Commission to the Rescue!

It looks like President Obama is going to create the bipartisan commission to cut the deficit that Kent Conrad and Judd Gregg have been pitching–except that now Judd Gregg is against it.

According to the original Conrad-Gregg plan, the commission would have eighteen members–eight named by Congressional Democrats, eight by Congressional Republicans, and two by the administration, for a ten-eight split; if fourteen of the eighteen could agree on a deficit-reduction plan, Congress would have to vote it up or down without amendments. The Conrad-Gregg proposal is expected to be voted down in the Senate. So instead, Obama would appoint a commission by executive order, with six people named by Congressional Democrats, six named by Congressional Republicans, and six named by the administration, including at least two Republicans–for a ten-eight split; if fourteen of the eighteen could agree on a deficit-reduction plan, Congress would vote it up or down without amendments; however, Congress could separately choose to amend it. According to the Washington Post, Gregg “called a presidentially appointed panel ‘a fraud’ designed to do little more than give Democrats political cover.” Huh? I’m guessing Gregg’s objection is that Obama’s plan is based on an agreement with Congressional leaders, rather than actual legislation–but if you can’t pass the legislation, what else do you want Obama to do?*

More, important, is this a good thing? My prediction is that it will amount to exactly nothing, although there is a possibility it could turn out badly. I simply don’t see how any plan can get the agreement of fourteen commission members–meaning all the Democrats and four of eight Republicans, or all the Republicans and six of ten Democrats, or something in between.

Some people like to point to the Social Security commission of the early 1980s, but Jackie Calmes’s article in the New York Times showed that that commission was a failure. We only got Social Security reform because (a) the administration negotiated with commission members after the commission itself broke down (remind me again, why was Alan Greenspan appointed Fed chair in the first place?) and (b) Congressional Democrats added a provision to increase the eligibility age. (b) is the rough equivalent of Congressional Republicans adding a tax increase today, meaning it ain’t gonna happen now.

Others point to the commission to close military bases. But that was a very different issue, because base closure was a district-by-district, state-by-state issue–not a Democrat-Republican issue like taxes and government spending.

So my prediction is that the administration, meaning Orszag’s brainiacs, will put forward some sensible solutions that include tax increases and modest entitlement reductions; Congressional Democratic appointees will oppose the entitlement reductions but go along grudgingly because they want to accomplish something while Obama is in office; Congressional Republican appointees will oppose the tax increases and  not go along; and we’ll end up with gridlock. Even if by some miracle something comes out of the commission, if it contains a single dollar of tax increases (or even something that can be spun as a tax increase, like allowing any of the Bush tax cuts to expire on schedule), it will be rejected by Republicans in Congress, who will probably have more votes next year than they have now. As Ezra Klein said, “You can’t govern this country if the party that doesn’t control the White House simply refuses to give the party that does control the White House any accomplishments.”

But there is a bad scenario, as Mark Thoma warns. The Obama administration could appoint six people who are willing to gut the safety net further in order to balance the budget, and it might be able to pressure Pelosi and Reid to appoint moderates instead of liberals. Then you might be able to come up with fourteen votes for a package that only includes entitlement cuts and no tax increases, which would be acceptable to Congressional Republicans and their veto-wielding minority.

Would the administration actually do this? I like to think they wouldn’t, but at times they seem to care about balancing the budget more than how they balance the budget. I think it was pretty clear in the health care process that their one non-negotiable priority was fiscal balance over ten years. In other words, they want to save the country from future deficits so much that they might convince themselves it’s better to accept whatever the Republicans give them than not do a deal at all. Which puts us in this curious situation where the party with the White House and the largest Senate majority in decades ends up letting the other party govern the country.

Although I expect the commission to be a dud (or worse), in the short term I think the politics are good for the administration and the Democrats, because they can say they are doing something about the deficit–and it is actually something favored by deficit “hawks”** like the Peterson Foundation. And maybe that explains why Judd Gregg is suddenly against his own idea.

* And besides, I don’t see how Congress could prevent a future version of itself from amending the plan put forward by any commission. It could, conceptually speaking, simply retype the entire plan, add a few changes, and call it a new bill, couldn’t it?

** Always put in quotation marks because most “hawks” supported the Bush tax cuts and the unfunded Medicare prescription benefit.

By James Kwak

17 thoughts on “Commission to the Rescue!

  1. ** Always put in quotation marks because most “hawks” supported the Bush tax cuts and the unfunded Medicare prescription benefit.

    Don’t forget the Bailout, the wars, and Pentagon budgets.

    Does there exist even one single authentic spending hawk?

  2. Question, why do we need a “commission”? I thought that we voted for these people to take care of things. Why does a commission then get the power when we don’t necessarily vote for them?

  3. You can’t do much about the deficit without slashing the military or raising taxes on the wealthy. If they mess with the safety net too much middle class professionals will just start leaving the country or not immigrating in the first place, not too mention there will political problems which may unleash a black swan of their own. There are a whole lot of other places in the world to live besides the US, and skilled workers are only going to be more in demand in the coming years.

  4. The reason you need a commission is so that both sides (democrat/repubican) can make moderate concessions that they would not accept otherwise but can accept as part of a grand compromise.

