'The Most Predictable Economic Crisis We've Ever Had'
Concluding earlier this afternoon, the inaugural meeting of the President's National Commission on Fiscal Responsibility and Reform laid the groundwork for the coming months of debate -- both within the commission and throughout the country -- on how to bring down medium- and long-term deficits (click here for C-SPAN coverage and here for our live tweeting of the meeting).
The meeting was kicked off with three expert testimonies from Ben Bernanke, Peter Orszag, Bob Reischauer, and Rudy Penner on the extent of the fiscal problem facing our country. All four agreed that if current spending and revenue path continue unaltered, we and future generations of Americans will suffer lower standards of living. Although a gradual crowding out effect and slowing of economic growth would occur, these experts warned that a change in market sentiments could precipitate a rapid crisis. It was also noted that the amount of fiscal adjustment needed will take more sacrifice than Americans are used to, and that one of the key roles the commission should also play is helping the public understand the extent of the problem.
All 18 commission members then proceeded to make statements on what they believe the commission needs to focus on and some possible options to help get us back on a sustainable fiscal path. It was encouraging to hear from each member that they want to see this commission succeed and that debates over the coming months should be open-minded, bipartisan, and fair. Congressman Ryan's remarks might summed up the issue best: unlike the current economic crisis, "what we have before us is the most predictable economic crisis we've ever had in this country." Co-Chairman Alan Simpson stated that projected debt "isn't just unsustainable, it's unconscionable," and Co-Chairman Erskine Bowles added that the country is on autopilot and won't change course on its own.
Many of the members focused on how projected future deficits will be caused primarily by growth in federal spending, and that spending should thus be the primary focus of the commission. It's indisputable that spending is slated to far exceed historical norms in coming decades as health care costs rise from an aging population and is therefore a major issue. But we can't do all of the needed fiscal adjustment on the spending side, and many members of the commission spoke about the cons of a narrow tax base and our overly complex tax structure.
The co-chairmen of the commission, Alan Simpson and Erksine Bowles, have said that everything is on the table, and today most members affirmed their commitment to considering all options. CRFB is excited to watch the commission work to address future deficits, and wishes it the best of success. As we said yesterday in a release, "if the commission does fail, we all lose."