The United States faces a dire budget problem, largely the result of the aging of the population and soaring health costs. The president's National Commission on Fiscal Responsibility and Reform and the Bipartisan Policy Center's Debt Reduction Task Force both agree that Social Security, Medicare, and Medicaid reforms are necessary, although health costs are the far greater problem. They also recommend restructuring the personal and corporate tax systems. These commissions' efforts show that reasonable policy packages can get bipartisan support even in an intensely partisan era.
The text below is an excerpt from the complete document. Read the entire brief in PDF format.
Numerous committees have formed
to suggest ways of restoring fiscal
stability. Some come from the
political right or left, but the most
interesting include members who span the
ideological spectrum. The most important is
the president's National Commission on Fiscal
Responsibility and Reform (NCFRR 2010).
The president appointed six members drawn
from both political parties, and Democratic
and Republican congressional leaders each
appointed six elected members—three from
the House and three from the Senate. The
commission's rules stated that Congress had to
consider its recommendations if at least 14
commission members supported them. That
ensured that at least two elected members
from each party had to be on board before the
Congress would be forced to act.
Few budget watchers thought the commission
had any chance of success, especially after
congressional leaders appointed some members
from the extremes of their parties. But
commission members and their staffs worked
diligently in a collegial fashion. They finally
recommended radical revenue-raising tax
reform, a 15-cent increase in the gas tax, comprehensive
Social Security reform, options to
restrain growth in federal spending on health
care, and severe caps on defense and nondefense
Only 11 members ultimately voted for the
commission report, but the fact that it got
more than majority support was a notable
achievement. Moreover, support spanned the
ideological spectrum from Senator Tom
Coburn (R, OK), one of the most conservative
members of the Senate, to Senator Richard
Durbin (D, IL), a solid liberal. Although the
Republican Party has adamantly opposed tax
increases, three Republican senators voted for
a plan that contained significant new revenues.
The commission claimed that by 2020, roughly
70 percent of its deficit reduction would come
from slowing noninterest spending growth
and 30 percent from revenue increases. In the long run, the commission held spending to 21
percent of gross domestic product (GDP), a
severe limit given the costs of an aging population
and ever more expensive health care.
A private bipartisan committee called the
Debt Reduction Task Force (DRTF) and
headed by former Senator Pete Domenici (R,
NM) and Alice Rivlin, President Clinton's
director of the Office of Management and
Budget, also recommends radical tax reform,
enforceable limits on Medicare and Medicaid
cost growth, Social Security reform, and a
stringent approach to discretionary spending
(DRTF 2010). However, their deficit reductions
relied more heavily on tax increases than
did the president's commission. The task force
recommended a new value-added tax (VAT) to
supplement the existing tax system.
So far none of the committees has received
enthusiastic support from elected officials. The
president has been tepid in his support of his
own commission, looking favorably only on
their tax reform suggestions. Speaker Pelosi
dubbed an earlier version of the commission
report "unacceptable," and as this is written,
Speaker Boehner praised the commission for
drawing attention to the budget problem but
said nothing about their proposed solutions.
Nevertheless, the output of the president's
commission and various committees is
extremely valuable. They offer a rich variety of
policy options, and that will be useful when we
finally act on our budget problems. The fact
that radical tax reform appears in more than
one report makes an option that appeared earlier
to be implausible worthy of discussion.
Perhaps most important, the experience of the
president's commission and the DRTF shows
there are policy packages that can get bipartisan
support even in an intensely partisan era.
End of excerpt. The entire brief is available in PDF format.