Ten Leadership Lessons from Simpson-Bowles

It was January 2010 and the Senate was locked in a sharp debate about the country’s debt and deficit crisis. Unable to agree on a course of action, some Senators proposed the creation of a fiscal commission that would send Congress a proposal to address the problem with no possibility of amendments.

Highlights

Stop Fantasizing About Easy Budget Fixes: While economic growth undeniably boosts government revenues, growth alone will not solve long-term fiscal problems. Rather, we need forceful action on health care, entitlement programs, and revenue to close our budget gaps.

Facts Are Informative: At the beginning of their deliberations, the Fiscal Commission broke down into working groups focusing on revenues, mandatory spending, and discretionary spending. Each group heard informative presentations by policy experts regarding the roots of federal deficits and longterm debt. The factual nature of the conversations helped drive the group towards policy recommendations.

Compromise Is Not a Dirty Word: Neither party can solve our fiscal challenges by dogmatically defending its core tenets and refusing to compromise on basic principles. Fiscal deficits could not be addressed through a partisan lens. Rather, Republicans and Democrats had to keep everything on the table and start with the assumption that there were no sacred cows in terms of taxes, entitlement programs, or national defense.

Setting the Agenda through the Chairman’s Mark: The co-chairmen were responsible for identifying viable ideas, building support, and negotiating with individual members. Bowles served as the detail guy who understood the nitty-gritty of federal budget policy. Simpson meanwhile excelled at personalizing the issues and explaining key tradeoffs to the media and general public.

It’s Relationships, Stupid! The Value of Confidential Discussions and Trust-Building Exercises: Commission leaders found that private and confidential discussions and trust-building exercises were important to achieving the final result. They felt that while public access and a free press were essential to openness and transparency, some meetings and most discussions had to be held behind closed doors.

The bill failed but President Barack Obama signed an executive order establishing The National Commission on Fiscal Responsibility and Reform. It was chaired by former Senator Alan Simpson and former White House chief of staff Erskine Bowles. With the national debt then totaling around $13.56 trillion and federal budget deficit running over $1 trillion each year, the members’ task was to produce a report recommending budget steps that would address long-term fiscal issues. Following months of meetings, 11 of the members signed onto a report recommending that the federal government take dramatic action. However, that number was short of the super-majority requirement of 14 votes necessary to send the package to Congress for an up or down vote.

Despite the political inaction, the Simpson-Bowles Commission report remains one of the most credible debt/deficit reduction plans on the table. It proposed an initiative that reduced the deficit by $4 trillion through 2020, reformed the tax code by ending a number of tax loopholes, cut tax rates and capped revenue at 21 percent of Gross Domestic Product, and suggested changes designed to contain health care costs, stabilize the debt, and reform the budget process.

In this report, we review the fiscal leadership lessons that emerged from this effort and what it tells us about future debt reduction activities. We interviewed principals of the Fiscal Commission and compiled documentary evidence, media interviews, budget information, and background materials on fiscal leadership. Based on this information, we developed a list of fiscal leadership lessons relevant for future budget action. We emphasize the importance of ending the fantasy that there are easy solutions, focusing on facts, understanding that compromise is not a dirty word, respecting that Democrats and Republicans have credibility in different fiscal areas, and valuing personal relationships among political leaders.

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