Peggy Noonan's column about the budget in last Friday's Wall Street Journal (I could probably stop here and know that I've said all that needs to be said) shows why someone who doesn't know anything about the budget or economy shouldn't write about them.

One sentence in particular caught my eye: 

"People are freshly aware and concerned about the real-world implications of a $1.6 trillion dollar deficit..."

Peggy...Has anyone ever told you that you have to consider the economic context in which a deficit occurs?  A deficit even half that size when the economy was growing, like the ones that happened during Bush 43, were indeed a disaster.  But last year's deficit of $1.4 trillion, which occurred when monetary policy was having no effect and when businesses and consumers weren't spending, not only was the correct fiscal policy, it was a triumph.  The same will be true this year if the deficit is $1.6 trillion.

 I too attended yesterday's Peterson-Pew Commission on Budget Reform Policy Forum, and I highly recommend that you watch it for several reasons:

     I dropped by a forum of the Peterson-Pew Commission on Budget Reform yesterday, the  earnest  group of budget mavens that's been pushing  for a bipartisan deficit commission and is itself a dress rehearsal for such a commision.

     Unfortunately, as polite as the discussion was, the gridlock was obvious.  It didn't bode well for President Obama's plans to name a bipartisan commission on Thursday.

     Douglas Holtz-Eakin, the former CBO director who was John McCain's top economic adviser during the presidential campaign, sounded dispassionate until you listened to the nuances.  Without flatly rejecting the idea of tax increases to help close the deficit, Holtz-Eakin pointedly insisted that spending was the main problem and that "we cannot tax our way" out of this.

    I heartily agree with Bruce Bartlett's scathing description of Minnesota Gov. Tim Pawlenty's proposal for a balanced-budget amendment to the Constitution: it's phony, simplistic, ill-informed and cynical.

    But my wife stopped me cold this morning with this question:  "Ed, what if you were a Republican politician right now, running against a Democrat?  What else would you come up with?"

    My short answer: I got nothing. 

     Obviously, there are plausible conservative ideas about how to reduce the budget deficit, deal with entitlements, reform health care or regulate financial services.  

 Just before noon today, President Barack Obama proposed five new middle class benefits that will be detailed in his budget next Monday:

The pizza-loving Matthew Yglesias thinks my post yesterday characterizing the phrase "primary balance" as a communications ploy is too strong and that it has real meaning I shouldn't simply dismiss.

Economists and policy types may indeed recognize the concept of a primary balance (a balanced budget not including annual interest payments on the national debt) as valid and worthwhile as Matthew suggests.  As a policy/budget person, I have no problem with that.  Amen.

It started with a Wall Street Journal story from yesterday that said the White House either is considering not spending all of the TARP money that remains unspent or doesn't think it's going to need to spend the funds because the situation is improving faster than expected.  As a result, it may be able to lower the projected 2010 deficit and the amount the government will have to borrow.  Here's the money quote:

Agreeing not to spend a certain amount of TARP money will enable the White House, in its budget projections, to assume less money out the door and, therefore, less debt issued. The move would also reduce the deficit by an unknown amount since a certain level of spending and borrowing is already factored into estimated future deficits. (Italics are mine).

My column in today's Roll Call was inspired by what Bruce and Pete posted lasted week on budget commissions.  As noted in the column, I served on one of these commissions and so know first hand that a bunch of things have to happen for them to have a chance of accomplishing anything.  It's not clear to me that that everything is aligning properly this time.

Commissions rarely have much impact on Washington policymaking, so why do we have such a long string of them?  Because political leaders want to convince their constituents that they really stand for whatever the commission is set up to do, when, in fact, the laws they're voting for do the opposite.

Bruce's post lists them.  Most recently, President Bush's Tax Reform Commission did an unusually good job, only to find their work was for nought.  The Kerrey-Danforth Commission did an excellent job on entitlement reform, leading to welfare reform, but not much else.