A serious conversation about managing the federal budget is under way. And that’s a good thing. Federal spending is growing faster than federal revenue. Absent changes in the law, future generations of Americans will likely have to raise taxes to unprecedented levels, dramatically reduce the reach of government programs, risk the macroeconomic consequences of uncontrolled debt, or some combination of all three. At best, these options are unappealing. At worst, they are a threat to prosperity. But the fiscal conversation is unfolding in an unfortunate manner.
Erskine Bowles has harsh words for the left: Mr. Bowles's tone on the call was grim. "The problem is real," he said. "The solutions are all painful. There is no easy way out." At one point, he said if the country doesn't do anything to tackle the debt, "we're going to have one hell of a crisis." He has said the debt could trigger an economic crisis if country's that buy U.S. debt either decide to stop or start demanding much higher interest rates. Mr. Bowles had harsh words for fellow Democrats.
Naftali Bendavid reports that a bipartisan debt reduction plan is picking up steam in the Senate.
Paul Ryan isn't letting go of his Obama-ignored-the-deficit-commission talking point. Here's his interview with Politico's Mike Allen. Ryan: President Obama, through an executive order, created his own commission to solve this plan. Q: You were on it. Ryan: I was on the commission. And you know what he did? He didn't accept -- he didn't take one of the big recommendations of the commission, he basically disavowed the commission.
Since today there's another entry in what I expect will be a perpetual series of articles urging President Obama to make a bipartisan deal to cut the deficit, let me plug my (subscription only, so subscribe!) TRB column arguing that there's a better and easier way to handle the medium-term deficit: The deficit is a huge dilemma that’s too big for one party to solve, say the pundits and various deficit scolds. (Alan Simpson and Erskine Bowles: “Neither party can fix this problem on its own, and both parties have a responsibility to do their part.) Nonsense, I say.
The deficit is a huge dilemma that’s too big for one party to solve, say the pundits and various deficit scolds. (Alan Simpson and Erskine Bowles: “Neither party can fix this problem on its own, and both parties have a responsibility to do their part.) Nonsense, I say. There’s a really easy, and 100 percent partisan, answer: Just let all the Bush tax cuts expire. President Obama can accomplish this without negotiations, compromise of any sort, or even putting aside petty agendas for the national good.
WASHINGTON—As I was passing through security at Boston's Logan Airport on Tuesday night, a TSA worker discovered a penny in one of the bins that had just gone through the screener. He picked up the coin, turned to a colleague and said with a grim smile: "This is your Obama bonus." Which made me wonder: Is President Obama's strategy of offering pre-emptive concessions destined to make enemies of his potential friends in the electorate without winning over any of his adversaries? The idea of freezing the pay of federal workers could be a sensible part of a larger, long-term deal that would comb
WASHINGTON—Ronald Reagan (bless his sense of humor) loved to say that the problem with his administration was that the right hand didn't know what the far right hand was doing. Something of that sort is happening among conservatives on the supposed urgency of closing the federal budget deficit. On the near right is the preliminary proposal of the co-chairs of the president's deficit commission, Erskine Bowles and Alan Simpson. It is a deeply conservative document that would make sharp reductions in Social Security, Medicare and Medicaid while also cutting and flattening income tax rates.
When Erskine Bowles and Alan Simpson came out with their deficit plan last week, I got a little excited and rattled off like a million blog items about it. That turned out not to work so well for me. The more analysts looked at the plan, the worse it got, and after a while I decided their plan was a pretty bad idea. Oh well, lesson learned -- just because a couple bipartisan worthies come along promising to put our fiscal house in order, it doesn't mean I have to drop everything and... Hey, look! New bipartisan deficit plan! Okay, I know, I should probably wait. But seriously.
No one expected the deficit commission’s report to get a warm welcome. But the reaction, particularly from liberal groups, to a draft version commission co-chairs Erskine Bowles and Alan Simpson released Wednesday was positively frigid. AFL-CIO President Richard Trumka said that it amounted to telling “working Americans to drop dead.” House Speaker Nancy Pelosi labeled it “simply unacceptable.” There is plenty wrong with the proposal, but does it actually deserve the sneering, dismissive response it is receiving? Not even close.