Maybe the Next Budget Commission Should Meet in Philly

Posted November 9, 2009 at 6:15pm

We’re a month or so away from the moment when the Treasury says the federal debt ceiling will have to be raised. Even though the bill increasing the debt ceiling is the fiscal equivalent of a vestigial organ from the budget debates of at least a century ago, the Senate seems hellbent on demanding that, before it will approve the legislation, the House agree to create yet another commission that supposedly will put the United States on the road to fiscal redemption.

[IMGCAP(1)]I don’t mean to sound totally cynical. If a commission has even a slight chance of moving the budget debate from its ongoing intractable standoff, why not give it a try?

One reason is that there’s a long history of budget commissions not having anything close to the desired effect on the bottom line. Few people today remember the National Economic Commission, the high-powered group that came together toward the end of the George H.W. Bush administration to fix the budget problem but ended up having no impact whatsoever. In the early 1990s, the Bipartisan Commission on Entitlement and Tax Reform, chaired by two very highly respected Senators, Bob Kerrey (D-Neb.) and John Danforth (R-Mo.), had a truly outstanding staff and put together a report that was very well-received. It, too, didn’t move the budget debate one iota.

For full disclosure purposes, I should also mention a budget commission on which I served — the President’s Commission to Study Capital Budgeting — which existed in the late 1990s and was as ineffectual as the National Economic Commission and Kerrey-Danforth.

In some respect, all federal budget commissions can trace their roots to the group that met in Philadelphia in 1787 to revise the Articles of Confederation. Then, as now, a difficult economic issue was proving impossible to solve, so a commission of smart people came together to deal with it. Fortunately for all of us, that commission — the constitutional convention — was successful. Instead of just revising them, it replaced the Articles of Confederation with the U.S. Constitution.

There were, however, two very important differences between the commission that led to the U.S. Constitution and all of the budget commissions created since then.

First, there was no existing process in place in 1787 that could have brought all of the parties together. Each state had its own independent government. Any state could have cut a deal with one or more of the others, but there was no way to impose it on all 13.

Second, in 1787 there was a general agreement that something had to be done. The economic warfare between some states had become so intense that it was clear the Articles of Confederation were unworkable and had to be changed.

Neither of these situations exists today when it comes to the federal budget.

There already is a well-established process that could be used to deal with the problem. In fact, it’s the process established in 1787. The Constitution gives Congress and the president the full authority and responsibility for deciding what to spend and how and if to pay for it. In other words, if they really wanted to use it, the House, Senate, White House, Democrats and Republicans already have — and have had — all the power they need to deal with the deficit and federal borrowing.

In addition, the deficit would have already been reduced if the type of political consensus that existed about the failures of the Articles of Confederation also existed on the budget. It doesn’t.

These two differences are likely to be a big impediment for yet another budget commission. Up to now, and regardless of which party was in the majority, those in a position to do something about budget issues haven’t wanted to cede that power to others even when they have been unwilling or unable to use it. Because the Constitution gives Congress and the White House the authority to deal with revenues and spending, neither has been willing to allow others to exercise it for them. It’s hard to see why that would change anytime soon.

In addition, even though there are many highly respected prophets of fiscal doom who repeatedly warn about the dangers of the federal government continuing to borrow as much as it has been doing, that doesn’t justify cutting spending or increasing taxes for some the most important participants in the budget debate. In fact, for many just the opposite is true.

Rather than the cure-all, silver bullet or magic elixir for the federal government’s fiscal ills, a budget commission needs to be seen as just one end of the spectrum of possible ways to deal with the situation. If current and past Congresses and presidents were able and willing to face the deficit directly, they would be cutting a deal because they already have the ability to do what’s necessary. If they wanted to come up with a solution but an acceptable deal wasn’t readily apparent, a budget summit to negotiate it would be the way to go. A budget commission is mentioned as an option when the existing process is unable to produce a deal or allow productive discussions to take place about what it might be.

But as history has amply shown, the fact that a new budget commission might be an option doesn’t guarantee that it will be successful. Not only were none of the previous budget commissions successful, most were total failures.

Also keep in mind that, even when they have succeeded, commission recommendations seldom quickly change the political landscape. It took about three years for what was proposed by the constitutional convention to be ratified by all 13 states, and many of the issues it raised are still hot topics. That doesn’t bode well for an agreement based on what a new budget commission might propose.

Stan Collender is a partner at Qorvis Communications and author of “The Guide to the Federal Budget.— His blog is Capital Gains and Games.