Bipartisan commission proposes strict budget rules to stabilize U.S. debt
The Washington Post
WASHINGTON – A bipartisan commission focused on stabilizing the nation’s soaring national debt wants to dramatically revise congressional budget rules to force lawmakers to set long-term borrowing goals and create triggers that would automatically enact painful spending cuts and tax increases if those goals were not met.
“Transparency, triggers and targets. That’s sort of the key to our report,” Bill Frenzel, a former ranking Republican on the House Budget Committee who co-chaired the effort, said Wednesday.
Although the panel offered no specific plan to balance the budget, Frenzel said stronger rules would help lawmakers “keep (their) feet from straying from the path of righteousness.”
The nearly two-year effort was a partnership of the Peter G. Peterson Foundation, the Pew Charitable Trusts and the Committee for a Responsible Federal Budget. Its report, released Wednesday, is the first of three sets of recommendations for deficit reduction expected over the coming month. The other two, including one from President Barack Obama’s bipartisan fiscal commission, are expected to offer more explicit budget-balancing plans.
Frenzel said the Peterson-Pew commission rejected that approach in favor of providing Congress and the White House with “additional tools to help fix the broken budget” process.
For the first time since the current budget rules were adopted in 1974, the House failed to propose a budget blueprint this year, meaning that there is no fresh outline for how to control spending during the fiscal year that began in October. Congress as a whole also now routinely fails to approve budget plans in election years.
With Republicans and Democrats at odds over the correct prescription for reducing record budget deficits, commission member Maya MacGuineas said the report’s recommendations could serve as a bridge toward progress until a broader consensus about spending cuts and tax increases can be forged.
“If we can’t get anything real . . . this could be the first step,” said MacGuineas, who serves as president of the Committee for a Responsible Federal Budget. “You can’t even lead a horse to water if you don’t have a leash.”
Specifically, the commission calls for a short-term goal of stabilizing the portion of the national debt held by private investors at 60 percent of the gross domestic product by 2018. Debt held by private investors is now about 63 percent of GDP.
The commission recommends a new law called the “Sustainable Debt Act” that would establish that borrowing goal and set annual targets for spending and revenue. In a major change, the tax-writing committees would be held to tight limits, as the spending committees are now, to rein in the explosive growth of tax breaks for businesses and groups of individuals known as tax expenditures.
If Congress failed to meet those targets, a tough new enforcement regime would cut all spending – including entitlements such as Social Security and Medicare – across the board and add a broad-based surtax to all forms of federal taxation.
The commission also recommends beefing up the congressional budget committees by adding House and Senate leaders, as well as the chairmen of the appropriations and tax-writing committees, to their ranks. It urges Congress to adopt multi-year budget plans – rather than the current single-year proposals – to help keep them on track.
And it suggests creating long-term goals to restrain the growth of the major drivers of the nation’s budget problems: Social Security, tax expenditures and the soaring health-care prices that are pushing up the cost of Medicare and Medicaid. Triggers would make automatic adjustments to those programs if the goals were not met.
It’s not clear whether Congress can be persuaded to adopt such rules, which would be far tougher and more extensive than any previous deficit-reduction regime. MacGuineas said the report has been presented to Capitol Hill leaders in both parties and to administration officials, who, she said, “had no negative responses.”