The deficit's moment of truth
"THE ERA OF deficit denial in Washington is over," Erskine Bowles, co-chairman of the National Commission on Fiscal Responsibility and Reform, declared in unveiling the panel's recommendations. What's less clear - although there were some hopeful signs Wednesday - is whether the era of doing what it takes to deal with the deficit has begun. The undeniable contribution of the commission, along with parallel efforts by the Bipartisan Policy Center and others, has been to hammer home the inescapable point that there is no realistic way to attain fiscal solvency without a combination of spending cuts and tax increases. Even shifting the debate onto this rational plane from the current denialism - among Democrats on entitlement spending and even more among Republicans on taxes - would be a major achievement.
The comments from commission members at Wednesday's session offered some reasons for optimism. The chairman and ranking member of the Senate Budget Committee, Kent Conrad (D-N.D.) and Judd Gregg (R-N.H.), said they would vote for the package even though they disagreed with some specifics. "This document becomes the memo that controls the meeting," said Mr. Gregg, who is, unfortunately, leaving the Senate. "We've reached a point where it's time to govern." On the more liberal end of the commission spectrum, Sen. Richard J. Durbin (D-Ill.) did not commit to a vote for or against but expressed support for the notion, heretical among many liberals, of raising the retirement age for Social Security. The plan would raise the retirement age to 68 by 2050 and 69 by 2075 while creating a "hardship exemption" to allow workers in demanding jobs to retire at 62.
The plan is not perfect, but it is, as commission member Alice Rivlin said, a "very serious plan for dealing with a imminent catastrophe." It leans too heavily on spending cuts over tax increases. It arbitrarily brings spending and revenue down, eventually, to 21 percent of gross domestic product; this would not accommodate the needs of an aging society. It does nothing to stimulate the economy in the short term - although it suggests that Congress consider a payroll tax holiday - and indeed might have a counterproductive effect on economic recovery by slashing discretionary spending in 2013. But it would create a fairer, more rational and more productive tax code, including limiting preferential tax treatment of mortgages, taxing employer-provided health care and increasing the gasoline tax by 15 cents a gallon. It would tackle wasteful defense spending and agriculture subsidies and seek to control health-care costs by bolstering the powers of the Medicare advisory board created by the new health-care law. It would shield programs for the disadvantaged from cuts.
It remains to be seen whether the proposal will attract an anemic number of votes within the commission - seven of the 18 expressed support Wednesday - or a more robust majority. One missing voice in the debate has been the man who created the panel: President Obama. The hands-off attitude adopted by the White House on Wednesday was hardly a profile in courage. "The president looks forward to reviewing their work at the conclusion of their votes . . . and evaluating their proposals and their votes as we move forward and put together a budget of our own for next year," said press secretary Robert Gibbs. This is the package put together by Mr. Obama's commission. He asked the members to vote on its recommendations. It's time for him to engage as well.