Posts Tagged ‘Simpson/Bowles Deficit Reduction Commission’

Simpson and Bowles Fire First Salvo in Deficit Reduction Battle

Tuesday, November 30th, 2010

The initial recommendations of the Deficit Reduction Commission Chairmen have been released and if anyone was unsure why neither party has tackled this issue before, the answer can be found in the report.

It reads like a litany of third rail issues and has come in for criticism from both the left and the right since it’s release. Talking Points Memo provides a summary of the major proposals.

There have been attacks on the proposal from both the left and the right, but a surprising number of pundits have argued that, even if they disagree with many of the proposals, the effort is important and the proposal represents a good starting point.

It’s worth noting that this isn’t the report of the deficit commission, but just the initial recommendations of the chairmen. The release of these recommendations has been seen as a sign that the chairmen don’t have the 14 out of 18 votes they need in order to produce a report, and the report itself can be seen as a first step for negotiation. Even if the commission is not able to produce a consensus report, the release of the report on the heels of the Republican victory in the midterm elections sets the tone for Washington’s agenda over the next few years. It’s a hell of a time to have to be balancing the budget, but that’s what we get for running structural deficits ever since the Reagan Administration.

The point I have been making about serious deficit reduction for the past two years is that it can’t be done without sacrifice and that, while I agree with Republicans that this can’t be done just by raising taxes, the Tea Partiers need to understand that it can’t be done just by cutting government spending (especially if you want to give yourself a tax cut, protect your favorite parts of the crappiest welfare state in the industrialized world and continue to act as policemen for the rest of the world). Anyone who thinks that cutting taxes, protecting Social Security, Medicare and defense from cuts is a recipe for deficit reduction is deluding themselves.

With that being said, there are a number of ways to get to there from here. The Simpson-Bowles framework is based on a number of changes, including:

Tax Changes

  • Ending a number of tax deductions, including the deduction of mortage interest.
  • Using some of this money to lower overall tax rates across the board
  • Raising the gas tax by 15 cents over a 10 year period to pay for transportation projects
  • Increased Social Security taxes for higher income earners

Entitlement Reform

  • Pegging the growth of Social Security income to a lower inflation rate.
  • Increasing the retirement age to 69 in 2075
  • Means-testing Social Security
  • Increasing Medicaid co-pays
  • Increasing Medicare premiums

Cutbacks in Discretionary Spending, including:

  • Wage freezes and cutbacks in the federal workforce
  • Decreased benefits for veterans health care
  • Elimination of subsidized student loans
  • Cuts in Foreign Aid and the State Department

Cuts in Defense Spending, including:

  • Cutting forces in Europe and Asia by 1/3
  • Cuting a number of weapons systems
  • Freezing salaries of non-combat military personnel
  • Reducing spending on R&D

If these changes seem drastic to you, consider that Simpson-Bowles doesn’t even eliminate the deficit by 2020, just decreases it to a more manageable portion of GDP going forward. All in all, it takes a $4 trillion bite out of the $9 trillion projected deficit over the next 10 years.

While Simpson-Bowles is the only official deficit reduction panel, others have taken a shot at the goal of deficit reduction as well. Earlier this year, Esquire magazine convened a bi-partisan group of former Senators organized by MSNBC TV personality and former Senate Finance Committee Staff Director Laurence O’Donnell. O’Donnell’s team actually put together a plan to eliminate the deficit by 2020. Their plan includes many of the same elements of Simpson-Bowles, but (among other things) assumes decreased costs for Afghanistan and Iraq, more cuts in defense spending and includes a $1 a gallon gas tax (which is offset for the average American by increasing fuel efficiency to 46 MPG (the current European standard)). 

In the wake of Simpson-Bowles, the Bipartisan Policy Center, led by former Clinton OMB Director Alice Rivlin and former Republican Senator Pete Dominici, has also released a plan to cut the deficit to Simpson Bowles levels by 2020. The Rivlin-Dominici Plan is a more balanced approach, relying equally on revenue and spending cuts to balance the budget, while Simpson-Bowles rely on a 3 to 1 ratio of cuts to revenues. Again, much of the same framework remains, but Rivlin-Dominici also include a new national sales tax of 6.5%, and takes into account the fact that the economy needs additional short term stimulus to get us out of this mess, proposing a pricey ($640 billion) one-year payroll tax exemption to take effect in 2011.

