Fiscal Commission Suffering from a Raging Case of the Stupid

Over the weekend, former Sen. Alan Simpson (R-WY) and Erskine Bowles, the co-chairmen of the president’s debt and deficit commission, spoke to the National Governors Association in Boston. During their speech, Simpson and Bowles hinted at the recommendations their group will make to Congress later this year. Despite pleas to the contrary – including during its recent public hearing – the commission seems bent on a package composed mostly of spending and entitlement cuts.

The Washington Post’s Dan Balz on the co-chairmen’s speech:

Bowles pointed to steps taken recently by the new coalition government in Britain, which also faces an acute budgetary problem, as a guide to what the commission might use in its recommendations. That would mean about three-quarters of the deficit reduction would be accomplished through spending cuts, and the remainder with additional revenue.

The story led economist Dean Baker of the Economic Policy Institute to observe, "The deficit commission refuses to talk to anyone who knows about the economy." He also disparaged the commission’s seeming fixture on wrongheaded solutions:

The commission also does not appear to be considering any measures that would challenge powerful interest groups like the pharmaceutical industry, the insurance industry, highly-paid medical specialists, or the Wall Street banks. Rather than incur the wrath of these powerful interest groups by reining in medical expenses or reducing the rents earned by Wall Street bankers, the commission seems intent on taking back Social Security and Medicare benefits for ordinary workers.

Baker is entirely right on this point. There are plenty of proposals the commission could make to help reduce deficits that wouldn’t cut Social Security or Medicare benefits, but they’re not likely to materialize from this group.

Moreover, the commission needs to quit lumping Social Security in with Medicare and Medicaid when they discuss the nation’s long-term debt problem. Rising medical costs within Medicare and Medicaid, not Social Security, make up almost our entire structural debt problem.

As economist Paul Krugman wrote a couple years ago about the Social Security trust fund, "The only way Social Security gets in trouble is if Congress votes not to honor U.S. government bonds held by Social Security. That’s not going to happen."

The commission needs to take Social Security cuts off the table, and devote attention to fiscal solutions that don’t kick the poor and working class while they’re down. Namely, addressing the massive loss of yearly revenue through tax expenditures, the immense amount spent on defense and security, and further reforms to the health care system.

 

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