The deadline to raise the federal debt ceiling came and went without anything happening. Some say that this is proof that it was never a real issue to start with. Is it possible that they are right?
Not a chance. We got an extension until August by raiding the pension fund.
You may or may not be willing to take the risk, as some are, but it is unreasonable to think government default has anything other than horrible consequences – starting with a complete government shutdown, likely involving higher costs to service the massive debt we have, and probably threatening the fragile recovery we have in the economy.
Yet there are many who want a long-term budget balancing plan before they agree to increasing the debt limit. It may surprise you to know that just such a plan has already been crafted by a bi-partisan commission, and it is a damned good one.
There wasn’t a lot of attention on this issue when President Obama created the commission in February 2010 or when it reported last November. The chairs are Erskine Bowles, former Pres. Clinton Chief of Staff and Alan Simpson, former Republican Senator from Wyoming. The report that they created is comprehensive, detailed, and difficult to summarize. But it does work.
Read the entire report for yourself here (pdf form).
The main feature is that there are not any actual tax increases – but there is the elimination of all special tax breaks, called “Tax Expenditures” for the purpose of this plan. It starts with dramatic tax simplification and an actual lowering of corporate tax rates once the loopholes and credits are shut down. It also trims $100B from military spending along with $100B from domestic spending.
More importantly, it advises kicking this in with the 2012 budget, something that does not have to be approved until October of this year. They did not want to threaten the recovery.
Why hasn’t this plan surfaced as the compromise necessary to promote long-term reform ahead of a debt ceiling increase, a plan many Representatives have insisted is necessary to win their vote? Like any good compromise it has something in it to displease everyone. Closing down special tax breaks is considered a “tax increase” by those who … well, I guess that they want to see it that way and that’s about that. Democrats are wary of the domestic cuts offered and the long-term plans to control medical expenses.
But there is a plan out there which should serve as a blueprint for moving ahead – and the details do not have to be finalized for another 5 months. It simply has not been accepted by entrenched interests and a need for grandstanding.
Is the debt ceiling a very real problem? Oh yes, it is. But, as always, there is a way out that is very real and workable. The problem is that those in power have a very limited interest in reality, preferring instead to score cheap political points while the nation slowly slides to the brink of disaster.
It’s up to us to reform our political process by insisting that real solutions be found to real problems. The biggest one of all is actually out there right now, ready for implementation if Congress is ready to get real and get to work. It’s up to us to start putting pressure on them to make it happen.