The Debt Commission
The bi-partisan debt-reduction commission has released its draft proposal. I'm no economist, but the proposal seems to have some real merit -- not just spending cuts, but slashing the corporate tax rate and simplifying the personal tax code. According to reports, the proposal favors spending cuts over tax increases by a ratio of 3:1. That, no doubt, is why Pelosi, the AFL-CIO, and many of the usual suspects have pronounced this proposal dead on arrival
Politically, I think the GOP leadership would be nuts if they don't immediately say: "this is a good start, we can work with this." That's all they have to say right now. It doesn't mean that they accept all the tax increases. It doesn't mean that the spending cuts go far enough. It doesn't mean that we don't also want to repeal Obamacare. But it does mean that Republicans are not the "party of no," and it puts Obama in the position of either joining with the Pelosi wing or fighting with his own party. If Obama doesn't make a good faith effort to meet Republicans on at least some of the proposals, then in 2012, the GOP can say that they tried to implement bi-partisan proposals to reduce the debt but were rebuffed by the Democrats.
I realize that the commission proposal is not perfect, but perfection is an awfully high standard. We're talking about politics, after all. I say, embrace it and work with it. What do you think?
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Aug '10
Re: The Debt Commission
Agreed. Republicans can accept it in principle without explicitly endorsing every facet of the draft. This would throw the Dems into further chaos since it's Obama's commission and would help rebuild GOP credibility on fiscal matters, since they botched things so badly during the Bush years.
Sep '10
Re: The Debt Commission
Seems to me this thing is also a test for the Tea Partiers. Guess I'll have to go read the Power Point
Re: The Debt Commission
Frozen: yes, exactly my point.
And thanks to the editors for cross-referencing Steve Manacek's post, which I neglected to do. In principle, I agree with Steve that allowing the federal government to eat up 21% of GDP is too high. But again, all the GOP has to say is "this is a good start, let's work on some more cuts."
Reducing the size of government takes time. The federal leviathan is now consuming 25% of the economy. Getting it down to 21% in the near term would be a victory. If that's what is achievable today, let's do it. If the GOP wants to convince voters to give them the majority they need to enact Paul Ryan's Roadmap (which is my ideal) they first have to convince them that they can be trusted to govern.
Re: The Debt Commission
It is, I believe, fatally flawed. It accords the federal government 21% of GDP -- a higher percentage than in any peacetime budget prior to Obama.
May '10
Re: The Debt Commission
I agree with Adam. A few points. First, these are the suggestions of commission chairs Alan Simpson and Erskine Bowles; this is not the recommendation of the full commission. If the Republicans come out and say that we can work with some of this proposal and that these folks seem to be getting a few things right, it sends a warning to the rest of the commission that they're wasting their time trying to pull the final report to the left. Pelosi and the unions need to pipe down. What Simpson and Bowles suggested is the best they could ever hope to get, and they're not even going to get that. Ultimately, the Republicans need to send the message that Simpson and Bowles have rolled out a reasonable start that deserves consideration. Fiddle with it too much and we'll ignore you altogether (and remember, the commission has absolutely zero authority anyway).
Jul '10
Re: The Debt Commission
Conservatives must demolish the concept of defining a governmental "share" of GDP, whether that's 21% or 19% or 10%.
Once we let that concept be widely accepted, the only question in the future will be what percentage share to argue about.
It's this sort of thinking that allows George W Bush to crow that he held spending to a relatively low "share" of GDP, while doubling federal per capita spending.
Edited on Nov 12, 2010 at 10:22amRe: The Debt Commission
Adam -- the first problem is that the 25% number is an aberration, caused by the so-called stimulus, unemployment benefits, bailouts, etc. Obama's own "steady state" out-year projections call for federal spending at just under 23% of GDP, versus a longer-term historical average of around 19%. The proposed reduction is really from 23% to 21%, not from 25% to 21%. (Actually, by 2015, which is as far as Obama's budget goes in detail, the commission only gets spending down to 21.5% of GDP, which is only a 1.5% improvement.) The second problem is that the commission, despite the nice camouflage of "tax simplification," proposes an aggregate tax burden on the economy that is significantly higher than any we have ever experieced. Ever. The final problem is that their fundamental starting point is wrong. It is, in effect, "How can we improve on Obama's budget to shrink the deficit?" If that's your starting point, the commission's work is somewhat creditable. But that assumes, as James Capretta pointed out yesterday, accepting Obamacare and God-knows what else as part of your starting point. I don't think we should be comfortable with that.
