The Deficit Commission: A Good Try That Falls Short

My colleagues, Dan Mitchell, Jagadeesh Gokhale, Michael Cannon and Chris Edwards have already provided their thoughts on the chairman’s mark released yesterday by the bipartisan deficit reduction commission.  A few additional thoughts:

The commission provides a good-faith look at the magnitude of the problem we face, and the magnitude of cuts necessary to bring spending down to even 21 percent of GDP (and it really should be far lower).  In doing so they show just how unserious Republicans are in proposing a paltry $100 billion in spending cuts.  And the commission makes it clear, unlike Republicans, that both entitlements and defense spending must be on the table.

The commission also starts the debate in a useful direction by implicitly acknowledging that their need to be some limits to government spending—that government cannot consume an ever-increasing proportion of GDP.  (Without a change in policy, the federal government will consume 43 percent of GDP by 2050.)

But ultimately the report falls short because it fails to address the proper role of government.  In fact, it tacitly accepts the idea that government should be doing everything it is doing now.  It even acquiesces to the new health care law.  As a result, it fails to reduce the size of government sufficiently to avoid tax hikes, let alone permit tax cuts in the future.

Moreover, because the commission leaves the basic structure and role of government intact, it raises questions about the future viability of its proposed mix of spending cuts and tax increases.  History demonstrates that it is far too likely that tax hikes will be permanent, while spending cuts will last as long as the next year-end emergency appropriations bill.

As the commission moves toward a final report on December 1, members would be advised not to focus just on the details of these proposals, but to have a serious and deliberative discussion of what the federal government should and should not be doing.