Bipartisan deficit panels worked in the past, but now?

McClatchy NewspapersNovember 24, 2010 

WASHINGTON — A special bipartisan commission is set to give its recommendations on how to cut the skyrocketing federal deficit to President Barack Obama and Congress by Dec. 1.

But then the hard part begins: Finding the political will to act.

History shows that it can be done, if conditions are right. Lawmakers and the public must agree on three crucial points: The scope of the problem, the urgent need for solutions and a willingness to accept political risk.

Each element, budget experts say, was present during such bipartisan successes as the 1983 Social Security commission's rescue plan, and 1990 and 1997 bipartisan budget agreements.

But when even one of the three pieces was absent, such bipartisan efforts usually fizzle. Political conflict helped doom a high-powered 1993-94 panel studying Social Security and Medicare, and few saw a little-noticed 2005 tax reform commission as an urgent mission. Both went nowhere.

So far, experts are uncertain about the National Commission on Fiscal Responsibility and Reform, whose final report is due on Dec. 1.

Its mandate is to find ways to balance the budget, excluding interest payments on the debt, by 2015, and to bring down the national debt over a longer frame. Its final report will need the votes of 14 of 18 members, which means votes from partisans on both sides. If that happens, Congress is expected to vote on the recommendations.

Any commission agreement would be a powerful bipartisan political statement, because the panel includes outspoken conservatives and liberals, as well as influential congressional leaders.

However, Robert Greenstein, the executive director of the liberal Center on Budget and Policy Priorities, said that today's polarized political climate will make it hard to get 14 commission votes.

On the other hand, Rudolph Penner, a former director of the Congressional Budget Office, is more optimistic, saying "there's more congeniality that I expected." He's encouraged by the tempered reaction, at least from conservatives and moderates, to this month's recommendations from commission co-chairmen Erskine Bowles and Alan Simpson.

Today, no one disputes that the deficit and debt numbers are staggering: The deficit reached $1.4 trillion in fiscal 2009, sank to $1.29 trillion in the year that ended Sept. 30 and is projected by CBO to exceed $1 trillion again this year. The national debt is projected to reach World War II proportions, sufficient to endanger the economy, within 10 years.

"There's agreement the current (fiscal) course is unsustainable," said Susan Tanaka, director of policy and research for the Peter G. Peterson Foundation, which promotes deficit reduction.

However, there's strong disagreement over what to do. Most Republicans want spending cuts but balk at higher taxes. Most Democrats resist many spending cuts, other than for defense, and favor raising taxes on the wealthy.

Complicating the dispute is how to tackle the immediate economic situation.

"Do we stimulate the economy first, and then shift to deficit reduction?" asked Sen. Jack Reed, D-R.I., a Senate Appropriations Committee member. "It's like two prizefighters punching it out."

How does that fit with the lessons of recent history? Specifically:

Agreement on the problem.

The Social Security rescue commission had a well-defined mandate to solve projections that the system's trust fund could run out of money as soon as August 1983. It agreed on a series of steps that strengthened the system's solvency, including higher payroll taxes and a phased-in higher retirement age.

In 1990, key lawmakers from both parties were determined to reduce a deficit projected to rise to a then-record $250 billion in fiscal 1991. After torturous negotiations, they agreed to $496.5 billion in savings over five years, including higher taxes and cuts in spending.

Seven years later, both parties' leaders, bruised by years of budget battles, came together again behind a common purpose: To find a path to a balanced budget. After two months of talks, President Bill Clinton and Republican congressional leaders agreed on a package of spending reductions, changes in Medicare and a series of tax breaks and increases. Combined with a strong economy, the federal budget soon showed a surplus.

A sense of urgency.

"There was a good reason the 1983 Social Security commission was successful. We were about to run out of money to pay annuitants," recalled former Rep. Bill Frenzel, a Minnesota Republican.

The 1990 budget talks were prompted by rising deficits that appeared likely to strangle economic growth.

In 1997, lawmakers had tired of budget fights, including two government shutdowns in 1995-1996, were determined to escape such recurrent political chaos.

Polls today show that while the public wants deficits and debt reduced, it's not clear that they see this as an emergency demanding deep spending cuts or higher taxes.

Add the Nov. 2 election results, which gave Republicans control of the House of Representatives but kept Democrats in charge of the Senate, and the result is different interpretations from the two parties of what should be done.

House Speaker Nancy Pelosi, D-Calif., slammed the Bowles-Simpson plan as "simply unacceptable." She wants to restore higher Clinton-era tax rates for the wealthy as the primary budget solution.

The next House Speaker, John Boehner, R-Ohio, though, called extending all Bush-era tax cuts "the most important thing we can do to create jobs."

Those two positions aren't a good foundation for bipartisan deficit reduction.

A willingness to take political risks.

Two big budget initiatives in the 1990s arguably came with huge political costs. The 1990 deal helped cost President George H.W. Bush the White House two years later. Congressional conservatives were angry that Bush violated his 1988 "read my lips, no new taxes" pledge, and Bush lost re-election.

Three years later, Clinton won congressional approval of his $500 billion deficit reduction plan, which included higher taxes. But it passed without a single Republican vote, and probably helped the GOP win control of Congress a year later.

However, said former Sen. Bob Kerrey, D-Neb., who provided a crucial vote for the 1993 plan, those steps should be considered risks that paid political dividends. The 1990 deal, he said, created a blueprint for a bipartisan solution to fiscal turmoil, helped boost Clinton's 1993 effort and culminated in the 1997 budget deal.

By 1997, both sides saw potential political gain.

George Edwards, a presidential scholar at Texas A&M University, noted in a 2001 essay that Republicans needed to show they could govern, while Democrats needed credibility on fiscal responsibility.

Not every bipartisan effort worked.

Clinton created in 1993 bipartisan Commission on Entitlement Reform, but it fizzled. Its problem, said Greenstein, a commission member, was that "It had no support from the White House or congressional leaders," as Clinton had already taken a huge political risk with his 1993 plan.

Whether the current commission can succeed is a point of debate.

Veteran budget analyst Stan Collender observed that "Republicans practiced the politics of obstruction the past two years and got elected."

But Tanaka, of the Peterson Foundation, retains hope.

"What the commission is doing is putting long-term remedies on the table," she said. "They're making people talk about the problem."

ON THE WEB:

Simpson-Bowles plan

Schakowsky proposal

1983 Social Security Commission report

Congressional Budget Office 1990 budget agreement study

Government Accountability Office report on commissions

1993-94 entitlement commission

2005 tax reform commission

Congressional Budget Office deficit projections

Treasury Department report on 2010 deficit

Party divisions in the House

Unofficial roster of 112th Congress

House Republican leaders on earmarks

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