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Thursday, January 21, 2010
Obama forms “fig leaf” commission to propose tax increases
By Heritage Foundation @ 2:47 PM :: 3170 Views :: National News, Ethics

From the President who brought you unaccountable, constitutionally-questionable czars comes the latest innovation in pass-the-buck leadership: a White House executive commission designed to solve the behemoth of a spending problem plaguing the federal government.  Members of Congress have described the commission as a “nothing burger,” a “fig leaf” and “something that is put in place to kind of cover [President Obama’s] rear end." Colorful critiques aside, it’s an executive commission tasked with making policy recommendations aimed at reducing the country’s projected $1.4 trillion deficit.

News of the commission follows the Senate’s debate this week on the increase of America’s debt limit by a whopping $1.9 trillion, which would raise Congress’ theoretical credit card limit to $14.3 trillion. That's a legal necessity if the federal government wants to keep borrowing more money.  The key word is "wants," since the only return on the borrowed money is out-of-control discretionary spending and an expansive entitlement system with no responsible fiscal future.  Congress must address the entitlements crisis if it wants to honestly address the root cause of our future debt problems.

Due to rising costs in Social Security, Medicare and Medicaid, federal spending will cause the debt to grow to 300% of the economy by 2050. In total, the entitlement programs have promised $45 trillion more in benefits than the country can afford to pay.  But hey, we can just raise taxes right?  Raising taxes to fund these benefits would require an additional $12,072 per household by 2050 and further thereafter, which would create a tremendous burden on families and future generations. Cutting spending will not be sufficient to pay for the programs, as they will consume the entire federal budget by 2052.

And if you think today's economy is bad, you'll really dislike what the future has in store.  If Congress does not immediately address its long-term debt problem, America will face a fiscal crisis far worse than what we've seen in the past two years. Publicly-held debt must not grow faster than the economy if it is to be sustainable; otherwise the demand on capital markets would be so severe that private and foreign lenders would stop buying U.S. securities. Yet the United States is still on an unsustainable course.

Enter the executive commission. The Wall Street Journal describes its component make-up: "The 18-member commission will include six people appointed by congressional Democrats, six appointed by congressional Republicans and six appointed by the president. Of the president's six, two will be Republicans and four will be Democrats."

This veneer of budget-fixing bipartisanship will no doubt make for a lovely rhetorical flourish at the President’s January 27 State of the Union Address, where it will likely serve as a centerpiece in his argument that he is making serious efforts to tackle out-of-control spending.

But as The Heritage Foundation’s Stuart Butler explains, the commission would be inherently flawed and ineffective, given that it lacks the accountability and “public consultation” necessary to gain popular support for any reforms it recommends: "The commissioners would be chosen from a pool of potentially lame duck Members of Congress, with a report due after the election and recommendations to be crammed through and voted on by the end of the year in a lame duck session. If this process were actually successful, it would virtually guarantee a back-room “Andrews Air Force Base” deal consisting of immediate and real tax hikes combined with distant and doubtful spending cuts."

There’s a deeper truth at work here: a commission to study budget reform is an unnecessary measure designed to keep one’s hands clean while another does the dirty work. In reality, there’s nothing stopping Congress or the President from acting on their own accord and bearing the mantle of responsibility that the public has placed on their shoulders. In short, they have the power – but evidently not the will – to take serious steps to cut spending and reduce the deficit that this year exploded to “26 percent of the economy.”

They could start with canceling TARP, capping discretionary spending growth (which has increased by 25 percent over the last three years), and returning to federal spending levels of just a decade ago.  These fiscally prudent steps would immediately signal the American public that Congress comprehends the crisis.  At that time, Washington could undertake serious entitlement reform that puts America on a fiscally responsible path forward.  Understanding you have a problem is a good start, but a lame duck commission is not the solution.

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