Real Government Waste: 18 Months of Debt Talks
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The Fiscal Times
July 19, 2011

In late 2009, President Obama and Congress first toyed with the idea of creating a powerful commission to slash the long-term deficit and restore fiscal sanity to the nation. The Senate lost its nerve and killed the proposal, but Obama came back with an executive order creating a less influential panel to chart out a path.

What happened next tells a story of a dysfunctional federal government, unbridgeable political partisanship and missed opportunity. Over the ensuing year and a half, much energy, money and manpower was  expended to address what virtually everyone in Washington agrees is an essential task: reining in the $1.5 trillion annual deficit and finally getting a handle on runaway spending, including health care and other entitlement programs that threaten to consume most of the federal budget in the coming decade.

After meeting for 7 months,  the 18-member presidential debt commission headed by Democrat Erskine Bowles and Republican Alan Simpson overcame enormous political odds to win the support of a majority of the members in November of 2010.  They wanted to reduce the deficit by $4 trillion over a decade, but the plan was largely ignored by Obama and Congress until recently.  The president’s rebuff opened the door to nearly a dozen think tanks and politicians to devise elaborate copycat debt reduction strategies. Even Esquire Magazine weighed in with a plan of its own–but all did little more than provide background noise for the budget wrangling to come.

2010 was a wash out.  With no progress on deficit reduction and a government shutdown looming over a stalled budget deal,  two bipartisan “gangs” of lawmakers gathered early this year and struggled to craft deficit reduction plans. Like others, they knew that the real test was still to come—raising the debt ceiling    One group finally gave up in frustration and the other made headway on spending cuts but not on raising revenues.

Obama’s By-Pass Operation
President Obama and House Speaker John Boehner, R-Ohio, earlier this month met secretly to negotiate a “grand bargain” along the lines of the Bowles-Simpson plan, only to see it blown up by House Majority Leader Eric Cantor of Virginia and other conservative House Republicans.

Now, as the White House and Congress face a looming August 2 deadline to resolve their differences and raise the $14.3 trillion debt ceiling /taxonomy/term/138733, both sides have almost nothing to show for all those months of debate and negotiation.

Bowles, a former White House chief of staff under President Bill Clinton, is disappointed that Obama waited so long to embrace his commission’s recommendations – including proposals for reducing benefits for Social Security and Medicare, cutting defense and eliminating many tax breaks. He is also worried that the year will end with nothing approximating the $4 trillion in savings that his commission hammered out, including $3 of spending cuts for every $1 of tax increases.

“I am frustrated, I have seen enough, I want these guys to do something real,” Bowles told MSNBC late last week. I don’t care if it’s one part or two parts, but let’s do something that really does reduce this deficit. Let’s reduce it now, and let’s reduce it by at least $4 trillion.”

Asked whether he blamed  Obama for not endorsing and running with his commission’s recommendations right after they were unveiled last December, Bowles responded: “Look, do I wish he had signed onto it earlier, yes. But he is there now. You can see the power of the bully pulpit as he uses it now . . . The problem is that so many people are talking about [raising the debt ceiling] with just about $2 trillion of deficit reduction. That’s not a solution. That’s not going to fool our creditors.”

Both sides must share in the blame for missing what is likely to be the last real chance for a major realignment of federal spending and tax policy before the 2012 presidential election and beyond, budget and policy experts agree. Obama and the Democrats mishandled the idea of the deficit commission at a time when it could have been a bipartisan battering ram to achieve major savings and entitlement reforms Senate Republicans for their part refused to support creation of a truly powerful debt commission, and from the time they won control of the House in November 2010, Republicans have been unwilling to consider any semblance of a tax increase –even the elimination of wasteful tax breaks and loopholes.

Washington Editor and D.C. Bureau Chief Eric Pianin is a veteran journalist who has covered the federal government, congressional budget and tax issues, and national politics. He spent over 25 years at The Washington Post.