Wednesday, April 22, 2009
Regarding Fred Hiatt's April 12 op-ed, "Fixing the Budget in the Worst (But Only) Way":
A Fiscal Future Commission is the only way to avoid the financial train wreck toward which the United States is headed. My group does not agree, however, that it is the "worst" way. We believe that this bold measure represents a path of genuine reform that will enable Washington to do what it could not do otherwise.
The challenge for President Obama will be the timing of a move from Keynesian deficit spending and encouraging consumer spending to quite the opposite: reform of entitlements and the tax code that favors savings and investment. A careful determination must be made as to when to pivot from stimulation to prudence and tough fiscal discipline.
The genius of a Fiscal Future Commission is that it would allow flexibility in this timing: It would provide time for the economy to recover as it did its work during the next two years. Then, at the end of this period, there would be an up-or-down vote in Congress on whether to implement the findings, as was done with the recommendations of the commission on military base closings.
But in the immediate term, the announcement of the commission would send a sign to the holders of our debt -- China, Japan and the Persian Gulf states, as well as international markets -- that the nation will put its fiscal house in order through extraordinary measures. Thus, it may avert the serious contingency of debt holders' shifting away from the United States, which could send us into a second recession.
DAVID M. ABSHIRE
Center for the Study of the Presidency and Congress