    The problem is that bipartisan compromise was tried for health care and failed abysmally. It seems the republicans feel it is a political win for them to block any major Obama initiatives, and so far they appear to be right…

  5. @purple – I’m curious as to all these other places in the world to live and work. Most of the ones I know require a visa. I don’t mean to sound snarky; I might like to go to one.

  6. Another bad joke from the Obamanation administration. Too awful to even think it is compromise! Republicans haven’t been included in any “health-care reform” in this Congress. This is behind closed door statist thieving. No wonder a class guy like Sen Gregg is not going to play the game and calls it fraud. It is fraud and waste of time and money. This Obama, REPORT BACK TO ME, and I’ll do what I see fit nonsense is a KABUKI show. He takes all his orders from the triple A’s, Alinski,Ayers,Axelrod, and he just reads from the teleprompter.

  7. “Then you might be able to come up with fourteen votes for a package that only includes entitlement cuts and no tax increases, which would be acceptable to Congressional Republicans and their veto-wielding minority.”

    If the commission does get created, this will be the outcome.

    The democrats will come out with 1 loud voice (ya know, for the “progressive blogosphere”), 9 moderate voices, and 8 currently deficit hawk republicans. The dems will start at a squishy position of perhaps raising the tax rate for $250,000+ incomes 1-2% (ya know, as a compromise of the 3% obama promised), and in the final bill, all tax increases will disappear, and many entitlements will too.

    Welcome to the “govern-like-you-want-to-break-it” age of government.

  8. purple sez:”If they mess with the safety net too much middle class professionals will just start leaving the country…”
    I’m not a professional anything but I’ve worked all my life and I never expected to seriously think about living anywhere else until now. Every “reform” that I remember (I’m 62) has been brokered on the backs of the poor and middle class. The middle class is more endangered than the spotted owl, and if they keep chipping away at what’s left, there will be either hell to pay, or purple’s prediction will come to pass.

  9. Stick to Fox “News” dude. I read this blog to learn something, and because the comments are mostly informative, respectful, and intelligent. I don’t have time for your lunatic rantings.

  10. I’m not a professional anything either, nor an expert on anything political, financial or economic, but this commission idea, as well as other methods that this administration has used in advancing fiscal stimulus and the health care plan has a grade school class “government” flavor to it. Some of us would get elected to an “office”. Then we’d sit around part of the week in various groups and make “decisions” that didn’t amount to anything. I’m starting to think that there are something like two problems with the current Democrat governance that’s got everything boggled up:

    1) The Republicans have a governing philosophy: drain the middle class; have a gigantic military to secure oil and make the uninformed feel more secure; let the robber barons have their way. It’s foul, but it’s a philosophy and they follow it pretty closely. Obama, on the other hand, got elected on Kumbaya. The Dems go in all different directions while Obama tries to make everyone, including the Republicans(!!) feel they have an equal say.

    2)Obama’s really showing himself to be an amateur, quite over his head in terms of having a coherent ruling philosophy (has he any?) and in terms how to manage the country’s affairs (my first paragraph).

    The Republicans have seen and somewhat siezed the opportunity to fill the leadership gap. That’s partly why they are, to an amazing extent, still in control of things.

  11. What’s *really* awesome is to hear conservative pundits scream about how the bailout is entirely Obama’s baby. They pretend the whole thing never touched Republican hands or crossed Republican minds. The tax cuts couldn’t be related at ALL to the deficit either, nor could the wars!

    Selective amnesia brought on by incessant politicking only to keep a job (NOT to fix the country) is why there are no true hawks. Only “hawks” of convenience.

  12. I’v started to wonder if conservatives care about what’s best for the country, or what’s best for their egos. They’ve gotten their way for pretty much the last thirty years now, and have been whining like spoiled children that got punished for punching another but can’t understand why ever since Obama took office.

    It honestly makes me rather embarrassed for them.

  13. Honestly, Obama has succeeded in doing the one thing I thought he could and would do: slowed down collision with imminent complete and total collapse that the Republicans have had us on my entire life through the governing philosophy you expressed. It’ll still happen as they fool the electorate in to putting them back at the wheel again over the course of the next couple years, but we get a brief reprieve before continuing the systematic gutting and removal of the middle class. Enjoy it while it lasts!

  14. There is nothing new about this idea of letting the GOP dictate the shape of the budget over time. Reagan’s small government rhetoric was manifested as a deficit meant to limit future fiscal options. Now, Bush “deficits don’t matter” and “tax cut cure-all” nonsense is working to limit future fiscal options.

    Obama doesn’t have the luxury of a normally functioning economy – the thing that allowed Clinton to turn the Reagan deficit around. What to do? Well, if you are a DLC-loving, Hotelling-over-creed kind of guy, you let the GOP dictate substance while trying to win the beauty contest.

  15. This was a good post by the way. A lot of complications here and different aspects. So it’s kind of hard to know which way is best. But I do think it’s great strategically and even from a moral standpoint to throw Judd Gregg’s words back at him.

    James shows he is very perceptive (at least on this issue) when he says the legislation will never be passed. But at least Democrats will have the satisfaction of showing the nation what a hypocrite Judd Gregg is.

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