Today's deficit commission preview
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As we wrote Monday, President Obama’s National Commission on Fiscal Responsibility & Reform will not release its recommendations until December. However, a good preview of the Commission’s likely findings will be on display today. The Peter G. Peterson Foundation is hosting a daylong summit that will feature members of the commission plus former President Bill Clinton, OMB director Peter Orszag, former Federal Reserve Chairman Alan Greenspan and others.
The purpose of the event is to “explore the extent and depth of our nation’s current fiscal challenges, attempt to define the real problems at hand, and begin to lay the groundwork for long term bipartisan solutions.”
We are very anxious to see what kind of “bipartisan solutions” will be put forth. Former Republican Senator and Commission Vice-Chair Alan Simpson recently said: “We’re not going to say we’re going to grow our way out of this…Hell, we could have double (-digit) growth for 30 years and never grow our way out of this.” Senator Simpson’s comments well illustrate the truth of the matter: the only two options we have for fixing the situation are raising taxes or cutting spending.
A great deal of the chatter in Washington is about raising taxes, or implementing new tax schemes, in order to address the deficit without much focus on the more appropriate solution of cutting spending. And while the federal debt is certainly troubling (hardly anyone disputes that we are on an unsustainable course), the Commission’s focus only on deficits does not capture the whole picture. The media and decision makers in Washington are using this commission to focus solely on how government is financed and is avoiding addressing rampant, out-of-control spending. Addressing our spending levels should be a very important part of the Commission’s study. Spending, in and of itself, is the problem.
It would be nice if the commission also gave some consideration to how government spending can crowd out private investment, distort business incentives, and cause efficiency losses. Furthermore, spending is the root cause of all of our fiscal problems – deficits are simply a symptom of overspending. The Commission will eventually make recommendations on fiscal responsibility. We certainly hope they give due consideration to restraining out-of-control spending.
Check back with Bankrupting America regularly for updates on the President’s National Commission.