Capital Exchange is a new blog featuring debate among some of Washington’s smartest budget and policy experts. –Eric Pianin, Washington Editor and Moderator
It’s painful to say this, but can we stick a fork in President Obama’s deficit commission? Yes, it’s way too early to be defeatist, and it’s dangerously fashionable to whine that commissions never accomplish anything and that this one was doomed from the start. But really – now that Republicans have appointed all their members, it’s hard to see how this one makes any headway unless some of these guys have a radical change of heart.
Am I wrong? Well, you read Grover Norquist’s Taxpayer Protection Pledge and tell me if any of the six GOP members of Congress just appointed to the panel -- Sens. Tom Coburn, Michael Crapo and Judd Gregg; and Reps. Dave Camp, Jeb Hensarling and Paul Ryan -- has any wiggle room at all to endorse a single dollar in tax increases. Every one of them has signed the promise to “oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses; and … oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.”
I’m looking for a loophole, but as they say about fences in Texas, that is cow-high and pig-tight.
The track record of pledges like these in serious deficit-reduction negotiations is not good, exhibit A being what happened to the first President Bush’s “read my lips, no new taxes” promise when it came time to cut a bipartisan budget deal in 1990. Bush had to give up the pledge or not have a deal. Not because Democrats are dying to raise taxes, but because 1) serious deficit reduction is about sharing the pain and 2) a big, effective package of nothing but spending cuts has zero political viability in the real world.
Don’t take my word for it. The National Research Council assembled two dozen of the best budget experts around, including three former CBO directors, and had them work for more than a year on ways to make serious reductions in the deficit. Their 338-page report, “Choosing the Nation’s Fiscal Future,” shows that it’s possible to assemble serious deficit-reduction packages with just spending cuts or just tax increases – but they’d be so radioactive that it’s not possible to imagine them surviving the democratic process.
What works is a middle-ground compromise that includes both spending cuts and tax increases. That’s what worked in the two big deficit-reduction packages in 1990 and 1993 (the puny 1997 package, trumpeted as “historic” at the time, contained tax cuts and was minuscule compared to its older brothers).
Lest this all be Republican-bashing, it’s important to note that it will be just as important for Democratic appointees to be serious about cutting or restructuring Medicare, Medicaid and Social Security as for Republicans to consider raising taxes. Those big entitlements are by far the biggest sources of runaway spending in the budget. In fact, if you strip away the accounting fiction of trust funds, both Medicare and Social Security are already in the red right now, spending more than their dedicated taxes bring in -- which is all that really matters to the budget. This is obviously unsustainable. So are the hints from Democratic appointees such as SEIU president Andy Stern that they’re unfriendly to the idea of touching those big benefits. The good news is that nobody’s signed an Entitlement Beneficiary Protection Pledge. Yet.
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George Hager is a member of the USA Today editorial board.