There is No Report from the Fiscal Commission

S&L, according to this article you may have jumped the gun.

Wednesday, Nov. 10, 2010
There is no report from the fiscal commission
By Ezra Klein

Here is the most important fact about the proposal released by the co-chairmen of the National Commission on Fiscal Responsibility and Reform: It is not the commission's report. And here is the second most important fact to remember: The commission itself does not have any actual power. So what we're looking at is a discussion draft of a proposal to balance the budget authored by two people who don't have a vote in either the House or the Senate. In a town thick with proposals for balancing the budget but thin on votes for actually passing such proposals, it's not clear what the purpose of this one is.

It's worth taking a moment to consider how we got here: The fiscal commission we have is not the fiscal commission we were supposed to have. The fiscal commission we were supposed to have was the brainchild of Kent Conrad and Judd Gregg, the two senior members of the Senate Budget Committee. "The inability of the regular legislative process to meaningfully act on [the deficit] couldn't be clearer," they wrote. Their proposal would have set up a commission dominated by members of Congress and able to fast-track its consensus recommendations through the congressional process -- no delays, no amendments. But that proposal was filibustered in the Senate, mainly by Republicans who worried it would end in tax increases.

So the president stepped in and created a fiscal commission of his own. Like the Conrad-Gregg commission, it had 18 members, though fewer of them were members of Congress. Like the Conrad-Gregg commission, it would need 14 of its 18 participants to agree to report out its recommendations. But unlike the Conrad-Gregg commission, it had no actual power in Congress. If 14 members agreed on the recommendations, all that meant was that ... 14 members agreed on the recommendations. They could still be filibustered, amended -- whatever. The political logic of this seemed rather peculiar: If the fiscal commission itself could not pass Congress, how would the recommendations from an executive-branch fiscal commission pass Congress? The recommendations, after all, are where the hard stuff is.

Increasingly, the concern looks to be moot: The National Commission on Fiscal Responsibility and Reform will not get agreement from 14 of its members. It might not even get a majority. Today's release, unexpectedly, is a draft proposal from the co-chairs, and that might be as close as the commission comes to a comprehensive product. "This is not a proposal I could support," said Rep. Jan Schakowsky, one of the members. Rep. Jeb Hensarling, another participant, was less definitive, but nowhere near supportive. "Some of it I like," he said. "Some of it disturbs me. And some of it I've got to study." The full commission is expected to debate the proposal over the next week.

Reading the report makes clear why the members of Congress are so ambivalent: It cuts Social Security benefits and raises taxes. It slashes discretionary spending without sparing defense. It eliminates the employer-tax exclusion for health care and the mortgage-interest deduction, and does nothing in particular to deal with the resulting chaos in the employer-based health-insurance market or the housing market. A "yea" on this package would not be an easy vote to cast.

Substantively, my impression of the report mirrors Hensarling's: Some of it I like, some of it I don't like, and some of it I need to think more about. But the report doesn't fulfill its basic purpose, which was demonstrating enough consensus among congressional representatives of both parties to convince the public and the political system that Congress is ready to make these choices. The reality is, we don't have a congressional fiscal commission, we don't have a report from the White House's fiscal commission, and we don't have a consensus on fiscal issues between the two parties. The co-chairmen have some interesting policy ideas for how to balance the budget, but as of yet, they've not made any discernible progress on the political deadlock preventing us from balancing the budget. And it's the deadlock, not the policy questions, that they were asked to solve.

S&L, I think you will like this editorial by the New York Times.


The draft proposal by the chairmen of President Obama’s deficit-reduction commission was a welcome antidote to the low-minded debate that dominated the midterm elections, in which politicians all vowed to reduce the deficit but offered no credible plans.
The proposal, released Wednesday, comes from Erskine Bowles, formerly the chief of staff for President Bill Clinton, and Alan Simpson, the former Republican senator from Wyoming. It frankly acknowledges what most politicians are too cowardly to admit — that deficit reduction will require shared sacrifice.
It lays out sensible principles, prominent among them that deficit reduction should start gradually, beginning in 2012, to avoid disrupting the fragile economic recovery. It also affirms the need to protect the most vulnerable Americans and to invest in education, infrastructure and research and development.
Then it does what any successful deficit reduction plan must do: It puts everything on the table, including tax reform to raise revenue and cuts in spending on health care and defense. It even dares to mention the need to find significant savings in Social Security, Medicare and other mandatory programs.