No doubt everyone who reads this will have a moment (more likely multiple moments) in which they think “They want to what? That’ll never happen!” No doubt that is true. It’s hard to see Republicans and Democrats in Washington agreeing on eliminating the mortgage deduction, or raising the gas tax by a dollar a gallon, or imposing a 6% national sales tax. But it’s equally difficult to see what cuts in benefits Americans would be willing to accept in order to forgoe these tax increases, and anyone who looks at the numbers will agree that something drastic needs to be done. As the initial Simpson-Bowles recommendations indicate, under current projections, by 2020 we will be paying $1 trillion every year just to service the debt we have already run up.

I noted in one of my first posts on this blog that deficit reduction would be a true test of the political parties in Washington. Can the Democrats show some restraint, or would they prefer to continue to increase spending indefinitely without paying for it? Does the Tea Party dominated Republican party really care about deficits, or do they just want tax cuts?

It might take a few years, but we’re going to know the answer soon enough.

The Tea Party Takeover of the Republican Party

Thursday, September 23rd, 2010

Since the advent of the Tea Party, my conservative uncle has consistently been sending me info on how the only way for Republicans to regain and maintain power is to embrace the movement’s agenda wholeheartedly.

Based on the events of the past year, we may see that idea tested. Over the past months, Tea Party candidates have forced out an increasing number of  “establishment” GOP candidates (many of whom were nationally known) in favor of candidates whose support came in large part from the Tea Party.

The list is impressive: Robert Bennet in Utah, Trey Grayson in Kentucky, Sue Lowden in Nevada, Jane Norton in Colorado, both Charlie Crist and Bill McCollum in Florida, Lisa Murkowski in Alaska, Arlen Specter in Pennsylvania (who was pushed out of the Republican party by Pat Toomey and the Club for Growth and then kicked out of the Democratic party by Sestak and the voters of PA),  and finally and most dramatically, Rick Lazio in New York and Mike Castle in Delaware (the only Republican that could have taken the Senate seat for the Republicans).

In other cases politicians have completely revamped their personalities, becoming more rigid and dogmatic to save themselves from Tea Party challengers. John McCain, who faced a Tea Party influenced J.D. Hayworth is the most egregious example of this. Faced with losing his seat, this American hero who prided himself on being independent and putting “Country First” is almost totally unrecognizable from the John McCain that the country knew and loved three years ago.

While McCain’s rightward shift looked like overkill, the defeat of Lisa Murkowski in Alaska by Joe Miller, shows the perils of complacency. Murkowski’s defeat by Joe Miller in Alaska seemed to come out of nowhere. While polls has shown the race tightening, not a single poll  had shown Miller even within striking distance of Murkowski and she overspent him by a 10 to 1 margin. Miller’s win was propelled by a number of influences, but what made the difference on election day was a huge increase in turnout by social conservatives who were motivated in part by a ballot measure on parental consent for abortion. These kind of unpredictable results are the kind of things that keep politicians up at night, and while it’s tempting to say that keeping politicians feet to the fire is a good thing, that’s more difficult to claim when we’re talking about the beliefs of a small minority of increasingly paranoid people (which is what Republican  primary voters have become in many states). 

There’s a debate raging around the country about whether the Tea Party Tumult will be good or bad for the Republican party’s electoral fortunes this year and going forward. It’s somewhat of a mixed bag this year, but the Tea Party has been able to take advantage of the unpopularity of the Democrats to field a slate of candidates (especially in Senate races) who seem to be faring well despite their extreme views. In other cases, the Tea Party has taken seats that were almost guaranteed Republican pickups and turned them into either dead heats (in the case of Nevada) or heavily favored Democratic seats (like Delaware).

In House races, the Tea Party should also help the Republicans since an influx of new (or newly energized) voters can swing a close election in House Districts (especially when the opposition party is as dispirited as Democratic voters have been this year).

Long term, I would be concerned about the Tea Party takeover of the party if I were a  Republican.  The country is generally center right, but there is strong support for a safety net. The Tea Party people are hard free market libertarians and many have spoken out in favor of dismantling the safety net. The country is becoming increasingly diverse and more open minded. The Tea Party led Republicans are becoming whiter, more nativist and idealize the 1950′s (a time that wasn’t always great if you were a minority or a woman).

Scapegoating immigrants and Muslims might be good short term politics in a midterm year, but if you want to see the fruits of that kind of effort, just go talk to President Pete Wilson, who rode to the presidency on his scapegoating of immigrants in the early 90′s… Oh wait, the actual results were that he is now reviled in the state and his party has almost ceased to compete statewide and struggles to elect 1/3 of the legislature each year.

