Deficit Panel Faces Obstacles in Poisonous Political Atmosphere
Policy + Politics

Deficit Panel Faces Obstacles in Poisonous Political Atmosphere

The panel carries a heavier burden and faces more obstacles than previous efforts. And the track record of the earlier commissions is not encouraging.
Iva Hruzikova/The Fiscal Times

The track record of presidential commissions is not encouraging, and President Obama’s announcement Thursday of a bipartisan effort to tackle the nation’s spiraling deficit problems faces even greater obstacles.

No previous presidential commission has had the clout to mandate the changes that affect so much money and so many deep ideological fissures--from tax rates and the overall size of government to the nearly-sacrosanct entitlement programs like Social Security and Medicare.

Nor has any commission had to take up its charge amid so much partisan gridlock in Congress, with Republicans fighting to deny Democrats any legislative victories, even if GOP lawmakers have to reverse their own long standing positions on key policy issues.

The positive news on Thursday was that White House officials said they were confident GOP leaders will name members to the 18-member National Commission on Fiscal Responsibility and Reform, though the Republican leaders themselves were silent on that question. The bad news for the administration was that some Republicans quickly heaped scorn on the initiative and made it clear that GOP participants would refuse to even discuss what many believe would be an essential ingredient to any comprehensive solution – tax increases.

With mid-term elections less than nine months away, and Republicans capitalizing on populist anger against Washington, the gridlock is only intensifying. With Republican backing necessary for the commission to advance recommendations, the GOP could deadlock the effort simply by withholding its support from any final plan.

"In terms of pure politics, Republicans have no incentive to play," said Douglas Holtz-Eakin, a former director of the Congressional Budget Office and the top economic adviser to Republican Senator John McCain’s presidential campaign.

"The deficit is a problem that the Democrats own," Mr. Holtz-Eakin continued. "If you have a commission, it becomes the commission’s problem. Republicans look at this and say, why should we let Democrats off the hook?"

But partisan warfare isn’t the only problem. The commission also faces suspicion and resentment from Democratic lawmakers, some of whom see it as an attempt to circumvent their power and others who fear that it will be used to rush through cuts in Social Security and Medicare.

Earlier this month, 21 Senate Democrats and one independent joined 24 Republicans in defeating a bill that would have created a deficit commission similar to the one Obama created by executive order. The Democratic opponents included liberals like Senator Tom Harkin of Iowa and Maria Cantwell of Washington, as well as the powerful chairman of the Senate Finance Committee, Senator Max Baucus.

The very idea of a deficit commission has also raised alarms at one of Washington’s most powerful lobbying groups: the AARP, which represents retired people and the elderly, actively helped defeat a Senate bill last month that would have created a commission requiring Congress to take action on its recommendations for reducing the deficit before the end of the year.

To be sure, there have been a few nods toward bipartisanship. White House officials said Republican leaders had agreed to name GOP lawmakers to serve on the panel. Rep. Paul Ryan of Wisconsin, the ranking Republican on the House Budget Committee, has also said he would serve on the commission if he is asked.

Obama, for his part, dangled a potentially major compromise by allowing the panel to explore a sweeping tax reform that might lead to higher taxes on middle-income families.

Obama campaigned for president on the promise that he would not raise taxes "one dime" for families with incomes below $200,000 a year. But many budget experts say that pledge has put the president into a straitjacket, because the government already relies heavily on wealthy taxpayers. About 40 percent of American workers, most of them in the middle- and lower-income categories, currently owe no federal income tax.

Obama picked as co-chairmen of the commission Alan Simpson, a highly respectde former Republican senator from Wyoming, and Erskine Bowles, a former top official in the Clinton White House who is now president of the University of North Carolina.

If Republican leaders do in fact name Republican lawmakers to the commission, the panel will at least theoretically be able to hammer out a budget plan. In announcing the commission, Obama said that "For far too long, Washington has avoided the tough choices necessary to solve our fiscal problems – and they won’t be solved overnight.  But under the leadership of Erksine and Alan, I’m confident that the Commission I’m establishing today will build a bipartisan consensus to put America on the path toward fiscal reform and responsibility."

