That is the ever-so-apt title of the Report compiled this week by the National Commission on Fiscal Responsibility and Reform . . . or what we’ve come to know as the Debt Commission. In its Preamble, the report defines the challenge we face as a country to be clear and inescapable: “America cannot be great if we go broke.” The report pleads for Federal leadership to drop party lines, pull together, live within our means and “do right by our children’s future.” It goes on to say that, “Every modest sacrifice we refuse to make today only forces far greater sacrifices of hope and opportunity upon the next generation.”
The Commission was co-chaired by Alan Simpson (R), former Senator from Wyoming and Erskine Bowles (D), former Clinton Chief Domestic Policy Advisor. The balance of the remaining 17 members included a mixture of both Democratic and Republican politicians, union and business leaders. This group met for 8 months, drawing reference to families “huddled around kitchen tables” to make the “tough choices” and deciding “what they can learn to live without.” They also said that we, the American people, would “expect and deserve their leaders to do the same.”
The Commission did indeed roll up their sleeves, hammered out a set of principles to guide their mission and set about the task of formulating a plan . . . a plan that would put America back onto the path of fiscal responsibility and growth. I can only imagine how those “kitchen table” meetings must have gone.
The principles they settled upon are simple yet effective by design. Here they are:
- We all have a responsibility to make America better off tomorrow than it is today.
- Don’t disrupt the fragile economic recovery.
- Cut and invest to promote economic growth and keep America competetive.
- Protect the truly disadvantaged.
- Cut spending we cannot afford – no exceptions.
- Reform and simplify the tax code.
- Don’t make promises we can’t keep.
- The problem is real and the solution will be painful.
- Keep America sound over the long run.
These principles guided the Commission in developing a plan to achieve their mission which was to “bring the budget into primary balance (balance excluding interest costs) in 2015 and to meaningfully improve the long-run fiscal outlook.” They summarized their findings in the Report, as outlined below:
Discretionary Spending Cuts – 11 recommendations:
- 1.1 Cap Diesretionary Spending through 2020
- 1.2 Cut both security and non-security spending
- 1.3 Enforce caps through two mechanisms – point of order and abatement
- 1.4 Require the President to propose annual limits for war spending. Create a separate category for Overseas Contingency Operations (OCO).
- 1.5 Establish a disaster fund to budget honestly for catastrophes.
- 1.6 Stop the abuse of emergency spending.
- 1.7 Fully fund the transportation trust fund instead of relying on deficit spending. Dedicate a 15-cent per gallon increase in the gas tax to transportation funding, and limit spending if necessary to match the revenues the trust fund collects each year.
- 1.8 Unleash agencies to begin identifying savings.
- 1.9 Establish cut-and-invest committee to cut low-priority spending, increase high-priority investment, and consolidate duplicative federal programs.
- 1.10 Adopt immediate reforms to reduce spending and make the federal government more efficient.
- 1.11 Find additional cuts in security and non-security spending.
Tax Reform – 3 recommendations:
- 2.1 Enact fundamental tax reform by 2012 to lower rates, reduce deficits, and simplify the code. Eliminate all income tax expenditures, dedicate a portion of the additional revenue to deficit reduction, and use the remaining revenue to lower rates and add back necessary expenditures and credits.
- 2.2 Enact corporate reform to lower rates, close loopholes, and move to a territorial system.
- 2.3 Put failsafe in place to ensure swift passage of tax reform.
Health Policies – 6 recommendations:
- 3.1 Reform the Medicare sustainable growth rate (for physician payment and require the fix to be offset).
- 3.2 Reform or repeal the class act.
- 3.3 Pay for the Medicare “doc fix” and class act reform. Enact specific health savings to offset the costs of the sustainable growth rate fix and the lost redeipts from repealing or reforming the class act.
- 3.4 Aggressively implement and expand payment reform pilots. Direct CMS to desigh and begin implementation of Medicare payment reform pilots, demonstrations, and programs as rapidly as possible and allow successful programs to be expanded without further congressional action.