While it’s interesting to talk about how this helps the fortunes of the Democratic and Republican parties, I believe that the more corrosive effect of the Tea Party will be felt when it comes to governing. As we all know from Government 101, The American political system is built around trying to limit the things that government can do. In order for something to pass, the House, Senate and President have to agree on it, and Senators have added yet another hurdle by mandating 60 votes for any significant legislation. Since it is rare for any party to control 60 votes in the Senate, this means that almost nothing can pass unless it has at least some support from both sides of the aisle.

Almost all of the great programs of the past that Americans take for granted passed in bi-partisan ways: Social Security, Medicare, Civil Rights, Environmental Protection. The passage of Health Care Reform this year is a large anomaly, and as has been pointed out by Republican David Frum, was greatly impacted (in a negative way) by Republicans refusal to lend their votes to improve the bill. The legislative deal-making that the Democrats had to go through to pass this bill without a vote to spare was a disgrace and harmed the initial popularity of the reform significantly.

More importantly, America is at a crossroads right now. We face massive debt that is a result of a combination of runaway spending and 3o years of tax cuts. As has been noted previously, taxes are now at the lowest level they have been in 5 years and spending is at it’s highest. Politicians from both sides agree that this is unsustainable. What they disagree about (or more candidly, just refuse to talk about) is how to make the changes to get us closer to balancing the budget.   In two separate articles  written this year by right-leaning economist Robert Samuleson and Obama’s former Director of OMB, Peter Orzag, both look at the consequences of trying to cut deficits by focusing solely on tax increases or by focusing solely on cutting government.    They both reach the similar conclusions: any plan that focuses solely on either revenues or spending would entail either massive tax increases or massive cuts in popular programs such as Medicare, Social Security and national defense, none of which the American people will accept.

With a deficit commission soon to report its recommendations for meaningful deficit reductions, we need pragmatic centrists that are willing to compromise and do what is good for the country more than ever. The last thing we need is a bunch of Tea Partiers who will dig their heels in and refuse to compromise, either because they want tax cuts more than they want deficit reduction, or because they have to constantly look over their shoulder at the possibility that a Tea Party challenger will defeat them in the primary election because they weren’t dogmatic enough. The Tea Party has brought energy to the Republican party, but their lasting legacy may be to bring even more gridlock to our political system.

The Politics and Pragmatism of Extending Bush Tax Cuts

Tuesday, July 27th, 2010

Jonathan Chaitt has an interesting piece on the politics of extending the Bush Tax cuts in yesterday’s New Republic.

All of the Bush income tax cuts are scheduled to expire at the end of this year under current law and Barack Obama (along with most Democrats) support letting the taxes on the top 2% expire while leaving the cuts for 98% of Americans in place. Chaitt argues that, politically, this is a slam dunk for the Democrats since Americans overwhelmingly support increased taxes on the wealthy.

His article discussses the strategy proposed  by a number of Democrats, whereby the Senate would put extending the cuts for middle-class and the poor on the table and dare the Republican’s to filibuster it. If they can get Republicans to agree to middle class tax cuts, they’ll get their agenda. If not, tax cuts will expire for everyone and the Democrats can run  a campaign on how the Republican’s refused to allow the tax cuts to be voted upon because they wanted tax cuts for the rich. While Republicans would lament losing the tax cuts for the rich, neither party would particularly bemoan the loss of middle class tax cuts since neither one particularly wanted them, according to Chaitt. 

There are a number of problems here. First of all, it’s not a strategy without risk, because it assumes that the Democrats will be rewarded for Republican obstructionism instead of blamed for not being able to get anything done even though they have 59 votes in the Senate. Second of all, it’s not clear that the Democrats have the votes for this strategy and a number of their members have expressed doubts about allowing the tax cuts to expire during the largest recession since the Great Depression. Given that Harry Reid has not once in the past two years asked Republicans to actually fillibuster (Mr Smith Goes to Washingtn style) instead of just hold votes to close debate, it seems unlikely that he would force 4 or more Democrats to actually bring out the cots and spend the night on the floor defending tax cuts for the rich. However, nothing focuses the mind like a hanging and perhaps Harry will start acting like his career depends on showing some grit (since it does).

More important than these political issues are the economic and fiscal issues. As I’ve argued before, I think that pretty much all of these tax cuts are irresponsible given the budget deficits we face. However, I also believe that the economy is in a precarious position and needs the short-term stimulus. 

