may be the best possible first step. Congress should establish a bipartisan commission that would recommend legislation to narrow the fiscal imbalance, which Congress would then be required to approve or reject.
The economic stimulus bill now moving through Congress will add nearly $1 trillion to the federal debt over the next few years, burdening future generations and jeopardizing our prospects for long-run economic growth. Given that long-term cost-saving measures are unlikely to be included in the legislation, the next best way for Congress to signal its commitment to fiscal responsibility is to create a commission as part of the stimulus package. Unfortunately, House Democrats rejected one commission proposal offered in the Appropriations Committee earlier this week. However, President Obama still has an opportunity to move beyond the summit approach and encourage Congress to include a commission in the final stimulus legislation.
Both entitlement spending and taxes should be on the table.
In designing the commission, a few principles should be paramount. The commission’s purpose should be action, not research: it should present a concrete plan to narrow the fiscal imbalance, not add to the already voluminous set of studies documenting and describing the problem. And it should pursue solutions with bipartisan support, for neither party can solve this problem alone.
With these principles in mind, we offer a few guidelines to consider in designing the commission. Our ideas are similar in intent to proposals offered in the last Congress by the chairman and ranking member of the Senate Budget Committee, Senators Kent Conrad (D-ND) and Judd Gregg (R-NH), and by Congressmen Jim Cooper (D-TN) and Frank Wolf (R-VA).
First, the commission should convene promptly and present its proposals before the end of the year, so that there is ample time to consider these proposals during the 111th Congress.
Second, the voting members of the commission should consist solely of members of Congress, with the president appointing non-voting members. Of course, there should be ample opportunity for analysts, actuaries, economists, and other policy experts to contribute their thoughts. But the final recommendations must be adopted by the politicians themselves.
Third, Democrats and Republicans should be represented equally on the commission. It would require a leap of faith for the majority party to cede control in such a bipartisan manner. But only a true bipartisan commission would feel empowered to make hard choices and explore all options.
Fourth, both entitlement spending and taxes should be on the table. Personally, we would like to see entitlement restraint drive the solution, but any politically viable plan is likely to include items from both sides of the ledger. Imposing any restriction on the options that the commission could consider would doom it to failure.
No one can guarantee that such a commission would produce results. Its members might not be able to agree on recommendations. Even if they did agree, those recommendations might not pass Congress and become law. Some bipartisan commissions have succeeded: one cleared the way for a Social Security compromise in 1983, and another worked out the details of military base closings after the Cold War ended. Unfortunately, many others have failed.
In the end, a commission is no substitute for the political will to make hard decisions. But now is a propitious moment to summon that will. Record deficits have grabbed the public’s attention, the recession is making plain the costs of past excesses, and a new president has committed his formidable political capital to address this issue.
Can we finally take action to narrow the looming fiscal imbalance? With bipartisan cooperation and strong leadership from both ends of Pennsylvania Avenue, yes, we can.
Alex Brill is a research fellow and Alan D. Viard is a resident scholar at the American Enterprise Institute.
Image by Darren Wamboldt/Bergman Group.