With A Bipartisan Commission At His Side, President Obama Will Avoid Seriously Addressing Solve the Nation's Deficit Problem


At Tuesday's House Budget Committee meeting, Congressman Paul Ryan got White House budget-maestro Peter Orszag to admit that the administration's new budget only kinda-sorta meets the deficit reduction standard it set for itself (the relevant exchange occurs about 29 minutes in). The administration's self-set goal—which Orszag talked up last fall—is to get the deficit down to about three percent of GDP. The administration's budget puts forth proposals to get part of the way there, but then whiffs on the rest: Rather than propose specific cuts for the final leg, it sets up a bipartisan debt and deficit commission to make suggestions about how the country might achieve its deficit goals.

A commission! To make suggestions! How could it possibly fail?

Of course, failure is in the eye of the beholder. As former Bush economic adviser Keith Hennessey notes, there are several reasons to form a commission, arguably the most productive of which is provide cover to make politically difficult decisions (the key example here is BRAC, the military base-closing commission). Obama seems to be hoping that with this commission, that's what it will look like he's trying to do.

But the more likely explanation is that he's trying to duck the deficit issue while creating the appearance that he's doing something about it. As Hennessey argues, the commission is so weak and so poorly designed that it's unlikely to achieve the desired results:

The President's commission would duplicate his budget proposal from last year. The goal of the rumored new Presidential commission would be to reduce the federal budget deficit to 3% by 2015.  But last year the President budget included specific policy proposals to hit that same goal!  The President's budget, proposed February 26, 2009, claimed to reduce the budget deficit to 3.0% by 2015 (Table S-1).  (CBO says it misses this mark and would result in a 2015 deficit of 4.3%, but I'm focusing now on the Administration's claim.)  The Mid-Session Review, published August 25, 2009, falls back to only trying to reduce the deficit to 3.9% by 2015 (Table S-1).  So the President would now propose a 12-6 commission to meet a goal that he argued his budget met 11 months ago with specific proposals?!?  That makes no sense.
The President's commission would address the wrong timeframe. The commission's goal is to focus on the next six years, rather than the even bigger long-term fiscal problem.  Since I arrived in Washington in 1994 there has been a consensus that the hard fiscal policy problem is the long-term one, not the short-term one.
The President's commission does not create any binding fast-track process. Leader Reid cannot unilaterally bind 100 Senators to an up-or-down vote and no amendments.  Even if a commission were to produce unanimous recommendations, Republicans should fear that a Democratic Senate majority would use those recommendations as a starting point, substitute even more tax increases for whatever spending cuts are in the recommendations, and then pass the bill.  Scott Brown's election as the 41st vote has little effect on this dynamic, since the changes would probably happen in committee.  Any commission created by Executive Order has this weakness:  it cannot bind Congress.  Only Congress can tie itself to the mast.

Moreover, as Hennessey notes in a separate post, "the President does not commit himself to proposing the policies recommended by the Commission.  The Commission is charged only with 'identifying policies to improve the fiscal situation.'  The President is still retaining the right to ignore those recommendations, come up with different ones, or redefine his goal after the Commission has reported."

So the solution to our deficit problem is a non-binding commission with repeat goals that doesn't address the long-term system problem and that the White House is free to ignore. This will definitely work, right?

Previously, I noted the impending budgepocalypse. Veronique de Rugy examined the president's overly rosy budget assumptions here.