The debt commission: Bowles and Simpson point to the political solution
At a Monitor breakfast with reporters, the chairmen of the presidential debt commission say that lawmakers will finally cut the deficit either because of a crisis or because they're listening to one another. Let's hope it is the latter.
Sometimes the Monitor hosts a newsmaker breakfast that is so meaty and of such national import that all Americans – and not just invited reporters – ought to be able to see it. Today’s eggs-and-bacon offering, with “presidential debt commission” chairmen Erskine Bowles and Alan Simpson, was such a breakfast.
You can view the whole thing below, but what stood out was the two men’s views on how to solve the politics of the deficit and debt problem.
Budget and finance experts can calculate various solutions, as have the two chairmen in a hard-nosed draft released last week. But in the end, it is politicians who must finally pick up the deficit and debt “stink bomb,” as Republican co-chair Simpson calls it.
What will bring them to do that?
The newly elected Congress is more polarized than the last. Many conservative Democrats lost, while tea-party-backed candidates won. Compromise seems further away than ever, especially if lawmakers choose to focus on the next elections instead of the dire warnings about this debt ruining the economy.
Then there are the radioactive elements of budget cutting itself. Everyone wants to reduce the debt, but not if it hits their wallet or particular political interest.
The Bowles-Simpson draft, which is being debated by the 18-member commission, would substantially reduce the deficit, cutting almost $4 trillion between 2012 and 2020. Three-quarters of that would be spending cuts, and a quarter, tax readjustments.
That’s a sensible proportion and the sacrifice is evenly spread. Except for the truly disadvantaged, pretty much everyone’s wallet gets hit.
But so far, Americans don’t like that.
A new Wall Street Journal/NBC News poll shows big majorities opposed to the draft report's suggested changes to Social Security, Medicare, defense spending, and taxes. The draft suggests killing off tax deductions, including the popular ones for mortgage interest and charitable contributions.
But Mr. Bowles suggests a constructive way to view this dire step.
Think of tax deductions as earmarks, hidden pork that does not necessarily accomplish its intended purpose. These “earmarks” of the tax code, however, cost the nation $1 trillion a year; the normal earmarks done by Congress cost only $16 billion.
The draft does not take away without offering something in return: a lowering of income tax rates. Meanwhile, America would again become attractive to businesses by lowering the corporate tax rate from 35 to 26 percent.
The two chairmen – Democrat Bowles, former chief of staff to President Clinton; Mr. Simpson, a former Republican senator from Wyoming – said that the political will to tackle the deficit and debt could be prompted by a crisis, or by lawmakers listening to one another.
Simpson pointed to this spring, when Congress will face a vote on raising the national debt ceiling in order to keep funding the government. Conservatives will refuse to raise the limit, and demand cuts. Other lawmakers will refuse. The government might shut down.
“They’re gonna sweat bullets,” said Simpson. That’s good because then they might reach for the commission’s ideas.
Beyond that, lies the unknown day of crisis when the global financial markets decide the US can no longer afford to pay its debt – just like markets pulled the plug on Greece last spring, and with Ireland now.
The crisis would develop swiftly, and so would the damage. The cost of borrowing would skyrocket, businesses would not be able to function, roads would not get built, entitlement benefits would not get paid.
That can be avoided, insisted Bowles, if lawmakers start to listen to one another and build trust. He’s seen that happen among the 18 members of the commission, 12 of whom are members of Congress. “We spent eight months building trust,” said Bowles. “There is common ground there.” If Washington decides it wants to come together over this problem, “it’s doable.” Still, as of now, sharp differences divide the commission, although they have until Dec. 1 to vote on the report.
Listening and compromise is the preferred way to solve the nation’s debt woes. And the lawmakers who are on the commission can start by sharing in Congress what they’ve learned. They can spread trust. Indeed, three of the Republican commission members will soon head important committees in the House, where spending bills originate.
As Simpson said, whether lawmakers on the commission agree now or not, “they know the figures.... Instead of appetite and ambition, you will have sown the seeds of wisdom and knowledge.”