- 3.5 Eliminate provider carve-outs from ipab. Give the Independent Payment Advisory Board authority to make recommendations regarding hospitals and other exempted providers.
- 3.6 Establish a long-term global budget for total health care spending. Establish a global budget for total federal health care costs and limit the growth to GDP plus 1 percent.
Other Mandatory Policies – 10 recommendations:
- 4.1 Review and reform federal workforce retirement programs. Create a federal workforce entitlement task force to re-evaluate civil service and military health and retirement programs and recommend savings of $70b over 10 years.
- 4.2 Reduce agricultural program spending through 2020. Reduce net spending on mandatory agricultural programs by $10b from 2012 through 2020 with additional savings to fund an extension of the agricultural disaster fund, and allow the agricultural committees to reallocate funds as necessary according to their priorities in the upcoming farm bill.
- 4.3 Eliminate in-school subsidies in federal student loan programs. Eliminate income-based subsidies for federal student loan borrowers and better target hardship relief for loan payment.
- 4.4 Give pension benefit guarantee board authority to increase premiums.
- 4.5 Eliminate payments to states for abandoned mines.
- 4.6 Estend FCC spectrum auction authority.
- 4.7 Index mandatory user fees to inflation.
- 4.8 Restructure the power marketing administrations to charge market rates.
- 4.9 Require Tennessee Valley Authority to impose transmission surcharge.
- 4.10 Give Post Office greater management autonomy.
Social Security – 10 recommendations:
- 5.1 Make retirement benefit formula more progressive. Modify the current three-bracket formula to a more progressive four-bracket formula with changes phased in slowly.
- 5.2 Reduce poverty by providing an enhanced minimum benefit for low-wage workers. Create a new special minimum benefit that provides full career workers with a benefit no less than 125% of the poverty line in 2017 and indexed to wages thereafter.
- 5.3 Enhance benefits for the very old and the long-time disabled. Add a new “20-year benefit bump up” to protect those Social Security recipients who have potentially outlived their personal retirement resources.
- 5.4 Gradually increase early and full retirement ages, based on increases in life expectancy.
- 5.5 Give retirees more flexibility in claiming benefits and create a hardship exemption for those who cannot work beyond (age) 62.
- 5.6 Gradually increase the taxable maximum to cover 90% of wages by 2050.
- 5.7 Adopt improved measure of CPI.
- 5.8 cover newly hired state and local workers after 2020.
- 5.9 Direct SSA to better inform future beneficiaries on retirement options.
- 5.10 Begin a broad dialogue on the importance of personal retirement savings.
Process Reform – 5 recommendations:
- 6.1 Switch to a more accurate measure of inflation for indexed provisions.
- 6.2 Establish a debt stabilization process to enforce deficit reduction targets.
- 6.3 Allow cap adjustments for program integrity efforts.
- 6.4 Review and reform budget concepts.
- 6.5 Design effective automatic triggers for extended unemployment benefits.
The image that they want you to see is these 18 wearily disheveled and unshaven guys sitting around a kitchen table under a dim and lonely light bulb with half-empty coffee cups in front of each, stains on the table, papers and reports of every kind strewn about the table and on the floor, frantically punching numbers into an adding machine until finally they come to “the” epiphany of fiscal salvation for America. I see something more like the photo on the right. Sorry, but I just don’t trust anyone in government and I can’t trust any commission with sitting SEIU influence.
Bottom line: These guys took a look at our spending programs and developed a deficit reduction plan. I’m sure “necessary” compromises were made during the meetings in an attempt at consensus. In the final analysis however, the measure lacked the requisite supermajority of votes to get passed along to Congress. The dissention came from not-so-surprising members of the Commission: Senate Finance Committee Chairman Max Baucus (D), former SEIU head Andrew Stern, and 1 of Obama’s personal picks for the Committee being among the strongest opponents of the plan.
The good thing about this exercise is that it reveals our fiscal problems and opens up dialogue about them on the Hill. Read the Report for yourself, here’s the link: