Cutting the federal deficit is a politically thankless task. The pain—lower spending or raising taxes—is immediate and obvious, particularly to those on the losing end of such policies. The gain—reduced drag on the economy—is distant and difficult to discern (since it is mainly the avoidance of bad consequences, which perhaps would not have occurred even without legislation to balance the books). Can a bipartisan fiscal commission make deficit reduction policies stick when Congress cannot? Don’t bet on it.
One can point to a host of reasons why a new commission is likely to fail. Commissions are often the dumping ground for issues that have no easy solution, and commission recommendations are more often ignored than acted upon. A fiscal commission set to report after the next election with recommendations that are purely advisory seems designed to fail. But even parliamentary tricks intended to force Congress to accept hard actions do not prevent later legislation that undoes the well-intentioned work of the commission. Without strong popular support for deficit reduction, it will not happen.
Budget apocalypse has (so far) remained a distant and, for many, a theoretical threat that can be overlooked while taking care of more immediate needs. It is even harder to make a convincing case for stringency when the policy message coming from the White House seems contradictory: deficit reduction and stimulus? The average voter, not schooled in the complexities of macroeconomics or the sophistries of policymaking, is likely to think that jobs now is the only important goal.
The good news is that we are at least talking about the growing economic threat of federal deficits. The first step in solving a problem is admitting we have one. But taking another drink of federal spending (in the form of a massive new entitlement to subsidize health insurance) is a step away from the fiscal cure.
Yes, the Congressional Budget Office scored the Democratic health bills as reducing the deficit. But that is cold comfort. The savings estimated by CBO will only materialize in the world they have imagined, and the real world is a messier and more complex place. No analyst has a crystal ball. Economic models oversimplify the reactions of people and firms to proposed legislation—in this case, hundreds of intersecting policies that would only be fully specified through regulations issued over the course of years. The budget savings estimated by CBO are far from money in the bank.
The health bills may have been designed to produce long-term savings, as Henry Aaron states. The Titanic was designed to be unsinkable, too. How odd to argue for fiscal stringency by citing legislation that would have created a new trillion-dollar entitlement.
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Joseph Antos is the Wilson H. Taylor Scholar in Health Care and Retirement Policy at the American Enterprise Institute