May '10
Re: The Debt Commission
That there are problems with the details of the proposal I don't doubt. As Matthew said, this is just the personal recommendation of the commission chairs, not the final report. As such this is really all about positioning and influence, not real substance...not just yet.
Seeing as Pelosi and the unions are immediately red-faced and affronted by the proposal, we can tell that it is a step in the right direction and we ought to express pleasure to see such a step proposed. Matthew is right that the final report might be influenced (are the chairman reacting to timidity in their commission?), and there will be much opportunity to take this first step and run with it.
The purpose of these first moves is to establish the scope and scale of the subsequent discussions. The news we want to feature is that this will be a very wide ranging change, and that the entitlement programs are going to be included.
But I do share Kenneth's concern about defining Government as a percent of our GDP, whatever the level. Bad idea, that.
Oct '10
Re: The Debt Commission
Paying government expenses are the least of our problems; paying the expenses government imposes upon the private sector through endless regulation is the real problem.
The current trend of most legislation today is to substitute ‘rulings’ for rules. That is, the bureaucracy is given the power to interpret legislation on a case by case basis. Rather than the rule of law, we now have the rule of men.
Hiring the talent necessary to read the bureaucratic tea leaves if one is to avoid becoming the victim of a bureaucratic ‘message’ is not only a daunting task, but an expensive one. 2000 page bills have now become the norm. No one, not those who write them, not those who pass them, not those who enforce them or those who are subjected to such bills have any idea at all what the law is. This is a recipe for disaster.
Aug '10
Re: The Debt Commission
Conservatives must demolish the concept of defining a governmental "share" of GDP, whether that's 21% or 19% or 10%.
Once we let that concept be widely accepted, the only question in the future will be what percentage share to argue about.
Kenneth nails it. The whole idea of setting a share to go the one body we're looking at taking apart will just reinforce their inviolability . Everyone is being way too coy about how much needs to happen. This is like financial forecasting, you can always make it look rosy in the long term. But stuff happens in the long term, so you fix it in the short term. Let that steamroller turn Trumka and Pelosi in some kind of italian perogie as it rolls over them. And then wrap that hot steamy mass in the NYT and WaPo and toss it all in the trash.
(you got your wetnaps and dramamine ?)
Re: The Debt Commission
Matthew Yglesias is upset because Simpson is a nut and the proposals don't consider taxing greenhouse gases. It's really hard to argue with insights like this:
Indeed it is.
Sep '10
Re: The Debt Commission
First this is a Washington commission and for that reason alone it is not worthy of comment. Kenneth is right-on with his comments concerning % of GDP. Only necessary government activity should be funded. If it is 5% or 50% of GDP is really not a consideration. The people quoting these percentages are either ill informed or desire to mislead. Thanks to federal mandates on states today’s 25% would really probably equal 30% two or three decades ago. Does anyone think this farce will be remembered three years from now?
Re: The Debt Commission
James, thanks. Reason enough to support Simpson's handiwork, I would think.
Ideological purity is great for graduate school seminars; less good, perhaps, when seeking the voters' trust. The question I raise is: how should the GOP leadership react to the co-chair’s proposal? Surely they should acknowledge that there are good ideas in there and commit to working on them. That doesn’t mean that the GOP surrenders its right to seek repeal of Obamacare and to push for real entitlement reform. Yes, Paul Ryan-type reform is the real goal, but hey, Paul Ryan is on the commission and he didn’t reject the co-chairs proposals.
May '10
Re: The Debt Commission
Elimination of the corporate tax, or at very least a great simplification, is a necessary step toward letting businesses manage themselves to maximize profit (maximum profit is achieved when resource efficiency is greatest) rather than managing in accordance with government goals. Further, if government share of GDP hovers at a given point (here acknowledged to be about 19%) then the route to maximizing receipts is through growing GDP fastest, i.e., with minimal government interference or direction.
Jul '10
Re: The Debt Commission
Simple approach: We agree with the framework, but the starting is just too high. Get us to 18% of GDP and we can work with it. Otherwise, let's have this debate in 2012.