I would be okay with the following: leave all of the tax cuts in place for another year and set them to sunset at the end of 2011. According to CBO, this would cost about $110 billion for the year.  This insures that, if nothing is done, the cuts will expire, so no matter who controls Congress, there will be no chance that President Obama will be stuck with tax cuts for the rich if he doesn’t want them. By 2011, the Deficit Reduction Commission will have reported it’s recommendations, hopefully the recession will have eased slighltly and (again hopefully) the political debate will have shifted to a more serious discussion of the fiscal disaster looming. I may be overstating the impact of the deficit reduction panel, but I think it will be a game changer. I’m not positive that Obama will feel he has enough cover to abandon his pledge not to increase taxes on the middle class, but certainly this is a possibility.

Perhaps as part of a bargain for a temporary extention of the tax cuts and negotiations over the Estate Tax, the Administration can also get some of the additional stimulus programs that they have been pushing, including tax breaks for business and aid for teachers.

The worst outcome would, in my opinion, would be for the politicians to put these tax increases off indefinitely. This would send the unmistakable signal that, once again, the politicians are refusing to make the tough decisions to put our fiscal house in order in the long term.

The Irony of 2010

Monday, July 19th, 2010

Last week, Robert Gibbs set off a firestorm when he said what everyone already knows on Meet the Press: the Democrats could lose the House his year. This set off howls of protest from House members who feel that they have put their careers on the line for President Obama and that he has not shown the same level of commitment to them.

Meanwhile, prognosticators are reading the tea leaves for signs of how the electorate will respond in 2010 and whether this election will resemble the wave elections of 1994 and 1996 or the smaller, but significant, losses of the Reagan Republicans in 1982.

The irony of this all is that a favorable outcome for their respective Congressional parties may be a liability for the both President Obama and Republican presidential candidates in 2012.

Let’s stipulate up front that the loss of the House would be a clear setback for Obama and would put his agenda going forward in peril. Losing the House could also have long term implications for Democrats, since incumbency brings inherent advantages (such as a re-election rate that hovers in the 96% range) and having power in the present significantly increases a party’s chance of having power in the future.

For Barack Obama, Nancy Pelosi’s House Democrats have been extremely helpful in pushing forward his agenda. Although he is not reaping the benefits in the polls, he has been remarkably successful at enacting policy. In less than two years, he has passed a budget that sets new priorities for the country, as well as the trifecta of a stimulus plan, health care reform and financial reform. A (much watered down) energy bill is on deck. The House of Representatives has been a key part of this effort, moving first on all four issues and providing a liberal push as counterweight to the slow moving, inherently conservative Senate. To lose control of the House would be a dramatic blow to Obama’s ability to enact new programs going forward.

On the Republican side, there is probably no one as reviled as Nancy Pelosi. The Republican faithful would like nothing more than to take Pelosi and Reid out of power and hand the Democrats a historic defeat.

But any careful observer can see that that taking or keeping control of the House may not in the best long term interests of Obama or of the Republican hopefuls in 2012.

For Obama, a Republican House would provide a useful foil for him in making his 2010 case for re-election, just as Newt Gingrich was for Bill Clinton. With the defeat of most moderate Republicans over the past five years, the party now consists of mostly hard line libertarians, extreme social conservatives and a gang of formerly independent statesmen who have been so cowed by the Tea Party that they act just like the Rand Paul wing of the party. In recent polling, only 32% of Americans believed that the Democrats in Congress could be trusted to make the right decisions. The only group who polled lower were the Republicans at 26%. The entire key to the 2010 elections (and by extension the 2012 elections) will be to make the contest a choice of two competing ideologies instead of a referendum on Obama, Pelosi and Reid.

For Republican presidential candidates, the situation is equally clear. Running in 2012 against Pelosi, Reid and Obama would be a much easier campaign to frame than one in which Republicans had any measure of control or claim to responsibility for the situation.

In addition, there is plenty of evidence that Congressional Republicans are not quite ready for prime time. Every other time John Boehner opens his mouth he says something that shows how out of touch he is. For the past two years, their policy has been based on one thing: saying no to everything proposed by Obama, Pelosi and Reid. They complain incessantly about Democratic proposals, but didn’t have anything particularly serious to offer on the major issues of the day (health care, financial regulation, energy). They regularly bemoan deficit projections, but the closest thing they have to a plan is conservative wunderkind Paul Ryan’s Roadmap, a serious plan to balance the budget to be sure, but one that relies on privatizing both Social Security and Medicare, as well as raising taxes on the middle class while slashing them for those with higher incomes (all policies that have found very little support among the American people) At last count, Ryan’s Roadmap was endorsed by nine Congressmen.

