StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between



Support the Budget Commission

26 Jan 2010
Posted by Bruce Bartlett

As I wrote the other day, I have always been lukewarm to the idea of a budget commission because I don't think we are ready, politically or economically, for serious deficit reduction. I also have problems with the way the proposed commission would be structured--requiring a supermajority for every recommendation seems like a recipe for gridlock.

That said, I have just been appalled by idiocy of the arguments against the commission that appear to have won the day in the Senate. In particular, the idea that revenues should be completely off the table is simply insane. And the idea that Social Security should be completely off limits is only slightly less crazy.

Every serious budget analyst--I mean every--knows that revenues must be part of the solution to our deficit problem. We can debate how much and what form higher revenues will take, but the idea that we can or even should embark on serious deficit reduction with no tax increase whatsoever is grossly immature and unworthy of consideration.

The idea that we can rope off Social Security is only slightly less bad. I say "slightly" because every budget analyst--I mean every--knows that the root of our fiscal problem, insofar as spending is concerned, is Medicare. But Social Security and Medicare are joined at the hip so it is difficult the fix one without addressing the problems of the other as well.

For example, my preferred solution to the entitlement problem is to sharply raise the age at which people qualify for benefits. The normal retirement age should be 70 right now and early retirement should not be available until age 67. Both should be indexed to longevity so that they rise a month or so per year forever.

A serious mistake was made in 1983 when the age to qualify for Social Security was raised to 67 but the age to qualify for Medicare stayed at 65. I think Obama made a serious error in not fixing this mistake by proposing to at least raise the age to qualify for Medicare to the same age as Social Security.

Roping off Social Security from consideration by a deficit commission will make it impossible to raise the normal retirement age. It will also prevent changes in the indexing formula for initial benefits, which currently raises real benefit levels for every age cohort. Wage indexing should be replaced by price indexing. And the price index used to adjust benefits for retirees should more accurately reflect the cost of living.

In conclusion, the arguments of those opposed to a deficit commission have caused me to change my view. These arguments are so terrible that they have made the arguments of those supporting the commission seem convincing. So I say to any senator who gives a damn, vote yes on the commission. It may only be the equivalent of dipping one's toe in the pool, but we have to start somewhere.

Addendum

I meant to mention also that the Defense Department should not be exempt from budget cuts. Derek Thompson makes the point here.

Bruce, Glad to see this post

Bruce,

Glad to see this post of yours. As I've noted here and elsewhere, there has always been a striking, mutually exclusive difference of expectation between those on right and left who frantically raised alarm bells in opposition to a commission that would surely lead to X or Y, and those (such as you) who have argued that the commission would not lead to adoption of any legislation (or any significant legislation). And as I've said, I think the latter view is quite plausible (in fact, I'd say that the odds are against adoption of a very substantial recommendation, although I don't know how long those odds are), but for reasons I've laid out previously I think the commission is clearly worth doing.


Budget Commission

Unless you can definitively state the case when a commission has produced anything worthwhile, I think you should give the topic a rest. What we really need is a crop of brand new legislators who aren't afraid to break the eggs needed to make this omelet.


First and Second Hoover Commissions between 1948 and 52

Produced hundreds of good recomendations, including consolidation of several federal departments. Most of the recomendations were adopted fairly quickly and others were steadily rolled out over the next 20 years. Some have never been adopted but at least generated some creative thinking.


Social Security does not need

Social Security does not need to be fixed. And to take money out of the Social Security system, even from the wealthiest recipients, to pay for the government's general obligations would be nothing less than a betrayal.


With All Due Respect . . .

I am sick and tired of the same mantra over and over again that we have to kick the bums out. Guess what? When we kick the bums out, new bums come in. Americans are going to be in for quite a surprise when they elect tea party legislators by the bucketful this November and spending shoots up. Why? Because once these bozos get to DC they are going to want to (i) shift spending to the programs they favor and away from the ones they oppose and (ii) do everything to get relected over and over and over again. Cutting spending is a surefire electoral loser. As a result, I predict that the tea party movement will peter out just like the Contract With America movement petered out.

I recognize it is extremely difficult to amend the Constitution, but we need to insist on a constitutional amendment creating term limits for Congress. It's the only way we will rein in Congress.




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