No Way To Get A Real Deal On Spending And Revenue – Simpson And Bowles Had A Good Plan, But Washington Rejected It America needs statesmen who will tell the truth about fiscal issues and act without political considerations in mind

By Paolo von Schirach

October 7, 2013

WASHINGTON – Let’s leave aside Senator Ted Cruz’s narcissism and his consequent irrepressible need to be in the limelight. He may indeed have a point about Obamacare’s deep flaws; but he is mostly a self promoter operating freely in a system in which anything goes because there are no more rules. Unfortunately, in this theatre, (and Cruz is not the only star), it will be almost impossible to have an adult conversation about the real crisis: America’s systemic revenue and spending problems, (made worse by negative demographics), that are at the root of our perennial fiscal imbalances.

The Debt Commission

The last time we had an adult conversation it was back in 2010, with the Debt Commission. That effort led by Democrat Erskine Bowles and Republican Alan Simpson was honest, sincere and meaningful. These two gentlemen are real patriots. Instead of treating the commission created by President Obama as yet another Washington futile exercise, they grabbed the opportunity and tried to make a difference. Their final report was truly bipartisan and it was approved by a majority of the members of the commission, Democrats and Republicans. The Report recommended real, as opposed to cosmetic, changes in Social Security and other key entitlements. It recommended sensible, (not sequester-like hacking), cuts to defense spending, including previously taboo benefits for veterans.

Lower spending, higher taxes

Finally, it recommended fiscal reform: an expanded tax base and lower rates, with the goal of increasing revenue somewhat, however lowering corporate taxes in order to incentivize business activities. The combination of a serious spending reform that would have focused on the big-ticket items and sensible fiscal reform would have made a huge difference. It would have engineered the “bending of the spending curve” that would have finally altered the trajectory now characterized by perennial budget deficits and an ever-increasing national debt.

Nothing happened

Sadly, nothing happened at the time. Nothing at all. In a rather pugnacious but always civil fashion Bowles and Simpson pressed on, bringing their case to the media and to the public. But the poisoned Washington political environment was totally against any serious bipartisan dialogue. No deal. No deal at all, on anything.

This was December 2010. Now we are almost at the end of 2013 and we are in the same place. In fact worse, because we keep having deficits year after year and adding to the debt, even though at a slower pace.

No deal

And here we get into the treacherous territory of the negotiations on raising the debt ceiling. President Obama argues rather disingenuously that raising the debt ceiling is a “duty” on the part of Congress, since this all about paying for past expenditures. The Republicans say instead that any authorization to borrow even more in order to pay for out of control spending should be tied to some deal about reducing future spending. This is not a crazy idea, some kind of Ted Cruz-like silly posturing.

At some point America will have to confront its systemic over spending. Simpson and Bowles had a plan. May be not perfect. But it was an honest base for a serious engagement. Now we have nothing. Only animosity and name calling.

Debt for ever?

Of course, it is easy to accuse the Republicans of reckless behavior for their audacity to even contemplate a “US default”, should they refuse to authorize new debt. But then, what should they do? Raise the debt ceiling and the white flag at the same time, conceding that America’s insane over spending will continue until the Democrats are in charge?

Forget bipartisan accord

In a better world, a world in which people like Simpson and Bowels negotiate and come up with decent compromises not dictated by political calculus, this menace of an ever-growing national debt would be dealt with. In this environment in which radicalism is matched only by pettiness and short-term goals, I am afraid to say that we do not have a chance.


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