The Debt Commission Report, formally The National Commission on Fiscal Responsibility and Reform, has been subject to a lot of derision on the left. It has been seen as a waste of time at best, or an attack on Democratic core principles at the worst. So much so, that many started calling it the Catfood Commission.
The President created this commission after a Republican backed Congressional commission failed when the President indicated his support for such a measure. So, the President created it himself and put it to work to find a way to seriously look at the budget and make recommendations on how to reign in the nation’s huge budget deficits in the short, medium, and long term. It was stocked with 18 members, requiring a super-majority of 14 votes to approve of any recommendations. This is why I would argue that the commission was created to work through the process but to ultimately fail. Hopefully, creating a serious look at what might be done to improve the nation’s finances.
Now, I haven’t really seen any real discussion on the debt commission after it failed to reach a consensus. So, here is my attempt to go through the entire text. So, to start with, here is a link to the report for your own review:
So, to start at the beginning:
The Preamble is basically the same lead up that we have heard from politicians on both sides in Washington lately, mostly a little over dramatic, but calls to action no doubt.
Here’s a passage from the Preamble, I’m going to attempt to use when going through the report:
In the weeks and months to come, countless advocacy groups and special interests will try mightily through expensive, dramatic, and heart-wrenching media assaults to exempt themselves from shared sacrifice and common purpose. The national interest, not special interests, must prevail. We urge leaders and citizens with principled concerns about any of our recommendations to follow what we call the Becerra Rule: Don’t shoot down an idea without offering a better idea in its place.(emphasis mine)
I will try to make my own recommendation when shooting down any idea that is presented here.
This section talks about how we got into this situation. It talks about our history and how our debt level has never been higher. So, it’s imperative that we take action now.
This section just describes how they plan to meet the President’s goal to have a balanced budget by 2015. It lays out good goals, hopefully the rest of the report live up to what their aspirations are.
Think of this section as the executive summary. This where where they put their six-part plan.
1. Achieve nearly $4 trillion in deficit reduction through 2020, more than any effort in the nation’s history.
2. Reduce the deficit to 2.3% of GDP by 2015 (2.4% excluding Social Security reform), exceeding President’s goal of primary balance (about 3% of GDP).
3. Sharply reduce tax rates, abolish the AMT, and cut backdoor spending in the tax code.
4. Cap revenue at 21% of GDP and get spending below 22% and eventually to 21%.
5. Ensure lasting Social Security solvency, prevent the projected 22% cuts to come in 2037, reduce elderly poverty, and distribute the burden fairly.
6. Stabilize debt by 2014 and reduce debt to 60% of GDP by 2023 and 40% by 2035.
There is a graph in this section and looking at it, the results of this plan do not seem realistic but I don’t have the data that they had.
The plan has 6 major components:
1) Discretionary Spending Cuts: Enact tough discretionary spending caps to force budget discipline in Congress. Include enforcement mechanisms to give the limits real teeth. Make significant cuts in both security and non-security spending by cutting low-priority programs and streamlining government operations. Offer over $50 billion in immediate cuts to lead by example, and provide $200 billion in illustrative 2015 savings.
2) Comprehensive Tax Reform: Sharply reduce rates, broaden the base, simplify the tax code, and reduce the deficit by reducing the many “tax expenditures”-another name for spending through the tax code. Reform corporate taxes to make America more competitive, and cap revenue to avoid excessive taxation.
3) Health Care Cost Containment: Replace the phantom savings from scheduled Medicare reimbursement cuts that will never materialize and from a new long-term care program that is unsustainable with real, common-sense reforms to physician payments, cost-sharing, malpractice law, prescription drug costs, government-subsidized medical education, and other sources. Institute additional long-term measures to bring down spending growth.
4) Mandatory Savings: Cut agriculture subsidies and modernize military and civil service retirement systems, while reforming student loan programs and putting the Pension Benefit Guarantee Corporation on a sustainable path.
5) Social Security Reforms to Ensure Long-Term Solvency and Reduce Poverty: Ensure sustainable solvency for the next 75 years while reducing poverty among seniors. Reform Social Security for its own sake, and not for deficit reduction.
6) Process Changes: Reform the budget process to ensure the debt remains on a stable path, spending stays under control, inflation is measured accurately, and taxpayer dollars go where they belong.
I’ll discuss the merits of each when we get to the detail sections.
Discretionary Spending Cuts
RECOMMENDATION 1.1: CAP DISCRETIONARY SPENDING THROUGH 2020. Hold spending in 2012 equal to or lower than spending in 2011, and return spending to pre-crisis 2008 levels in real terms in 2013. Limit future spending growth to half the projected inflation rate through 2020.
Now, discretionary spending caps starting in 2012 aren’t necessarily a bad idea. The major problem I see in this report is that there aren’t any suggestions as to where to cut spending. This commission was set up to make the hard choices, to go line by line. All they suggest in this section is broad pronouncements that we basically get to 2008 spending levels by 2013 and limit spending increases to half of inflation through 2020. Where is this money coming from? It would have been more helpful to at the very least give dollar amount on the agencies if they cannot go through program by program.
