StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between



More About Why Bowles-Simpson Is Far Less Important Than Meets The Eye

07 Dec 2010
Posted by Stan Collender

As I promised yesterday, my column from today's Roll Call explains in more detail why the Bowles-Simpson commission shouldn't be considered a success.

If you still have doubts that Bowles-Simpson failed to change budget politics and deficit dynamics, just take a look at the tax/unemployment benefits/estate tax/god-knows-what-else deal announced late yesterday: Less than a week after the commission ended, congressional Republicans once again have eagerly agreed to policies that will dramatically and substantially increase the deficit. So much for the notion by commission supporters that what it did represents a sea change in the way we'll deal with this issue and an indication that the budget times have changed.


Bowles-Simpson Offers Lessons on the Deficit

By Stan Collender
Roll Call Contributing Writer

I am one of the people who never thought the deficit reduction commission co-chaired by Erskine Bowles and Alan Simpson had much chance of succeeding, so I wasn’t at all surprised last week when its proposal didn’t get the support of the 14 of 18 members needed to move the process along.

The Bowles-Simpson commission was set up on a pass-fail basis, and it unquestionably failed. Some members and others attempted to provide an alternative definition of success after Friday’s final meeting, and they came as close to drinking the federal deficit and national debt Kool-Aid as you can get. Some of those who have tried the hardest to impose an alternative definition have an ulterior motive because they supplied staff to the commission and were deeply involved in the plan’s development. To say the least, their position that the plan should be viewed as a success has to be treated skeptically.

Some people are taking solace in the fact that more than a simple majority supported the plan, but my strong suspicion is that the 11 supporters were actually an overstatement. Several members likely announced their support for the plan only after they were certain it wouldn’t be adopted so they could position themselves or their political party for future tax and spending debates.

As for the co-chairmen’s contention that the commission’s work at least proved that the era of budget denial is now over, it’s not at all clear it ever really existed. After all, the commission wouldn’t have been created if no one thought there was a problem that required attention. Others say the bipartisan support for some provisions amounts to real progress, but they need to keep in mind that deficit reduction proposals will be considered in a very different political context in the next Congress. Several commission members will be Members of Congress in 2011 and 2012 (they are the only commission members whose current positions should be watched for possible future implications), and it’s important to remember that their current support for part or all of the plan doesn’t guarantee their support for its elements in budget resolutions or reconciliation bills later.

Four main lessons from Bowles-Simpson are important to keep in mind as far as future federal budget efforts are concerned.

First, as we’ve seen multiple times over the past few decades, commissions seldom work when it comes to revenue and spending issues. Budgeting is the most political of all governmental processes because most of the questions can’t be answered objectively. That dooms from the start almost every effort to do what commissions are supposed to do: take the politics out of what is an inherently political decision.

The two commissions that are frequently cited as examples of success actually prove this point. The much-admired Base Realignment and Closure Commission has succeeded because, after a difficult political decision was made to close military facilities, the BRAC was only asked to determine which ones they should be. That’s very different from the larger, more open-ended and political question that Bowles-Simpson had to answer about how the deficit and national debt should be cut.

The Greenspan commission of the early 1980s is also often cited as an example of how the process can work, but we now know it was actually a failure. Because of the tough politics of Social Security, the commission was unable to agree on anything, and the plan it announced was actually worked out in private by President Ronald Reagan and Speaker Tip O’Neill (D-Mass.), two politicians cutting a deal the old-fashioned way.

Second, Bowles-Simpson showed clearly that any commission, but especially one that deals with taxes and spending, has to make a convincing case to the public for its proposals in order to be successful. Because Bowles-Simpson didn’t do this, recalcitrant commission members weren’t convinced that they would be politically protected if they supported it. Bowles and Simpson saw their job as just coming up with a plan, instead of coming up with a plan that had enough voter support to be adopted. That was a fatal flaw.

Third, I can tell you from personal experience (I served on a budget-related commission during the Clinton administration) that staffing is almost always a critical element for any commission. Most commission members don’t have the deep expertise needed to do the detail work, so they rely on others to do things like developing spending and revenue estimates and providing a deep dive on concepts. My commission relied on Treasury staff and a few paid outside consultants; Bowles-Simpson seemed to rely on staff on loan from outside organizations with an interest in the outcome. This is a huge problem in general; in this case it also called the commission’s objectivity into question.

Finally, even though a commission may work largely behind the scenes as Bowles-Simpson did, it has to keep in mind that the political environment will change simply because its existence and efforts generate questions, anxiety, support and opposition. The good feelings that may exist when the commission is named don’t automatically stay the same as its work continues.

For all the reasons noted above, my guess is that the Bowles-Simpson plan will suffer the same fate as the reports by virtually every other budget-related commission in U.S. history: the online equivalent of gathering dust on a shelf. By early next year, it will seldom be mentioned.

Bowles-Simpson and Faux Courage

Thanks, Stan, for a great analysis of another commission without any clothes. I was particularly taken with this point:

"Several members likely announced their support for the plan only after they were certain it wouldn’t be adopted so they could position themselves or their political party for future tax and spending debates."

Sounds pretty much like Dick Durbin to me, and don't forget his close connection to both Obama, his former Illinois colleague, and Pete Rouse, his former Chief of Staff. Durbin's position seems to have been merely a tactical exercise with next to no cost to him personally. I think Bert Lahr as the cowardly lion in The Wizard of Oz had significantly more courage than Durbin, who basically had none.


When it comes to the deficit,

When it comes to the deficit, Washington is like the alcoholic who alternates between self-righteous tee totaling and disastrous benders.. For a few weeks we had hand wringing about the deficit and talk about looming disaster and now it looks like they're going to add 900 billion to it over the next two years. It will be fun to see who votes for this and compare what they said before the election to their vote. Hopefully Rand Paul will vote to add 900 billion to the deficit over two years.


The commission was a success for the sponsors

Some members and others attempted to provide an alternative definition of success after Friday’s final meeting... Some of those who have tried the hardest to impose an alternative definition have an ulterior motive because they supplied staff to the commission and were deeply involved in the plan’s development. To say the least, their position that the plan should be viewed as a success has to be treated skeptically.

I'd say that at least one of the outside "sponsors" of the commission would view it as an important success. Rhetorically, the commission strongly tied Social Security benefits to the debt/deficit problem.

The new tax-cut agreement furthers that success by directly linking Social Security funding to the debt/deficit problem. The temporary cut in the payroll tax rate will require a $120 billion transfer from general funds into Social Security to replace the missing revenue.


Commision thrown under bus

I guess it is frustrating to work so hard on a bi-partisan commision on deficit reduction for the better part of a year and see it blown up by your president one week after. He sure paid attention to the recommendations! It makes you wonder why?




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