Budget Commission First Needs to Answer Big-Picture Questions

Posted February 22, 2010 at 6:43pm

I told the House Rules Committee several years ago that it shouldn’t bother to come up with a new Congressional budget process until it knew what it wanted that process to accomplish. All of the other witnesses at the hearing had specific recommendations. But, much to the frustration of several Members, I testified as forcefully as I could that it wasn’t worth their time, effort or energy to propose a new budget process until there was a consensus at least in the committee about what needed to be done. Without that, even if it could be enacted (which I said I doubted), a new budget process was doomed to fail so there was no reason to bother.

[IMGCAP(1)]I have the same basic recommendation for the budget commission that President Barack Obama created five days ago by executive order: Long before it thinks about any specifics or gets deep into the spending and revenue weeds, it first should try to develop a consensus about what should be accomplished. Without that, any plan that it recommends very likely, if not almost certainly, will be rejected out of hand.

The reason I say that is the reaction you probably had to the last paragraph. Many of those with an interest in the deficit reduction debate don’t think tax increases should be part of the discussion. If you’re one of those people, the mere fact that I mentioned “revenues” has you cursing my name. Others are equally insistent that one or more programs on the other side of the budget shouldn’t be part of the deficit reduction equation and my including the word “spending” has you using not-appropriate-for-a-family-publication language to talk about my ancestry.

The reality is that specific revenue and spending questions are actually little more than fiscal tinker toys compared with the big-picture budget issues on which the commission first needs to develop a consensus.

One option — reducing or eliminating the national debt — is off the table for now. That will be a source of fiscal agita for some, and it’s possible that the commission could decide to go beyond what the executive order that created it says. But the order’s charge that the commission propose “recommendations designed to balance the budget, excluding interest payments on the debt, by 2015” gives it some direction and a short-term goal that stops short of reducing the debt. Besides, you can’t reduce the debt without running a surplus and, given the current politics of the budget, the size of the deficit and the economy, that’s just not possible anytime soon.

The commission’s longer-term charge — “propose recommendations that meaningfully improve the long-run fiscal outlook” (the italics are mine) is what will pose the far tougher challenge because, as the debates on Capitol Hill have consistently demonstrated, there’s no consensus whatsoever about what that means.

For example, the four consecutive budget surpluses that occurred from fiscal 1998 to 2001 were thrilling to some who saw a value in reducing the size of the national debt and the annual interest payments that the federal government makes every year so that the long-term fiscal outlook and the government’s options would be significantly improved. Others saw the projected surpluses as an indication that revenues were higher than they needed to be to meet current expenses. They insisted that a tax cut was in order and that the surplus be eliminated.

Based on this history, the budget commission’s biggest and most meaningful contribution may well not be what many are expecting it to do — that is, propose specific spending and revenue changes. Instead, developing what so far has been that elusive consensus about an overall budget goal by far could be its most important accomplishment.

That’s not to say that big-picture proposals won’t be controversial. A recommendation that, assuming the economic conditions make it the appropriate fiscal policy, the budget deficit should be at a particular level rather than completely eliminated, could create a political firestorm about continued government borrowing. A controversy also will erupt if the commission recommends that, economy willing, surpluses and reductions in the national debt should be the goal. And, almost needless to say, any recommendation that specified a particular annual level of federal spending or revenues will create a serious disturbance in the budget force.

But, as I told the House Rules Committee, without an agreement on the context, any specific proposed spending and revenue changes will be even more of a problem. Without understanding the overall goal of the changes, few in Congress or outside the Beltway will appreciate what they will get in return for the spending reductions or tax increases needed to get there from here and will fight like crazy to prevent them.

The biggest of the big-picture questions that the commission will face is whether developing that much-needed budget consensus will be valued enough to make it worthwhile to try. Despite the obvious importance for a consensus to be developed, will a budget commission that only proposes long-term, overall goals be immediately labeled a failure and, therefore, have far less impact than it should have? But would the big-picture consensus get lost in the weeds if the commission recommended specific revenue and spending changes that would translate that agreement into a real plan?

Stan Collender is a partner at Qorvis Communications and founder of the blog Capital Gains and Games. He is also the author of “The Guide to the Federal Budget.”