Sunday, October 10, 2010

Rep. Jeb Hensarling, the four-term Texas Republican, hopes it is true that, as has been said, Americans invariably do the right thing -- after exhausting all alternatives. Regarding the fiscal imbalance that is driving the national debt toward 90 percent of GDP, Americans are running out of alternatives.

Deficits are supposed to add $8.5 trillion to the nation's debt in this decade. This is the plan -- based on an assumption of 10 years of 3.4 percent economic growth. This year's second-quarter growth rate was half that.

President Obama established the 18-member National Commission on Fiscal Responsibility and Reform, on which Hensarling serves. The commission is not, Hensarling thinks, "well designed for success." Two-thirds of its members were appointed by Democrats and any recommendations must be supported by 14 members, meaning a minimum of two Republican appointees.

The commission's co-chairman, Erskine Bowles, former chief of staff to President Clinton, has suggested that the commission should endorse balancing federal revenues (they have averaged 18 percent of GDP over the last 30 years) and outlays at 21 percent of GDP. Spending is now 25 percent and under current law, on reasonable assumptions, will reach 35 percent by 2035.
Hensarling says the commission's deliberations so far have resembled sumo wrestling -- there has been much staring at one another and the problem, "but the moment of contact has not arrived."

The commission's near-term mandate is to propose recommendations designed to balance the budget by 2015 -- excluding debt service. That is no mean exclusion: Interest on the debt is projected to be $739 billion in 2015.  If this is all the commission does, Hensarling says, it may do more harm than good because it will take the focus off the need to address the long-term structural debt caused by the big three entitlements.

Fixing Social Security's approaching insolvency is, Hensarling says, "child's play" compared to dealing with Medicare and Medicaid, the primary drivers of the government's fiscal imbalance. Democrats, however, must pretend that they and Obama have fixed health care. The commission could assure Social Security's solvency for at least another generation by quickly raising the retirement age to 68 and by indexing benefits to inflation rather than wage increases.

The commission's other mandate is to recommend measures "that meaningfully improve the long-run fiscal outlook," including the gap between projected federal revenues and expenditures, particularly regarding entitlement programs. A "road map" to fiscal responsibility written by another commission member, Rep. Paul Ryan, R-Wis., does that. But Hensarling is one of only 13 co-sponsors of it. The other 164 House Republicans flinch. They fear, not without reason, that voters' cognitive dissonance makes them ardently in favor of shrinking the deficit and as ardently opposed to measures commensurate with the problem.

But Hensarling says that "judging from my 1/435th of the nation," people have never been more alarmed about deficits.  Today's anxiety is one reason why, when the commission reports in December, the lame-duck session of Congress will contain many zombie members -- politically dead but still ambulatory. Having no political future, they may have the gumption to do difficult things but, having been repudiated, will lack the requisite legitimacy.

1 comment:

Baxter said...

Hensarling is a preening and ambitious fellow with a mediocre mind. We will soon see if he is part of the problem or part of the solution with respect to the debt commission.

Where were all the Republican articles about the nations doubling debt during Bush & GOP Congress?

The "zombie" members of Congress in the lame duck are entirely legitimate. The term that the people elected them for runs until January 3rd. The GOP - a rather whiney bunch - is now cynically trying to discredit our elected representatives, as they will prefer the playing field next year.