JONATHAN CHAIT MARCH 10, 2011
Naftali Bendavid reports that a bipartisan debt reduction plan is picking up steam in the Senate. At the same time, it still sounds incredibly vague:
Messrs Warner and Chambliss and four other senators, the so-called Gang of Six, are seeking to craft a proposal that would shave $4 trillion off the federal government's projected budget deficit over 10 years.
The package under consideration would essentially force Congress, within a short period of time, to come up with changes to spending and tax rules to achieve that goal over the next decade.
This is the whole problem with the Bowles-Simpson approach. The dilemma is that we need to figure out some things that government is spending money on that it should no longer spend money on, and we need to identify some people who need to pay higher taxes. Doing that is really unpopular and really hard. That's why they created a commission. But all the commission did was throw the problem back at Congress and say, "you have to spend less and raise more revenue" without identifying who would be paying more taxes and what services or benefits would no longer be provided. As Stan Collender explained:
The plan calls for a substantial reduction in federal employees. A reduction in employees generally results in the government relying on more outside consultants to get the work done but, in addition to the recommended reductions-in-force, Bowles-Simpson also calls for a significant cuts in the use of contractors.
The combination of those two seems to indicate that the now smaller number of federal employees will have to do everything that was done before, that is, that they will have to be much more productive. But Bowles-Simpson also calls for a three-year freeze on federal employee salaries and that almost inevitably means an increasing number of federal workers will quit. That will reduce rather than increase productivity as new and less experienced workers replace the more senior folks who will have left for greener pastures.
In other words, Bowles-Simpson projects substantial savings based on the expectation that a less experienced and much smaller federal workforce will be more productive and just as effective than the more experienced and larger workforce it replaces. That makes absolutely no sense. ...
The most egregious gimmick, however, and the one that is a clear golden oldie in the federal budgeting world, is assuming $11 billion in annual savings from domestic discretionary spending by creating a committee to recommend the cuts. This is nothing more than a modern-day version of the magic asterisk in unspecified future savings that David Stockman and Dick Darman relied on in 1981 to make the numbers in Ronald Reagan's first budget work.
Bendavid also straightforwardly reports the hilarious detail that Pete Peterson might set up Bowles and Simpson in their own deficit reduction group:
Democrat Erskine Bowles and Republican Alan Simpson, who co-chaired the White House's deficit-reduction commission last year, have embraced the effort and launched a new nonprofit organization to raise public awareness about the debt and possible solutions.
Pete Peterson, the New York billionaire who often funds projects aimed at cutting the debt, met with Messrs. Warner and Chambliss Wednesday morning and said in an interview later he was "seriously" considering giving money to the nonprofit.
How many groups like this is Peterson already financing? I've lost count. You've got the Peter G. Peterson Foundation ("Our mission is to increase public awareness of the nature and urgency of key fiscal challenges threatening America's future and to accelerate action on them"), the Concord Coalition ("dedicated to educating the public about the causes and consequences of federal budget deficits, the long-term challenges facing America's unsustainable entitlement programs, and how to build a sound economy for future generations"), the Committee for a Responsible Federal Budget ("a bipartisan, non-profit organization committed to educating the public about issues that have significant fiscal policy impact"), the Committee for Economic Development ("Earlier this year, CED's Fiscal Health Subcommittee launched an endorsement campaign around a business statementurging Congress to reduce the long-term federal budget deficit to improve America's long-term economic outlook. The statement urges bipartisan compromise and asks that all options be on the table and no preconditions be made to negotiations"), the Center for Entitlement Reform, and more. They could start their own softball league, with upper and lower divisions and a post-season tournament televised on the Pete Peterson Network, which, if it does not currently exist, will no doubt exist soon.
I'm not comforted by the fact that the task of rationalizing the federal budget is largely in the hands of a man who's setting up an endless bureaucracy of completely redundant bipartisan deficit scold organizations.