Co-Chairs Daniels, Panetta, and Penny Urge Trump to be Fiscally Responsible
At an event in Washington, DC on December 1, CRFB co-chairs Mitch Daniels, Leon Panetta, and Tim Penny presented their memo to President-elect Donald Trump on how he can secure the fiscal future of the country through presidential leadership on several issues. The event featured opening and closing remarks by CRFB president Maya MacGuineas, individual remarks from Daniels, Panetta, and Penny, and a panel discussion moderated by Greg Ip of the Wall Street Journal.
With debt held by the public as a share of the economy currently at a post-World War II era high – the highest level of debt facing any incoming president ever apart from President Truman – the co-chairs offered ten concrete steps that would help put our debt trajectory back on a sustainable path. These include using the power of the bully pulpit to highlight fiscal responsibility, setting achievable goals and outlining how to do so, and working with Congress in a bipartisan manner on a range of difficult fiscal issues – like Social Security, health care reform, and tax reform – to encourage a collegial atmosphere of cooperation and restore good governance to Washington. The ten recommendations are:
- Use the power of the presidency to elevate the importance of fiscal responsibility.
- Set a fiscal goal or goals, and meet them in your first budget.
- Pursue principled, bipartisan compromise, including by beginning negotiations with Congress on a multi-year budget agreement.
- Promote strong economic growth, without relying solely on growth to fix the debt.
- Work with Congress to advance pro-growth, fiscally responsible tax reform.
- Pay for your proposed initiatives and veto legislation that adds to the debt.
- Task federal agencies to identify waste and inefficiencies.
- Implement health care reform focused on cost containment.
- Take initial steps to save Social Security.
- Appoint a strong and experienced economic team.
You can read more about the ten recommendations in the full text of the memo.
The event kicked off with remarks by MacGuineas, commenting on the opportunities presented by the bipartisan group of leaders of Daniels, Panetta, and Penny to frame the debt issue and how the Trump administration should confront it in a serious manner. Panetta then introduced the first few recommendations of the memo, speaking on his past experience in both Congress and the White House during the Clinton administration. It was the era of the last big budget deals that made tough decisions on taxes and spending programs to ultimately achieve surpluses in the late 1990s and early 2000s. Panetta noted that it was important for Congressional leaders and the president to bring this issue directly to the American people, with the president having the opportunity to provide the important leadership necessary to solve these pressing issues.
Penny then discussed the last few recommendations, focusing on the urgency of addressing health care and Social Security over the next few years. With health care likely a focus in the beginning of the next Congress, Penny spoke on the need for significant cost containment in legislation being produced, which he described as one of the missed opportunities of the Affordable Care Act. On Social Security, Penny noted that the Greenspan Commission in the 1980s was able to produce the kind of necessary reforms to extend the life of the Social Security trust funds and that a similar strategy today could obviate the need for harsh cuts in the future. Finally, Penny talked about the opportunity presented during the transition to reframe the economic debate to focus on what will be the reality in governing. He specifically cited how President Clinton did this in the 1992 transition, refocusing his economic agenda and backing away from the costly tax cuts he had promised on the campaign trail in favor of fiscally responsible economic initiatives.
Daniels then spoke about the importance of economic growth in solving our fiscal problems. Without growth, Daniels said there was virtually no way to solve our fiscal problems, though he also noted some of the current proposals to boost growth in the short-term could end up harming long-term economic growth. Daniels noted that it is important for us to honor our commitments with regards to Social Security and Medicare, but we would be unable to honor those commitments to future generations without reasonable changes. He argued that this is a moral issue to solve as to prevent an intergenerational crisis where older generations will not be able to provide for a better life for younger ones. Daniels reiterated the need for presidential leadership on fixing fiscal problems.
Ip then began the panel discussion, asking each co-chair to grade President-elect Trump on his job of picking an economic team so far. Each co-chair noted that we still have more to see on where Trump's economic team goes, but so far there has been little attention paid to debt issues from the campaign and into the transition. Panetta said that neither party seems to pay attention to the debt as an issue, and Penny agreed and said it was the first time since 1980 that neither candidate had really addressed the debt or deficit in their campaigns. Daniels agreed as well but said that he was hopeful with some of the leadership in Congress that fiscal issues would gain more attention and more would be done to fix the problems. Ip also asked about entitlement programs and why neither candidate had paid much attention to solvency issues in the campaign. Penny said that it would be tough to go back on some of the campaign promises, but that if people make the connection between growing entitlements and the debt burden, then there would be room to build consensus on making changes to extend these programs for future generations. Daniels also said there needs to be the right vocabulary used to communicate the issues to Americans.