Perhaps the bigger issue is that, beginning next year, the focus of the country will most likely be on developing a long term deficit reduction plan. As discussed here before, the bi-partisan Simpson/Bowles Budget Deficit Reduction Commission will release its findings at the end of the year. In it will be a plan to cut deficits to $550 billion by 2015.  This plan should shift the conversation significantly. While their will be a debate on the specific plan, the report should make clear that the current path is unsustainable, that taxes and revenues need to increase and that budgets will need to be cut. This will be an opportunity for Obama to move to the center, provide a plan to decrease the projected long term deficits and refashion himself into the pragmatic candidate that he ran as in 2008.

If the Democrats do maintain control, it will be an opportunity for them to reclaim the mantle of fiscal responsibility that they have lost over the past two years and do it in a way that preserves Democratic priorities. But this process will be difficult to enact because of the fractious nature of the Democratic party, what will surely be smaller margins in the House and the complete lack of a credible partner in the Republicans.

On the other hand, if the Republicans take the House this year they will be forced to provide their own alternate plan to balance the budget. Given American’s historical aversion to sacrifice and the slim menu of choices available, this plan is likely to be unpopular and Obama can take advantage of the contrast to frame a choice between two competing visions of the country. If Republicans try to compromise and implement some real austerity programs with Obama’s support, this could be win-win for both parties, but it will make it much more difficult for Republicans to argue that Obama is a dangerous socialist. If, on the other hand, there is a long lasting standoff, Obama will be able to turn up the heat with the bully pulpit, returning to the stump to campaign against the vision of the party in power.

In the meantime, the fight for the House goes on and you can expect to see Obama and the Republican presidential hopefuls giving it their all.

But don’t be surprised if there are a few people in the White House (or in the Romney campaign) who don’t shed too many tears if their side loses.

Lockbox

Wednesday, July 14th, 2010

A few weeks ago, NBC debuted SNL’s Best of the 2000′s. Included was the now classic skit where Al Gore and George W. Bush are asked to sum up their campaign in one word. Gore (Darrel Hammond) thinks a while and then replies in his thick-as-honey Tennessee accent “…Lockbox.” Bush (Will Ferrell), looks straight at the camera and says with Bushlike certainty “Strategery.”

That skit has become iconic, but when I saw it, I was reminded that at least one politician did see the oncoming crisis and had a plan to deal with at least part of it. For the past year and a half (ever since Barack Obama was elected and the Republican’s discovered that deficits were bad), I have wondered many times how we could have gotten into this situation. For years it was clear to anyone who took a look at budget projections that Baby Boomers were going to start retiring and becoming eligible for Medicare and Social Security soon. Entitlement spending would increase at the same time that the number of people paying into the system was going to decrease. This system resembled a ponzi scheme more than a funding mechanism.  Who, I thought to myself, is responsible for the fact that we now are facing this situation and everyone seems to be acting as though it is a surprise to them?

Well, the answer is that we all are. For years, we elected politicians who said that they were going to balance budgets, but when the rubber hit the road, didn’t. Not only did we not kick these people out of office, we encouraged them to act irresponsibly by punishing any politician who promised to increase taxes or actually did increase taxes in order to balance the budget, and we punished any politician that tried to cut benefits by kicking them out of office (Think Walter Mondale in 1984, Gorge HW Bush in 1992, or Congressional Democrats in 1994).

Being good at their profession (getting elected), it didn’t take the politicians long to figure out this game. Anyone who acted responsibly and asked for sacrifice from individuals for the good of the nation was punished, so politicians just gave the voters what they were requesting through their votes: big government and low taxes.

On each side of the aisle, you can see the cynical calculations taking place over the past decades. The Republican strategy was called “Starve the Beast.” The idea was that you would continue to cut taxes so much that there would be no money for social programs. Then when a crisis hit, the “Permanent Majority” that Karl Rove was carving out would cut social programs and say that they had no choice.

The longstanding pattern was pushed to its most outrageous lengths under the Administration of George W. Bush. Bush and Congressional Republicans pushed through close to $1.8 trillion in tax cuts, while at the same time increasing both domestic discretionary spending and fighting two wars. For the first time in American history, taxes were decreased while America was at war. Included among Bush’s increased domestic spending was a ($500 billion over 10 years) Prescription Drug Entitlement Bill. This bill was passed with absolutely no funding.

