Budget Commission Delivers Gift to Obama

Budget Commission Delivers Gift to Obama

Printer-friendly version
a a
Type Size: Small

Christmas came early for President Obama; he just doesn’t know it yet. The report from the co-chairs of the Deficit Commission lays out a controversial, vigorous and bold package of ideas about how we might reduce our horrifying budget deficits going forward.  By embracing these proposals with an open mind, the president has an opportunity to show the country that 1) he received the message so clearly delivered by voters last week and that 2) he actually does want to restore our fiscal integrity.

Not all of the Commission’s ideas will be acceptable, but for the most part they are realistic and necessary. Mr. Obama needs to accept them as a starting point for a much-needed conversation about our country’s future. By doing so, he will distinguish himself from his liberal colleagues, who immediately condemned the proposals, shutting down all dialog. Really, they barely had time to skim the high points. 

After all, this Deficit Commission was the president’s idea. The genius was in giving the commission’s leadership to Alan Simpson and Erskine Bowles, both highly regarded leaders of their respective parties (Simpson was formerly the Republican senator from Wyoming and Bowles a Democrat who served in the Clinton administration.) Both have credentials that validated their appointment to the body; Simpson has chaired the Senate Subcommittee on Social Security and, as Clinton’s Chief of Staff, Bowles had responsibility for the federal budget. Best of all, both are now retired from politics.

Americans want success, not stalemate. They want to see that our leaders are willing to make some tough and unpopular choices in order to get the country back on track. Voters are not stupid; they know that Medicare and Social Security will soon be bankrupt unless reforms are implemented. They also know that Congress does not have the spine to tackle these and other reforms.

As to the proposals: there is something for everyone, and for everyone something unpleasing. Republicans will resist big defense cuts – but should remember that we are currently fighting two wars, and will hopefully not be in that position forever. Given the size of the Pentagon’s budget, it seems likely that a great many savings may yet be found, even though Secretary Gates has already been slicing his share of the pie. Raising the Social Security retirement age – well into the future so as not to disadvantage today’s near-retirees who have planned on certain benefits – seems entirely reasonable, and crucial. Trying to stem outlays for the nation’s healthcare is a must, especially since Mr. Obama’s overhaul bill failed to do so. Increasing the gas tax makes total sense. If we want to cut down on gasoline usage, we should make it more expensive. Every time oil prices have shot up, consumption has declined.

Simplifying our tax code is a win-win. Today’s system is beyond dysfunctional. Steve Forbes and others have argued forcefully for a flat tax; a step in that direction would be welcome. Lowering the corporate tax rate and repealing the alternative minimum tax are brilliant notions. People will howl over the proposal to junk the home mortgage deduction; I would argue that the deduction is not necessary. In the U.S. we have progressed beyond needing to encourage people to invest in their homes; it is an accepted path to savings and wealth-building that no longer needs government underwriting. One can indeed argue that far too much of the nation’s savings and capital has flowed into housing in recent decades, to the expense of our infrastructure. Making the research and development tax credit permanent is a worthy counterpoint—that’s where we want savings to flow.

Who doesn’t want to cut farm subsidies? Farmers, certainly, but these payouts are for the most part an anachronism left over from a time when we eagerly supported the small farmer against inroads from large commercial enterprises. Cutting the federal work force and freezing pay for government workers is an excellent idea- encouraged by the numerous studies showing public worker pay outstripping earnings in the private sector. This proposal would cheer those horrified by the ballooning federal payroll.

Needless to say, for every proposal, someone’s ox gets gored. That’s what is meant by “shared sacrifice.” These ideas must receive a fair hearing, and someone in Congress needs to have courage enough to agree.

After more than two decades on Wall Street as a top-ranked research analyst, Liz Peek became a columnist and political analyst. Aside from The Fiscal Times, she writes for FoxNews.com, The New York Sun and Women on the Web.