In final report, federal debt commission warns of fiscal ‘reckoning’
The bipartisan debt commission issued its final report Wednesday, warning that without the sacrifices it calls for, a fiscal “reckoning will be sure and the devastation severe.”
Based on an initial blueprint offered Nov. 10 by the panel’s co-chairmen, former Republican Sen. Alan Simpson and former Clinton administration chief of staff Erskine Bowles, the budget blueprint outlines steps that, when taken together, would slash the federal deficit by $828 billion by 2015.
“Even after the economy recovers, federal spending is projected to increase faster than revenues, so the government will have to continue borrowing to spend,” the report states. “If we do not act soon to reassure the markets, the risk of a crisis will increase, and the options available to avert or remedy the crisis will both narrow and become more stringent.”
Final recommendations include a cap on discretionary spending through 2020, an overhaul of the tax code, and reforms to Social Security.
Changes to the latter were the source of much of the criticism of the initial draft issued by Bowles and Simpson, and the final draft offered few changes. But understanding Social Security’s role as the “third rail” in American politics, the proposal includes deficit projections with or without changes to the program.
Still, the panel warns that a “do-nothing plan” would be far less desirable, leading to an across-the board cut in benefits.
At a meeting of the 18-member commission Wednesday morning, Simpson and Bowles said they were proud of the plan they put forward, emphasizing that it was not crafted with the goal of guaranteeing the 14 votes needed to pass.
“We’re not interested in 14 votes for whitewash. The problem is just too plain big and too important for our country,” Bowles told fellow commissioners gathered in the Hart Senate Office Building.
The co-chairmen set a Friday deadline for a final vote, to give members time to absorb the changes. They conceded that it may be a nonstarter for some members today.
Still, “whether we get two votes or 18, this baby isn’t going away,” Simpson told fellow commissioners. He said he suspected the proposals would live on regardless of the outcome of the final vote, particularly if a congressional stalemate occurs next spring when lawmakers must vote to raise the nation’s debt limit, something many new Republican members have vowed to oppose.
The chair and ranking member of the Senate Budget Committee, Sens. Kent Conrad (D-N.D.) and Judd Gregg (R-N.H.), swiftly backed the report.
“While there are things in this plan I dislike intensely, there are also things in this plan I think are grand-slam home runs for the American economy,” Conrad said. “I don’t see another alternative. I just don’t.”
Three of the four non-elected officials on the panel — David Cote, CEO of Honeywell International, Alice Rivlin, former budget director for President Clinton, and Ann Fudge, CEO of Young & Rubicam Brands — also said they would vote yes.
Rep. Jan Schakowsky (D-Ill.) was the first member to immediately indicate that she’d vote no, saying she thought the lower and middle classes were being asked to bear the brunt of the sacrifices. She had offered her own deficit-reduction plan.
Rep. Paul Ryan (R-Wisc.) said he worried that insufficient reforms in healthcare would lead to calls for a public option. But he supported recommendations for spending cuts, and would seek to incorporate some of them when he chairs the House Budget Committee next year.
Others felt it did not go far enough.
“This is just the down payment of what are some very real, difficult sacrifices that everyone in this country is going to have to make,” said Sen. Tom Coburn (R-Okla.).
Most panelists said that, regardless of the final vote Friday, the recommendations can guide future discussions.
“Nothing prevents members from bringing this plan to this floor,” said Rep. Jeb Hensarling (R- Texas). “There’s nothing magical about the 14 votes. We must advance the debate.”
President Obama established the National Commission on Fiscal Responsibility and Reform by executive order in February. A White House spokesman said Tuesday that Obama supported a delay in the final vote until Friday, and looked forward to reading the panel’s final recommendations.