• Was the Fiscal Commission a Failure?

    Several folks wrote me about my post on tax reform and health care costs saying that the Fiscal Commission was a waste of time since its report has not been completely embraced by the President, nor has it been introduced as legislation into Congress. So, was it a failure?

    I think not, for two main reasons. First, the document is a comprehensive list of policies that could put our country on a long term path to a sustainable budget that has already received some bipartisan support. In that sense, it serves as a sort of benchmark against which to measure alternative plans. Of course it is viewed as imperfect by each member of the Commission who voted in favor; it is a compromise document, and that is the nature of the beast.

    Second, and perhaps most importantly, if we have an economic crisis at some point in the near future that necessitates quick action, the deficit commission report will likely be that plan, more or less. It would probably be better to debate policy outside of a crisis. However, there is a sense in which the long term budget problems are so large and inter-connected that we may only be able to address them in the midst of a yet unknown financial crisis. If one comes any time soon, the Fiscal Commission report will likely provide the framework of the deal that will be passed quickly. That is something.

    Update: or maybe the President will endorse the Fiscal Commission approach wholeheartedly tomorrow.

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    • The entire idea of the commission was to reach agreement. It failed to do so, therefore it failed.

      The issues it raised have been widely discussed for years. There was nothing new.

      It is highly unlikely that there will be a crisis that sneaks up without warning and could be solved by quickly passing a budget. TARP was an emergency, but that’s different. A budget will require lots of discussion, or at least will be discussed at length. Emergencies can be dealt with by a continuing resolution.

    • Paul Krugman refers often to the “Magic Asterisk” in the Fiscal Commission report. It relies on significant reductions in Medicare spending, but says not a word about how these are to be achieved. I think that undermines the credibility of the whole endeavor.