The ghost of the Bowles-Simpson commission and the specter of another lost opportunity for a major deficit reduction deal are hanging over the congressional Super Committee. On Monday, the committee formally threw in the towel and declared an irreconcilable impasse between Republicans and Democrats over drafting a long-term deficit reduction plan.
Just a year ago, Obama’s bipartisan fiscal commission, headed by Democrat Erskine Bowles and Republican Alan Simpson, defied naysayers by forging a major $4 trillion deficit reduction plan. Their proposal: $3 in cuts to government services, defense and entitlement programs – including Social Security, Medicare and Medicaid – for every $1 of new tax revenue gained by eliminating loopholes. The Simpson-Bowles commission served as a guidepost to the White House, lawmakers and budget and tax policy experts in seeking a long-term deal.
But President Obama’s refusal to get behind his commission’s plan in a timely fashion led to the debt ceiling debacle last summer and the sorry and ultimately unsuccessful deliberations of the 12-member Super Committee. The Simpson-Bowles exercise in futility threw a spotlight on unbridgeable differences between the two parties over taxes and reform of federal health care and retirement programs. That spotlight lit a fire during the Super Committee negotiations, and no one could douse it.
Still, many on both sides of the aisle are saying that no deal is better than a bad deal. Indeed, the political agendas of both parties may benefit by passing up a compromise and allowing automatic spending cuts to take effect beginning in 2013 that will achieve $1.2 trillion of savings by equally cutting defense and many domestic programs. Liberal Democrats can cheer that Congress has put off for more than a year major decisions on government spending cuts, which could retard the painfully slow economic recovery, and conservative Republicans can boast that they stood up to Democratic efforts to raise taxes.
Yet twice now, the two parties have missed an opportunity for a “Grand Bargain” of deficit reduction, which is the only way to close the huge gap in spending and revenues and avert a European style debt crisis down the road. The first time was last summer when House Speaker John Boehner, R-Ohio, abruptly pulled out of secret talks with President Obama claiming the president “moved the goal posts” on revenues from an agreed $800 billion to $1.2 trillion. The second time was over the Veterans Day weekend. When Super Committee Democrats made an offer to Republicans to raise taxes and cut spending -- including as much as $500 billion of savings in health care programs, higher Medicare premiums for high-income beneficiaries and use of a less generous measure of inflation that would reduce annual cost of living adjustments in Social Security benefits – Republicans once again rejected the proposal.
“I think they [the Super Committee] just had a unique opportunity with extraordinary powers and the chance to solve the problem rather than just kick it down the road…. Unfortunately they didn’t do it,” Alice Rivlin, the former Clinton White House Budget chief who served on the Bowles-Simpson commission, said. “It’s the basic polarization over entitlement and taxes. They had to do both and they couldn’t get to agreement unless they did both.”
Richard Kogan , a senior fellow at the liberal-leaning Center on Budget and Policy Priorities, said that if the Republicans couldn’t embrace Super Committee Democrats’ Veterans Day proposal, there is no way the GOP would go along with the proposals of Bowles-Simpson, the Senate “Gang of Six,” the Bipartisan Policy Center plan drafted by Rivlin and former Republican senator Pete V. Domenici of New Mexico, or other centrist proposals.
“This is the nature of American democracy through much of its recorded history,” Kogan told The Fiscal Times. “The founding fathers set up a system that makes it really hard to pass legislation. And this recent go round has simply demonstrated that more or less eternal truth.”
The history of the Bowles-Simpson commission is one marked by a few highs and many lows for those serious minded about the now $15 trillion national debt and annual budget deficits well exceeding $1 trillion. Congress refused to get behind creation of a powerful deficit commission and instead left it to Obama to create one through executive order with far less clout.
After meeting for seven months, the 18-member National Commission on Fiscal Responsibility and Reform overcame enormous political odds to win the support of a majority of the members in November 2010. The group’s plan, which won the praise of many budget reform groups, was largely ignored by Obama and congressional leaders. But it spawned a number of acolytes, including the “Gang of Six” which tried unsuccessfully to win support for legislation echoing the essential elements of Bowles-Simpson.