|The Hijacked Commission
By Paul Krugman
COUNT ME AMONG those who always believed that President
Obama made a big mistake when he created the National
Commission on Fiscal Responsibility and Reform -- a
supposedly bipartisan panel charged with coming up with
solutions to the nation's long-run fiscal problems. It
seemed obvious, as soon as the commission's membership was
announced, that "bipartisanship" would mean what it so often
does in Washington: a compromise between the center-right
and the hard-right.
My misgivings increased as we got a better feel for the
views of the commission's co-chairmen. It soon became clear
that Erskine Bowles, the Democratic co-chairman, had a very
Republican-sounding small-government agenda. Meanwhile, Alan
Simpson, the Republican co-chairman, revealed the kind of
honest broker he is by sending an abusive e-mail to the
executive director of the National Older Women's League in
which he described Social Security as being "like a milk cow
with 310 million tits."
We've known for a long time, then, that nothing good would
come from the commission. But on Wednesday, when the
co-chairmen released a PowerPoint outlining their proposal,
it was even worse than the cynics expected.
Start with the declaration of "Our Guiding Principles and
Values." Among them is, "Cap revenue at or below 21% of
G.D.P." This is a guiding principle? And why is a commission
charged with finding every possible route to a balanced
budget setting an upper (but not lower) limit on revenue?
Matters become clearer once you reach the section on tax
reform. The goals of reform, as Mr. Bowles and Mr. Simpson
see them, are presented in the form of seven bullet points.
"Lower Rates" is the first point; "Reduce the Deficit" is
So how, exactly, did a deficit-cutting commission become a
commission whose first priority is cutting tax rates, with
deficit reduction literally at the bottom of the list?
Actually, though, what the co-chairmen are proposing is a
mixture of tax cuts and tax increases -- tax cuts for the
wealthy, tax increases for the middle class. They suggest
eliminating tax breaks that, whatever you think of them,
matter a lot to middle-class Americans -- the deductibility
of health benefits and mortgage interest -- and using much
of the revenue gained thereby, not to reduce the deficit,
but to allow sharp reductions in both the top marginal tax
rate and in the corporate tax rate.
It will take time to crunch the numbers here, but this
proposal clearly represents a major transfer of income
upward, from the middle class to a small minority of wealthy
Americans. And what does any of this have to do with deficit
Let's turn next to Social Security. There were rumors
beforehand that the commission would recommend a rise in the
retirement age, and sure enough, that's what Mr. Bowles and
Mr. Simpson do. They want the age at which Social Security
becomes available to rise along with average life
expectancy. Is that reasonable?
The answer is no, for a number of reasons -- including the
point that working until you're 69, which may sound doable
for people with desk jobs, is a lot harder for the many
Americans who still do physical labor.
But beyond that, the proposal seemingly ignores a crucial
point: while average life expectancy is indeed rising, it's
doing so mainly for high earners, precisely the people who
need Social Security least. Life expectancy in the bottom
half of the income distribution has barely inched up over
the past three decades. So the Bowles-Simpson proposal is
basically saying that janitors should be forced to work
longer because these days corporate lawyers live to a ripe
Still, can't we say that for all its flaws, the Bowles-
Simpson proposal is a serious effort to tackle the nation's
long-run fiscal problem? No, we can't.
It's true that the PowerPoint contains nice-looking charts
showing deficits falling and debt levels stabilizing. But it
becomes clear, once you spend a little time trying to figure
out what's going on, that the main driver of those pretty
charts is the assumption that the rate of growth in
health-care costs will slow dramatically. And how is this to
be achieved? By "establishing a process to regularly
evaluate cost growth" and taking "additional steps as
needed." What does that mean? I have no idea.
It's no mystery what has happened on the deficit commission:
as so often happens in modern Washington, a process meant to
deal with real problems has been hijacked on behalf of an
ideological agenda. Under the guise of facing our fiscal
problems, Mr. Bowles and Mr. Simpson are trying to smuggle
in the same old, same old -- tax cuts for the rich and
erosion of the social safety net.
Can anything be salvaged from this wreck? I doubt it. The
deficit commission should be told to fold its tents and go