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Why the President’s Debt Reduction Task Force is Vital - and Might Work!

The president’s creation of a Fiscal Responsibility Commission by executive order doesn’t sound like the best process for achieving bipartisan agreement on tough, unpopular legislative actions. However, with two strong leaders in former Clinton Chief of Staff Erskine Bowles and former Republican Senator Alan Simpson and voters fearful of the economic future, the Commission just may prove the right tool for galvanizing action.

In the last two years, America’s rapidly mounting public debt has gone from an abstract future problem to an imminent threat - and the public knows it. Long before the financial crisis and the deep recession it precipitated, the federal budget was on an unsustainable track. Federal spending for Medicare, Medicaid and Social Security, driven by an aging population and rising medical costs, was projected to rise faster than revenues, opening a growing wedge to be financed by borrowing. This scary trajectory was evident to everyone who looked seriously at the numbers, but the public was not alarmed because the economy was still growing, the debt was not yet dangerously high, and the baby boomers were just beginning to retire.

Then the recession hit, revenues tanked and spending ballooned as Congress acted to save the collapsing financial sector and mitigate the recession, sending deficits off the charts. While the deficits will recede as the economy recovers, public debt has skyrocketed from around 40 percent of the GDP to well over 60 percent in just two years and will keep on rising for the foreseeable future. Suddenly it is evident that continuously rising debt spells serious trouble. What if creditors pull back and interest rates soar? Debt service could prove unmanageable and the economy could slide into prolonged recession, just when we need returning prosperity to bolster U.S. international leadership.

Since there is no hope of putting the budget on a sustainable track without unpopular measures to slow the future growth of entitlement spending supplemented by equally unpopular revenue increases, bipartisan action is absolutely necessary. If either party acts responsibly, the other will attack it mercilessly. They have to join hands and jump together. 

Obviously, it would have been better if Congress had tackled the debt problem sooner through normal legislative processes or if the legislative commission proposed by Senators Conrad and Gregg had passed, not just by 53 votes in the Senate, but by the required 60. But the president, to his credit, refused to give up and decided to create a bipartisan Fiscal Responsibility Commission by executive order. The Speaker and the Senate Majority Leader have promised to bring their recommendations to a vote. If the Commission works diligently to produce a viable compromise and public anxiety about the impact of rising debt on the economic future manifests itself in the election campaign, the Commission may well be the vehicle through which common sense prevails. Republicans, Democrats and independents who value fiscal and moral responsibility - and worry about their children and grandchildren - should join in wishing them well!

  • Alice M. Rivlin is a senior fellow in the Economic Studies Program at Brookings, a visiting professor at the Public Policy Institute of Georgetown University and the director of the Engelberg Center for Health Care Reform. She recently served as a member of the President’s Debt Commission, was founding director of CBO, served as OMB director and was Federal Reserve Vice Chair. She is an expert on fiscal and monetary policy and the recipient of the 2013 Robert M. Ball Award for Outstanding Achievements in Social Insurance, awarded by the National Academy of Social Insurance.