Trying to reduce the federal debt by fixing the budget process
Republicans say last week's election gave them a mandate to slash federal spending and bring the national debt under control. On Wednesday, the Peterson-Pew Commission on Budget Reform suggested a first step on the road to fiscal health: adopting new rules for the federal budget, along with more effective ways to enforce them.
The commission is made up of an all-star team of federal budget wonks, including several former heads of congressional budget committees, the White House Office of Management and Budget and the Congressional Budget Office. Its members are alarmed by Washington's swift accumulation of debt, which they project will grow equal to the country's gross domestic product by 2024 and double the GDP by 2043 if left unchecked. Levels that high would likely cause lenders to lose faith in the United States' ability to repay, a development whose implications are too horrible to contemplate.
The Peterson-Pew Commission previously called for Congress to commit to bringing the deficit down enough by 2018 to stabilize the debt at 60% of GDP. (Although it urges Congress to make the commitment now, the commission doesn't call for lawmakers to begin tightening the purse strings until after the economy is more fully recovered -- say, in 2012.) The new report (download the PDF here) doesn't suggest which programs to cut or taxes to raise to achieve that goal; instead, it talks about changing the budget process to make it easier to get there.
In particular, it calls for Congress to enact into law a target year for achieving a sustainable debt level -- preferably, a percentage of GDP that's lower than it is today. The president would be required to submit and Congress to adopt a multi-year plan to reach that level, including annual debt targets along the way.
To enforce those targets, the commission endorses the sort of "enhanced rescission" authority that President Obama has proposed, which would give the White House the ability to force an up-or-down vote in Congress on a package of cuts to the annual spending bills. If the targets still haven't been reached after the president acts, the commission's plan calls for mandatory across-the-board spending cuts and surtaxes to go into effect automatically. Those would be limited in magnitude, however, to no more than 1% of GDP. In addition, a tougher pay-as-you-go requirement would limit Congress' ability to increase spending or provide new tax breaks.
Giving lawmakers less discretion works only up to a point -- it's a lot easier to set limits on the size of a budget than it is to figure out how to live within them. And it's worth remembering that one factor in California's dysfunctional budget has been the maze of restraints and mandates that voters imposed at the ballot box.
Still, the federal budget process suffers from too few limits, not too many. Lawmakers should be guided by budget plans that hew to an overarching economic goal, and that look further into the future than the next election. They also need a process that better illuminates the trade-offs that need to be made over the long term, and forces them to make choices. That's the message inherent in the Peterson-Pew Commission's work, and lawmakers should heed it.
-- Jon Healey
Illustration credit: Peterson-Pew Commission website