As outlined in the president’s executive order, any plan will require support from 14 of the panel’s 18 members. House and Senate leaders from each party will each get to name three members, who must currently be lawmakers. That would give the panel six Democratic and six Republican lawmakers. President Obama will name six additional members, at least two of whom would have to be Republicans.

Republicans have complained that the panel is weighted in favor of the Democrats. But in practice, the six Republican lawmakers would be able to veto any proposals if they voted in unison.

The panel’s exact make-up is likely to be far less important than the willingness of Republican and Democratic leaders to engage in real negotiations. But the ideological gulf is so wide – with Democrats seeking to protect entitlement programs and Republicans vowing to block any tax increases – that few analysts are optimistic.

Republican leaders quickly laid down the line against possible tax increases.

"Americans know our problem is not that we tax too little, but that Washington spends too much," said Senator Mitch McConnell of Kentucky, the Senate republican leader. "That should be the focus of this commission."

Others were more hostile.

"The Democrat Congress and the President have outsourced their constitutional responsibilities to a powerless commission, apparently created to provide political cover," declared Rep. Jerry Lewis of California, the ranking Republican on the House Appropriations Committee.

But Republicans aren’t the only ones roping off possible approaches. When the Senate debated its own deficit commission bill earlier this month, lawmakers voted 97-0 in favor of excluding changes affecting Social Security from being adopted through a "fast-track" voting procedure.

The fast-track procedure was the one provision that might have given some clout to the Senate’s version of the deficit commission, promoted by Senate Budget Committee Chairman Kent Conrad of North Dakota and Republican Sen. Judd Gregg of New Hampshire. Under that provision, Congress would have been required to vote on the panel’s recommendations in a straight up-or-down vote with no amendments.

That issue is now moot, because Mr. Obama’s panel was created by executive order and Congress is under no obligation to use the fast-track procedure at all.

But the willingness of senators from both parties to shield Social Security could provide a preview of congressional squeamishness to act on other tough recommendations.

Supporters of a bipartisan deficit commission note that at least two previous presidential commissions succeeded at breaking through intractable political problems when Congress was paralyzed.

The 1983 Greenspan commission, headed by Alan Greenspan, who later became chairman of the Federal Reserve, reached an historic agreement to gradually raise Social Security taxes and gradually increase the minimum age at which workers qualify for Social Security retirement benefits. Those recommendations passed both the House and Senate, and averted a potentially catastrophic financial crisis with Social Security.

But experts say that effort was different in several major ways from the challenge facing Obama’s deficit commission. The most important difference was that Social Security faced an imminent danger of defaulting on its obligations, creating an urgency for politicians that neither Republicans nor Democrats could ignore.

The other big difference, closely related, was that Republican President Ronald Reagan and the Democratic House Speaker, Tip O’Neill of Massachusetts, were both actively involved in the negotiations.

But that was an unusual case. A more typical experience was what happened to President George W. Bush’s bipartisan commission on tax reform. That panel was ordered to come up with a comprehensive plan to make the tax code simpler and fairer.

The panel was headed by a former Democratic senator, John Breaux of Louisiana, and a former Republican senator, Connie Mack III of Florida. And the panel did indeed come up with two alternative plans for overhauling the tax code.

But by the time the plans were presented, President Bush had already been stymied in his effort to push through an overhaul of Social Security, and Democrats had made it clear they were not about to negotiate over tax reform. As a result, Mr. Bush’s tax reform commission saw its proposals buried as soon as they were delivered.

"Commissions are good once you decide to tackle a problem, but it’s very hard for a commission to generate the political will," said James M. Poterba, a professor at Massachusetts Institute of Technology who was a member of the tax panel.

The other notable success among presidential commissions was the Commission on Base Realignment and Closure, or BRAC, which was charged with recommending which military bases to shut down – decisions that lawmakers had never been able to reach because each base had intense local political support.

But analysts say the BRAC commission was an easier challenge, because military officials and political leaders were in broad agreement that many bases needed to be closed.

When it comes to current and future deficits, there is broad agreement that they need to be reduced but little agreement about anything else.