The co-chairmen of the president’s debt commission, former Sen. Alan Simpson and former Clinton staffer Erskine Bowles, have released their final report, a bracing treatment of the nation’s looming fiscal crisis.
Like the draft report released three weeks ago, the final version reduces deficits by $3.8 trillion by 2020. It calls for deep cuts in domestic and military spending beginning in 2012, lowers tax rates but eliminates or reduces many popular tax deductions, cuts Medicare benefits, and gradually raises the Social Security retirement age.
Changes in the final version addressed concerns raised over the draft proposal. Those include added protections for workers who would face difficulty with the higher retirement age and greater cuts in discretionary spending.
Aside from the co-chairs, four members of the commission have endorsed the final report: Sens. Kent Conrad (D) of North Dakota and Judd Gregg (R) of New Hampshire; David Cote, the Republican chairman of Honeywell International Inc.; and Alice Rivlin, Democratic former White House budget director under President Clinton.
“This is a moment of truth,” said Senator Conrad, chairman of the Senate Budget Committee. “The nation is headed for a fiscal cliff. We have to act. This is the time for us to pull together.”
Of those who have signed on, only Conrad will remain in elective office come January, as Senator Gregg is retiring. Conrad is up for reelection in two years, but has yet to announce if he will run. Aside from Conrad and Gregg, 10 other commission members are also members of Congress, five from each party, and have the most to lose personally by signing on to the controversial plan, if they hope to remain in office.
Thus, chances of securing the supermajority – 14 out of 18 commission members – needed to send the plan on to Congress for a vote appeared slim to none, even the co-chairs admit. The commission will vote on Friday, a two-day delay from the Dec. 1 deadline as the co-chairs seek to round up votes.
One member, Rep. Jan Schakowsky (D) of Illinois, is the only firm “no” so far, but other congressional members have expressed doubts about voting “yes.” If few members of Congress on the commission sign on, that would represent a blow to the co-chairs’ hope that at the very least, they have launched an “adult conversation” about the nation’s unsustainable fiscal path.
The basic outline of the objections echoes those expressed over the draft proposal: Republicans hate the tax increases, such as those proposed for Social Security. Democrats hate the spending cuts, including those in social safety net programs.
Interest groups also fell into line swiftly and negatively.
“With this report the deficit commission once again tells working Americans to ‘drop dead,’ ” said Richard Trumka, president of the AFL-CIO. “No proposal on fiscal issues is serious that leaves the Bush tax cuts for the rich in place while raising taxes on the middle class and slashing Social Security and Medicare.”
The antitax group Americans for Tax Reform (ATR) called Wednesday’s report a “tax increase blueprint,” decrying “massive and permanent new levels of taxation.” ATR claims the plan scores out as a nine-year net tax hike of $1.1 trillion and seeks to raise the federal tax burden permanently to 21 percent of GDP.
Numerous groups have put out competing debt-reduction plans, which could signal a continuing national conversation about the nation’s fiscal future, even if the debt commission doesn’t get its 14-vote endorsement. But as long as Americans don’t feel the effects of inaction, it will be a politically tough slog to convince them to sacrifice in the name of a “looming fiscal crisis” that has long been forecast, analysts say.
At a press conference Tuesday, commission co-chair Mr. Bowles nevertheless expressed confidence that “deep down, the American people get it; the American people know this is the moment of truth.”
If nothing else, the report’s description of the looming crisis is a sobering read. Since the last time the federal budget was balanced, in 2001, the debt has risen from 33 percent of GDP to 62 percent in 2010, the report says. The economic downturn, two wars, and “fiscally irresponsible policies” by both parties are largely to blame, it says.
An economic recovery won’t eliminate the need to keep borrowing money, and according to Congressional Budget Office projections, if the nation proceeds on its current path, deficits will remain high and the debt will keep spiraling, reaching 90 percent of GDP in 2020, according to the report.
“Federal debt this high is unsustainable,” the report says.
At a recent Monitor breakfast, the commission’s two co-chairs, former Senator Simpson (R) of Wyoming and Bowles, former Clinton White House chief of staff, were asked to describe in vivid terms what a debt crisis would look like.
“Let me tell you,” said former Senator Simpson. “It won’t be the old slippery slope ... that we read about. It will be very swift. It will be very swift and very dramatic like in Greece or Ireland or Portugal or Spain.”
“I don’t know where this is going, but I’ll tell you, it won’t take long,” Simpson continued. “It won’t be a year to prepare to – it will be ‘whoosh,’ like that.”