Stronger Rules Will Rein In the Debt

President Barack Obama’s fight with Congress over government funding for the rest of this fiscal year is a distraction from much more important budget challenges: forging a multiyear, bipartisan agreement that can rein in future debt increases and strengthening the budget process to keep it on a fiscally responsible path.

We have participated in most of the major fiscal policy agreements of the past 30 years, including some excruciating negotiations between presidents and Congresses.

We both took part in the Gramm-Rudman-Hollings negotiations, which Congress passed in 1985. We also were involved in the 1990, 1993 and 1997 budget agreements, which yielded the first budget surpluses in decades. Needless to say, we are particularly proud that we helped produce those surpluses.

But current debt and deficits are much scarier than those of the 1980s and 1990s, and current projections of future debt are the most alarming we’ve seen. Even when the economy recovers from this deep recession and war spending winds down, debt is expected to keep rising to dangerous levels.

We have not faced such a frightening fiscal future since the Great Depression. It demands extraordinary political commitment to fiscal responsibility and stronger budget rules than we’ve ever had.

We have learned at least four lessons from our long budget experience.

First, successful budget action must be bipartisan and must involve the president. Consider, for example, the 1990 agreement between President George H.W. Bush and a Democrat-led Congress, which resulted from marathon negotiating sessions at Andrews Air Force Base. Or the 1997 agreement between President Bill Clinton and a Republican-led Congress.

The 1993 deficit reduction package — which involved only Democrats and contributed to the late 1990s surpluses — is less an exception than an illustration of why we need bipartisan action. Many Democrats who voted for those tax increases lost their seats, as Republicans regained control of the House in 1994.

Now that controlling future debt requires slowing the growth of popular entitlements as well as raising revenue, the two parties must work together, so neither can blame the other for unpopular actions.

Second, budget process rules must be enforced. The Gramm-Rudman-Hollings act was rooted in an admirable concept — spending would be automatically cut (“sequestered”) if Congress didn’t reach prescribed deficit targets. That, presumably, would force Congress to act and so avoid the meat-ax approach of a sequester.

But Gramm-Rudman-Hollings failed. Congress just ignored it, partly because the sequester was such a drastic threat.

Third, enforceable rules can help achieve fiscal responsibility. The discretionary spending caps of the Budget Enforcement Act of 1990 restrained appropriations growth until the surpluses appeared. Similarly, the BEA’s pay-as-you-go rules kept the administration or Congress from proposing entitlement increases or tax cuts that were not paid for.

The most effective tool for consistently producing fiscally responsible results is the “reconciliation” process of the Congressional Budget Act. Under it, Congress orders its own committees to revise laws within their respective jurisdictions to reach certain deficit reduction goals. If the committees balk, then the budget committees are empowered to change the laws themselves.

Needless to say, congressional committees’ potential loss of power over policies within their jurisdictions generally prompts them to follow instructions.

Fourth, new rules are necessary. Given the current outlook, restraining the rapid growth of debt requires slowing the growth of total spending on health entitlements. Pay-go rules are necessary but not sufficient — they only prevent new legislation from making future deficits worse. New approaches are needed.

Changing Medicare to a premium support program would mean that increasing subsidies could be limited by legislation. Congress should pass long-term spending and revenue targets consistent with stabilizing the debt and review them periodically to ensure that the budget is on track. It should also empower an “accountability commission,” to propose measures for returning the budget to a fiscally responsible track if deviations occur.

It is urgent that the president and Congress reach a bipartisan agreement on spending and revenue policies that can reverse and stabilize our growing debt.

Our experience demonstrates that a serious commitment to fiscal restraint and process reform, combined with political will, can produce bipartisan legislation that will serve the country well.