Deficit Commission Debated

Dec 16, 2009 | Budgets & Projections

Differing views on creating a deficit commission were aired at a Capitol Hill forum yesterday sponsored by the Cato Institute. The proposal, which is gaining bipartisan support in Congress, would create a bipartisan commission that would make recommendations to address the nation’s long-term fiscal challenges. Congress would vote on the recommendations on an expedited basis without amendments.

House Budget Committee ranking member Rep. Paul Ryan (R-WI) kicked off the discussion by stating that, while he appreciates that the calls for a commission are drawing much-need attention to confronting long-term fiscal imbalances, he prefers that Congress “do its job” and work within the regular order as opposed to a special process. Ryan expressed concerns that “outsourcing” the job to a panel would result in a missed opportunity to achieve comprehensive entitlement reform. He disputed the fundamental notion behind calls for a commission, that Congress is unable to make the difficult decisions to shift the nation’s fiscal course. The Congressman argued that entitlement reform is not unpopular with voters and presented himself as a “living example.” He has offered a detailed blueprint for an overhaul and has been reelected in a competitive district; referring to himself as “a koala bear on the third rail” to underscore his vulnerability.

He did affirm that action needs to be taken now, stating that we are consigning the next generation to a lower standard of living if we continue our present fiscal course. He went on to say that a commission “is not the worst of all ideas.” The worst idea would be to do nothing. He also said that those proposing a commission have their hearts and minds in the right place.

He concluded by asserting that some may consider a commission a “punt” while he would rather “throw a pass” towards scoring a touchdown.

Former Congressional Budget Office director Douglas Holtz-Eakin followed and offered a defense of establishing a commission and commended those pushing it. In providing an overview of the immensity of the fiscal dilemma he referenced the new report released on Monday by the Peterson-Pew Commission on Budget Reform, of which he is a member.

According to Holtz-Eakin, the most important aspect of a commission is that it could establish a fiscal goal, which would provide policymakers with a “way to say no” to costly new government initiatives. He lamented that we have lost touch with the fact that not every good idea can be funded with taxpayer’s money.

He did close with a warning: that the commission must be organized in a way that “maximizes its success.” If a commission is formed and fails to adequately alleviate the fears of creditors concerned about mounting U.S. debt, then that could bring about the economic crisis we are trying to avoid.

Dan Mitchell of the Cato Institute then proceeded to castigate the commission idea as a ruse for raising taxes and increasing the size of government.

In direct contrast to Holtz-Eakin, who argued that all members of the commission should be members of Congress in order to promote accountability, Mitchell expressed concern that the commissioners would be legislators intent on using it as a vehicle to raise taxes and enact “phony” spending reforms that would be quickly rolled back. He depicted a commission as a “stalking horse” for a value-added tax.

Chris Edwards seconded the commission critique of his Cato colleague and listed changes he thinks are needed. He said a “revolt at the ballot box” is required to get new blood in Congress committed to a sustainable budget. He also called for political reforms such as term limits for Congress, random assignments to congressional committees and a spending cap in Congress.

Congress may soon decide on establishing some form of budget commission. A bipartisan group of centrist senators is withholding support for a major increase in the debt limit in order to extract a vote on forming a commission. Congressional leaders are negotiating with the group.