MY VIEW: Judd Gregg
Judd Gregg, a former Republican senator from New Hampshire, served as chairman of the Senate Budget Committee from 2005 to 2007 and ranking member from 2007 to 2011. He recently wrote an op-ed featured in The Hill. It is reposted here.
Senate Majority Leader Mitch McConnell (R-Ky.) has declared that there will be no shutdowns and no gamesmanship as we go into this fall and the next round of debt-ceiling governance.
This is a laudable position.
The money has been spent and the bills have come in. It is appropriate to pay them. This is called governing.
What is not appropriate, however, is to so quickly dismiss the implication of the debt-ceiling increase.
The newly-elevated ceiling will be somewhere in the region of $18 trillion. This is how much we owe as a nation to other nations and to some individuals, many of whom are not Americans.
$18 trillion is equivalent to almost 40 per cent of all the tax revenue garnered by the United States since the federal government began collecting taxes in 1789.
To pay this amount off in a reasonably timely manner, we would need to run an annual surplus of approximately half a trillion dollars for about twenty years. Who believes we will do that? No-one.
Of course, there is always the compounding magic of inflation. We could get much of this debt behind us if we could just inflate the value of the dollar. But in the process we would reduce the standard of living of everyone who uses the dollar to get through their everyday activities.
Such a move would also undermine the credibility of the currency and lead to a dramatic increase in the amount we would have to pay as interest. Ultimately, therefore, it would accelerate the accumulation of debt, not decelerate it.
Or we could follow the new dictum (though it is a throwback idea) of the “progressive” center of the Democratic Party and simply tax wealth and wealth producers at much higher rates.
Yet there are numerous flaws in this approach. A rather basic one is that the progressive movement of Hillary Clinton and Bernie Sanders does not plan to spend the new revenues it would allegedly receive on debt reduction.
Rather, the leftists want to spend it on government expansion. They see too many people in need — and too many people who might vote for them so long as government largesse continues — to focus on paying down the federal debt. Puerto Rico is their template.
This leads to the question of how McConnell can do the responsible thing — which is to raise the debt ceiling in order to pay bills already incurred, while not allowing the profligacy which continues to drive this debt up to flourish unrestricted.
Here is an idea — tried once before, but still viable now. Reconstitute something like the Simpson-Bowles Commission, which first met in 2010. But do it legislatively, with real power to execute on its results. Set it up with BRAC-commission-like authority and fast-track process.
The make-up of its membership would need to be different, since control of Congress has now shifted to the Republican Party. But it should still be structured to be bipartisan, otherwise it would not be effective.
The hard right will wail that this is just a stalking horse for tax increases. Actually, the original Simpson-Bowles commission became a force for fundamental, Reagan-like, tax reform.
The hard left will say it is an attack on beloved entitlement programs. The original Simpson-Bowles commission did make Social Security solvent but it did so independently of the effort to fix the debt problem.
There will always be an uncompromising hard right and left. That is in the nature of American politics. But neither group will ever do anything of value to address the national debt or the need to manage our fiscal house for a very simple reason: It is not in their interest to do so.
The hardliners are, at their core, charlatans. They are more interested in the shouting and the fundraising than the lasting damage the debt is going to do to our national competitiveness and standard of living.
The election year that is coming makes it difficult to ignore their excesses. Certainly McConnell seems intent on getting out of this Congress with a reasonable chance of still being the majority leader, not the minority leader, in the next one.
But caution is not a winning strategy. The American people, whose frustration and anger with the political class in Washington has reached unprecedented levels, already see Congress as tentative and a failure.
They will vote to “throw the bums out” if they see only timidity.
The best way to break the spell of disenchantment that has been cast over the electorate is to do something. Show some action.
Creating a new Simpson-Bowles commission is politically doable and will resonate as real.
McConnell should push for Rep. Paul Ryan (R-Wis.) and Sen. Ron Wyden (D-Ore.) as the co-chairmen. This would show his commitment to a bipartisan approach. The two men, in any case, hold the appropriate positions as, respectively, Chairman of the House Ways and Means Committee and the ranking member on the Senate Finance Committee. And they are doers.
Everyone talks these days about President Obama’s legacy. But this would be a real legacy. It would restore confidence in the government and unleash the job-creating engine of an America which is now, unfortunately, on the road to insolvency.
It would also be a legacy item for the Republican Congress — one of inordinate impact and political power.
"My Views" are works published by members of the Committee for a Responsible Federal Budget, but they do not necessarily reflect the opinions of all members of the committee.