A commission to tackle out-of-control federal spending?

McClatchy NewspapersJanuary 17, 2010 

WASHINGTON — This week the Senate is expected to vote on a bold proposal to discipline out-of-control federal spending, but it's not expected to pass, even though most members of Congress know that failure to act eventually will endanger the nation.

The Senate is set to vote on whether to create a powerful bipartisan commission charged with making deficit-cutting recommendations right after this year’s mid-term elections. If most commission members agree on a plan, Congress would have to take mandatory votes before Christmas on the commission’s recommendations, which are all but certain to be politically toxic solutions to raise taxes, cut spending or change benefit terms for popular programs such as Social Security.

Congressional leaders are wary of this approach, seeing the commission proposal as a threat to strip away their cherished power over government money.

To Democrats, who control the White House and Congress, ceding that power is politically risky, since it creates “a reluctance to admit that Congress hasn’t been able to do its job,” said Susan Tanaka, a top official at the Peterson Foundation, which advocates fiscal discipline and strongly supports creating such a commission.

Still, lawmakers know that they need to act soon to rein in the skyrocketing federal debt. They also know that Medicare and Social Security are headed toward bankruptcy as the Baby Boom generation enters retirement.

The trend threatens not only the country’s economic future, but the careers of politicians who dawdle.

“Deficits and debt are not something people usually care about. But when the economy’s bad, and you see the government running up huge debts, that becomes a way for voters to focus their anger,” said Andrew Smith, director of the University of New Hampshire Survey Center.

As a result, he said, “It becomes an issue that helps Republicans.”

The commission proposal is expected to get fewer than the 60 votes needed to pass the Senate under an agreement reached last month, and President Barack Obama is considering issuing an executive order to create a less powerful task force to recommend deficit-cutting strategies. However, it would lack legal authority to force Congress to vote on its proposals.

Advocates of the stronger plan are unenthusiastic about Obama’s alternative. “It’s like second best,” said Tanaka. “It wouldn’t have the clout.”

Even so, she added, it would have some value, because “at least it would have serious people paying attention to the problem. Its power would depend on how much political capital the administration is willing to put behind it.”

The tougher plan is authored by Senate Budget Committee Chairman Kent Conrad, D-N.D., and Judd Gregg, R-N.H., the committee’s top Republican. It would create an 18 member task force of 10 Democrats and eight Republicans to review the government’s long-term financial condition. It would recommend potential remedies — higher taxes, lower spending, program changes or some combination.

The task force would vote on recommendations after the Nov. 2 congressional elections. If 14 of the 18 members agreed, its suggestions would become legislation by Nov. 23, and the House of Representatives and Senate would have a month to act on it. Congress could not amend the legislation. Final passage would require three-fifths majorities, or 60 Senate votes and 261 House votes.

The plan was co-sponsored by 30 senators from both parties. But its prospects are dim.

What’s needed is “a broad consensus between Democrats, Republicans and the administration that reducing the deficit is a big priority, and so it’s important for everyone to compromise. But I don’t think they’re ready to do that,” said James Horney, director of federal fiscal policy at the Center on Budget and Policy Priorities, a liberal research group.

In the House, 100 lawmakers from both parties back a similar plan. But Speaker Nancy Pelosi, D-Calif., has been cool to the idea, saying that the legislative process is adequate to deal with fiscal issues.

House Budget Chairman John Spratt, D-S.C., said flatly of a commission “I don’t think it can be done this year.” He acknowledged that “there’s a growing consensus we need to do something,” but he said that the calendar is already “squeezed” with other major issues, such as health care and overhauling financial regulation.

With baby boomers about to retire en masse, and the national debt requiring ever higher interest payments, trouble looms:

_ Medicare. Its trustees warned last year that its hospital trust fund will be exhausted by 2017.

_ Social Security. The federal retirement program is expected to pay out more than it takes in after 2016, and its disability fund will be exhausted by 2020. Still, the system should remain solvent through 2037, according to the trustees’ 2009 report _ four years earlier than they estimated in 2008.

_ Debt. The Congressional Budget Office estimated that debt held by the public should exceed 61 percent of GDP by the end of this year, its highest level since 1952. By 2019, CBO estimated, that figure should reach 68 percent. That means an enormous increase in interest payments on the debt over the decade.

_ Deficits. CBO estimates that the federal deficit should drop to $538 billion in 2013 from $1.4 trillion this year, but will rise again thereafter and reach $722 billion by 2019. It estimated that the government will accumulate $7.1 trillion in deficits this decade.

“It looks as though Congress is dysfunctional,” said Burdett Loomis, a congressional scholar at the University of Kansas. “I’m more worried than I’ve been in awhile.”

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