In a misguided provision, it assumes that spending and revenues should not exceed 21 percent of gross domestic product — a numeric limit that could make it impossible to meet future national needs. In all, however, the proposal is both broad and deep.

It is not clear what the commission’s final report will say. It is even doubtful that this plan would garner the 14 votes from the 18-member commission that are required to send the package to Congress for a vote in December.

At a time when good ideas are depressingly scarce in the political and economic debate, and bipartisan agreement even scarcer, this is a commendable start.

Some first impressions:

TAXES The proposal includes three options for tax reform, two of which would simplify the code by reducing income tax rates while modifying or repealing many tax deductions and other tax breaks. The third calls on Congress to undertake tax reform, while putting in place automatic tax increases if it fails to act by 2013.

The sensible aim is to raise more money — roughly $1 trillion over 10 years — than under the current system. We wish the co-chairmen had come right out and said directly that the country needs to raise taxes. Instead, the proposal says coyly that the tax changes would “reduce the deficit.”

Tax simplification is a benefit in itself. A tax code that is easier to understand is also one that is more likely to be perceived as fair, without which it would be impossible to get public support for reform.

The reforms should go farther. Raising enough revenue in a global economy driven by trade, finance, services and spending will require new sources, such as energy taxes, a financial transactions tax or a value-added tax. A value-added tax that doesn’t fall most heavily on lower-income Americans could be a significant spur to growth, because it doesn’t tax savings.

THE MILITARY The Pentagon, which accounts for half of all discretionary spending, got virtually all it wanted after 9/11. Since the recession, Defense Secretary Robert Gates has cut back several dozen unneeded weapons programs for a long-term savings of $330 billion. He has called for $100 billion in administrative cuts and efficiencies over five years. But he would plow the savings into troops and weapons modernization, maintaining modest growth in overall spending.

The new proposal would go far beyond that, anticipating $100 billion in military budget cuts in 2015 alone — and would put the savings into deficit reduction.

It calls for freezing salaries and bonuses for the Pentagon’s civilian work force and noncombat military pay, cutting weapons procurement by 15 percent and slashing military personnel at bases in Europe and Asia by one-third. All ideas well worth debating.

The most politically volatile suggestion may be to tackle military health care costs, which rose from $19 billion to an unsustainable $50 billion over the last decade. The commission blueprint would raise premiums and co-payments on military retirees who now pay no premiums and very low deductibles. Many of these retirees work in the private sector but opt for much cheaper government health insurance. Their employers would be required to reimburse the government for the employer share of the retiree’s health cost, eliminating what the chairmen say is a government subsidy for a normal business expense.

SOCIAL SECURITY To ensure the system’s solvency over 75 years, the proposal would reduce benefits to most future retirees. It would also subject higher levels of income to the payroll taxes that support the program, while building in safeguards for both low-income and long-lived beneficiaries.

The cuts to middle-class benefits are too large — a function of the fact that the proposal tilts too heavily toward cuts in benefits rather than increases in revenue.

What is important is that the proposal preserves the system’s basic character and successful design: the young support the old via payroll taxes and the rich help the poor via a benefits formula that favors the neediest.

HEALTH CARE The proposals for reducing federal health care costs include some worthy ideas that are usually ducked or weakened because of political or interest-group opposition.

In some cases, the chairmen would go beyond the new health care reform law by strengthening some of the most important cost-cutting provisions that were watered down in the struggle to pass the legislation. It would strengthen a Medicare payment advisory board and cap tax exclusions for employer-sponsored plans at a lower level than the law does.

The chairmen would spread the pain in both ideological directions. They propose caps on malpractice awards that can drive up costs, which is anathema to Democratic-leaning trial lawyers, and, if costs rise faster than targets, they back the introduction of a public plan on the new insurance exchanges, which is anathema to Republicans. All of this is described so sketchily that it is hard to predict the impact.

As we read the chairmen’s proposal, we had one very strong reaction: We hoped the Republicans would pause long enough in their gleeful planning of President Obama’s final defeat, and the Democrats would stop wringing their hands, long enough to read this important document — and then act on it.

Atypical wants you to learn to read.

"The proposed recommendations are in"

It's the very first sentence.

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Yes some "recommendations" are in but no PLAN.

Quote:

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Originally Posted by Havakasha

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Yes some "recommendations" are in but no PLAN.

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Yes, I know that. So far the recommendations appear to be unpopular on both sides.