Best-Laid Plans

A new bipartisan deficit commission offers yet another plan to reduce the debt. What makes this one different?

Alice Rivlin and Pete Domenici

While there may be a growing deficit, there’s certainly no deficit of deficit commissions. The co-chairs of the president’s commission unveiled a preliminary plan last week, as did the Peterson-Pew Commission on Budget Reform. Rep. Jan Schakowsky announced her own plan Tuesday. And on Wednesday, the Bipartisan Policy Center’s deficit reduction “task force,” led by former Sen. Pete Domenici and former White House budget director Alice Rivlin, added its plan to the pile. What all these plans have in common is that none of them brings deficit reduction any closer to reality.

The president’s commission, co-chaired by former Clinton adviser Erskine Bowles and former Republican Sen. Alan Simpson, offered a painful mix of spending cuts and tax hikes but doesn’t have the authority to bind Congress. Schakowsky’s plan, which focuses mostly on tax hikes and cuts to the military, is just that: Schakowsky’s plan. And while the Rivlin-Domenici task force (Rivlin is also on the presidential task force) presents some original ideas, it doesn’t have a single member who currently holds elective office.

“We all know we’ve talked about this problem for long enough,” said former Sen. Tom Daschle in his introductory remarks at the rollout at the Newseum in Washington, D.C., on Wednesday. “It’s time for action. … The choices will not be easy. But it can be done, as this task force shows.” Not really. What the task force shows is that 19 business leaders and former politicians without much stake in outcomes can agree on a hypothetical plan. Just because they can doesn’t mean Congress can.

The key to deficit reduction is finding the right balance of goodies for each side—a tax hike for you, a spending cut for you, and so on. The Rivlin-Domenici plan would start with a $650 billion stimulus in the form of a one-year payroll tax holiday. It would then impose a five-year freeze on discretionary spending and simplify the tax code, including reducing the corporate tax rate from 35 percent to 27 percent and imposing a 6.5 percent sales tax. Another chunk of savings would come from capping Medicare benefits, scrapping the tax exclusion on employer-provided health care, getting rid of the “doc fix,” and implementing tort reform. And instead of raising the retirement age, the plan would incentivize people to keep working by paying out greater benefits if they retire later.

All of which seem like perfectly sound policy ideas. They avoid the regressive tax structure of the Simpson-Bowles plan yet acknowledge that not all savings can come from raising taxes, as Schakowsky largely proposes. The problem is in the process. Members of the committee kept reiterating that Congress and the president would have to show “leadership.” “This can be solved by bipartisan input if leaders want to,” said Domenici. “And if they decide it’s better to save the country instead of saving their political future.” Rivlin emphasized that President Obama needs to make deficit reduction a priority.

Frank Keating, a commission member and former Republican governor of Oklahoma, made a perfectly reasonable statement that highlighted why the plan is unlikely to become law. “This is a consensus document, but that doesn’t mean we all agree on every bit,” he said, adding: “For me as a conservative, I didn’t win every battle, but much of this is excellent public policy.” It’s hard to imagine the same statement coming from a current Republican member of Congress.

Rivlin has been here before. “Lest you feel too hopeless, I’m older than you guys, and I was around the last time we balanced the budget,” she told a group of reporters. “That was very contentious. We did raise taxes and held the line on spending for a very long time.” This fight will be a lot tougher than 1995, though. Back then, all Congress needed to do was bring annual revenue in line with annual spending. But now long-term deficit growth is baked into the cake. Even if Congress doesn’t touch Medicare or Social Security, the debt will rise.

Education is a major component of any solution, said Rivlin. “Maybe now that we’ve had an election very focused on the debt and deficit problem, the public will begin to understand how serious this is,” she said. It’s true, candidates talked a lot about deficit reduction in 2010—but only in the vaguest terms. Few uttered specifics about how to reduce the deficit, lest their opponent use their words against them. Plus, many Americans seem to want deficit reduction but not any reduction in entitlements—hence the famous refrain, “Get your government hands off my Medicare.” Deficit reduction, while popular in general terms, is unpopular in its specifics.

What will it take to get politicians to risk their political futures for their country’s future? Judging by Domenici’s words, the answer is fear. “The American people face a quiet killer that is eating away at the foundation of America,” he said. “This is a quiet killer that will eat us alive.” Americans just have to start caring enough to make politicians think that if they don’t try to cut the deficit, it will eat their political careers, too.

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