RECOMMENDATION 1.2: CUT BOTH SECURITY AND NON-SECURITY SPENDING. Establish firewall between the two categories through 2015, and require equal percentage cuts from both sides.
Again, the commission doesn’t give specifics on security spending cuts, but I am in favor a spending cuts. Now, I don’t think we can cut ourselves off from the rest of the world. I think it would be in our interest to withdraw our forces to the western hemisphere. I would leave our base in Germany until we wound down the 2 wars, but then I would close that one too. We should at least cut spending 25%. The commission basically says to separate security spending from other discretionary spending an make percentage for percentage cuts in both.
RECOMMENDATION 1.3: ENFORCE CAPS THROUGH TWO MECHANISMS — POINT OF ORDER AND ABATEMENT. Require a separate non-amendable vote in House and 60-vote point of order in Senate to spend above the caps. If caps are exceeded, impose across-the-board abatement by the amount appropriations exceed the caps.
This is basically how both Houses operate now. The only difference this would require it just to spend above the cap. I think this is a good idea to make Congress at least think about spending before doing it.
Update: I can’t believe I missed this (h/t John Allen) the first time, but defunding one program to start another, just to stay under a arbitrary cap, seems downright dangerous. As long as the Congress follows PAYGO rules, any new program should be fine.
RECOMMENDATION 1.4: REQUIRE THE PRESIDENT TO PROPOSE ANNUAL LIMITS FOR WAR SPENDING. Create a separate category for Overseas Contingency Operations (OCO).
First of all, I hate that term Overseas Contingency Operations, who talks like that. Secondly, I don’t think this is a feasible solution to war scenarios. What I do think is that the President should have a 3rd party give yearly projections on the cost of the war to be adjusted quarterly and presented to Congress. This way we don’t get the situation that was presented before the current Iraq war, where costs were widely lowballed and Congress was misled by the Bush Administration.
RECOMMENDATION 1.5: ESTABLISH A DISASTER FUND TO BUDGET HONESTLY FOR CATASTROPHES.
This is a no brainer. We should plan for disasters since they happen a lot of the time. I think what ever is left over at the end of the year should go directly to pay off the national debt.
RECOMMENDATION 1.6: STOP THE ABUSE OF EMERGENCY SPENDING.
Here’s basically their proposal in this area, I think it’s a good idea to increase accountability and transparency.
Congress should codify a strict, clear legal definition of emergency, such as the one used by the Office of Management and Budget. Both houses should only use the emergency designation to address urgent needs for costs that cannot be reasonably offset. Further, Congress should designate each emergency provision individually and discontinue the practice of using global designations. In the Senate, an emergency designation would be in order only if (1) the proposed cost is certified as an emergency by the Senate Budget Committee, pursuant to this definition; and (2) a point of order against the designation, if raised on the Senate floor, is waived by at least a three-fifths majority. The House would require designation either from the Budget Committee or through a separate, non-amendable vote.
RECOMMENDATION 1.7: FULLY FUND THE TRANSPORTATION TRUST FUND INSTEAD OF RELYING ON DEFICIT SPENDING. Dedicate a 15-cent per gallon increase in the gas tax to transportation funding, and limit spending if necessary to match the revenues the trust fund collects each year.
This is a great idea and is similar to the President’s idea of an Infrastructure Bank. Also, on the plus side increasing the cost of gasoline could lead to more development of alternative fuels.
RECOMMENDATION 1.8: UNLEASH AGENCIES TO BEGIN IDENTIFYING SAVINGS.
The President has already done this, so check this off the list.
RECOMMENDATION 1.9: ESTABLISH CUT-AND-INVEST COMMITTEE TO CUT LOW-PRIORITY SPENDING, INCREASE HIGH-PRIORITY INVESTMENT, AND CONSOLIDATE DUPLICATIVE FEDERAL PROGRAMS.
Duplication should definitely be eliminated, but the rest of this section doesn’t seem to tread any new ground that was discussed in the previous section.
RECOMMENDATION 1.10: ADOPT IMMEDIATE REFORMS TO REDUCE SPENDING AND MAKE THE FEDERAL GOVERNMENT MORE EFFICIENT.
This section gives specific recommendations on cuts, the first for this report. They are mostly good ideas, to cut the normal costs of doing business in Washington. They do fall into the trap of earmarks, though. Earmarks are just designating money already being spent on specific projects, these aren’t new money projects being added tot he budget, it’s a red herring.
RECOMMENDATION 1.11: FIND ADDITIONAL CUTS IN SECURITY AND NON-SECURITY SPENDING.
Apparently, they leave it up to Congress to find the cuts, but there is mention of a list of recommended cuts. There no list attached to the report, there may be some on the commission’s website.
Here’s the website:
I couldn’t find the list that was referenced in Recommendation 1.11
So, you can see why I decided to break this into parts. I’m hoping to have the next section done by the end of the week.