Think about that for a second. For all of the Republican fulminating about the gimmicky accounting for the funding of the health care bill, at least it has funding. This prescription drug benefit’s costs were tacked on directly to the deficit. Imagine if Obama had tried to do this in 2010. The Republican’s would have tried to gouge his eyes out. In 2003, they barely batted an eyelash.

Republican’s have made stimulus a bad word over the past year and a half, but looking back, the entire Bush presidency looks like a giant stimulus plan, with trillions of dollars being pumped into the economy through tax cuts and increases in government spending.

Like most politicians, Barack Obama learned his lessons from this history. Not to be outdone by Republican’s, Obama ran on a platform of rescinding the Bush tax cuts for the top income tax bracket, but leaving in place all other Bush tax cuts. In addition, he also proposed an additional tax cut of $500 for individuals and $1000 for families not among the top 5% of earners, even if those families or individuals only paid payroll taxes for the year.

The Democrats in Congress and President Obama followed up their tax cuts (slightly cut down and lasting for only two years) with a long awaited plan to move the country toward providing the benefit of health care that every other industrialized country has. But instead of having a real debate about the coming deficit avalanche, they pushed through Health Care Reform with a budget that was narrow enough to fund the specific plan, while ignoring the fixes that will be needed for the coming crisis. In fact, as funding for half of their plan, they used $500 billion of cuts in Medicare services over a 10 year period. While this technically qualifies as funding, it basically cuts an existing “entitlement” program that is in crisis to fund a new entitlement. The tactics here are different, but the strategy is the same: put a popular status quo (near universal health care) on the table as the starting point for negotiations.

The cumulative result of this recklessness is dramatic. In 2010, tax rates were the lowest that they have been in 50 years (47% of people paid no federal income tax) and federal spending was the highest it has ever been. Not coincidentally, deficits were also at record highs.

To be fair, much of this is an artifact of the unprecedented steps the government has made to keep us out of a Great Depression and I support many of them. In the short term deficits are appropriate and necessary. But for the long term, we need a plan to get our accounts back in balance.

In a recent debate with my conservative uncle, he tagged me for always referring to Bush Tax cuts as “Tax Cuts for the Rich” and pointed out that everyone got a tax cut under Bush (although, to be fair, the rich got hell of a lot more). “Do you support rescinding the Bush Tax cuts for the other 95% of the population,” he asked (assuming that he knew the answer). I thought about it for a second and then responded: Yes. Yes, of course. Because this is a huge crisis and what’s at stake is the future of America.

Look, I know what it feels like to get a check that barely pays your bills and then have the government take more out of it. And I’m sure that if I was lucky enough to be making over $200K, it wouldn’t be fun to have 40% taken out of my paycheck from that point forward. But as conservatives like to say, “Freedom Aint Free.” You can’t maintain a military that polices the globe and provide even the lamest social safety net for 300 million people without raising a lot of revenue.

So I’m open to ideas on how to solve this mess, but I think we need to level with ourselves and accept that it can’t be done without cuts in spending as well as tax increases. If anyone tells you something different, they’re either lying or they don’t know what they’re talking about.

The bottom line here is that, for years, politicians acted irresponsibly and voters allowed them to or even encouraged them to continue those policies. For the past few decades, the question shouldn’t have been “how big of a deficit should we be running,” but “how much of a surplus do we need to be saving so that we don’t have to face a massive fiscal crisis once the Baby Boomers retire?”

Unfortunately, for the past decades we didn’t ask those questions, our politicians didn’t encourage us to ask those questions and the media was (as always) asleep at the switch. Now we face the worst of both worlds. Just as we are recovering from the worst recession since the Great Depression, we are going to be forced to make tough choices that will necessitate sacrifice from all of us.

I don’t expect any progress to be made on this in the months ahead. Requests for sacrifice will not be on the minds of too many congressmen in the months before the election. But the months after the election will be key. Whether the Democrats maintain control of the House is an open question. But certainly, the House will be more conservative in 2011. Soon after their election, the new Congress will be splashed in the face with a cold bucket of water called the Simpson/Bowles Budget Deficit Reduction Commission. In it will be a plan to cut deficits to $550 billion by 2015. The debate that follows should highlight the crisis that we are in…as well as the stakes of failure. It will allow us to take real measure of the seriousness that our elected leaders bring to their job. As we watch the debate unfold, we are going to see whether each party can finally live up to the rhetoric it has espoused for years. We will finally see if Republicans are really concerned about deficits, or if they just want tax cuts. We will finally see if Democrats are willing to ask Americans to sacrifice for the benefits that they have supported for years through borrowing.

The results should be illuminating.