Up Front

Web Chat: Another Congressional Budget Crisis

Bill Frenzel

On September 28, budget expert and former member of Congress William Frenzel answered your questions in a live web chat about the dysfunction plaguing the Congressional budget process and the consequences of persistent partisan gridlock.

The transcript of this chat follows.

12:27 Vivyan Tran: Welcome everyone. Let’s get started.

12:28 William Frenzel: Hi, I’m Bill Frenzel. Glad to be here. After a series of cliff-hanging, near-government-shut-down Budget battles, including the FY’11 CR, the Debt Ceiling Extension, and the short-term FY ’12 CR (still not settled), the outlook for Budget cooperation for the rest of the year is grim.

12:28 William Frenzel: With the Republican House and the Democratic Senate and president apparently all permanently at their Budget battle stations, it’s likely that the shooting war will continue. The gladiators are already rearming for the FY’12 appropriations, most of them in a long term CR like FY’12, and for the report of the Super Committee.

12:28 William Frenzel: With opposing forces’ eyes firmly fixed on the hole (minor expenses), the doughnut (entitlements and revenues) goes untouched and undebated.

12:29 [Comment From dave: ] what did congress accomplish with this most recent last-minute deal?

12:29 William Frenzel: First, the House hasn’t approved the last deal, so it isn’t a deal yet. What they accomplished was a minor compromise to keep the government alive for 6 weeks.

12:29 [Comment From wes: ] Have you ever seen a Congress that was this dysfunctional? Is there anything that can be done to fix it?

12:29 William Frenzel: First, I regret to say that I have seen more than one Congress that is this dysfunctional. Second, we have to find a way to ameliorate the polarization in the country but a good way to immediately improve the Congress is by term limits.

12:29 [Comment From Henry (DC): ] Do you have any hope for the Super Committee?

12:30 William Frenzel: I believe the Super Committee can meet its quota, but that’s not enough. I am one of those deficit hawks that believe the committee should “go big.” That would mean a debt-deficit reduction of more than $4 trillion.

12:30 [Comment From Marcus: ] If you were a member of the Super Committee, what would your recommendation be?

12:30 William Frenzel: I would recommend that the Committee attempt to find the grand compromise that eluded the president and Speaker Boehner this summer, including a $4-5 trillion debt reduction, including entitlement cuts and revenue increases.

12:30 [Comment From Nancy: ] Do you foresee a government shutdown this year?

12:31 William Frenzel: No.

12:31 [Comment From Jessica: ] So this is the 9th CR that Congress has had to pass this year. Will we ever have a year-long budget agreement? This all seems like a big waste of time!

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12:31 William Frenzel: The long-term budget agreement doesn’t have much to do with an annual CR. They are different problems. But a long-term budget agreement reducing the debt by around $5 trillion is an absolute necessity, or we will all be pretty miserable.

12:31 [Comment From Karen: ] Can you explain exactly what the problem is—what exactly is preventing the two parties from coming to an agreement?

12:33 William Frenzel: Number one: the country is polarized and the Congress is polarized even more. Number two: Democrats refuse to concede on any major entitlement reforms and Republicans refuse to consider any tax increases. Number three: despite their positions, Republicans are reluctant to cut entitlements single-handedly, and Democrats are reluctant to take the blame for raising any taxes.

12:33 [Comment From Randy: ] What do you make of all this hubbub over the “Buffett Rule?” Do you think any such significant changes to the tax code would happen?

12:34 William Frenzel: Right now, Republicans defend against any tax increases and therefore changes are not going to happen this year.

12:34 [Comment From Eric: ] Congress’s approval rating is taking a nosedive. What will it take for our legislators to get their act together and actually do their job?

12:34 William Frenzel: Send them home.

12:35 [Comment From Eric: ] And why is President Obama having such trouble getting Congress behind him? If we were Great Britain, we would have had a vote of no confidence long ago.

12:36 William Frenzel: The Westminster system is different from our democratic republic. In our system, everybody has a veto, and today they are all exercising those vetoes.

12:36 [Comment From Lana (Chevy Chase): ] Leaving these budget agreements is risky—as we’ve seen with the recent fluctuations in the stock market. Doesn’t Congress see the imperative to act on this quickly?

12:36 William Frenzel: Yes. But Congress seems deaf to the message that the markets are screaming at it.

12:37 [Comment From Katie: ] Have we done irreparable damage to our economy and economic growth?

12:37 William Frenzel: I don’t think so. But we surely haven’t done it any good in the past 30 years, and we have big trouble ahead unless we repair some of the problems very quickly.

12:38 [Comment From Frank: ] Realistically, is there any hope for reducing our deficit? doesn’t seem like it.

12:39 William Frenzel: Until the Republicans and the Democrats are willing to sit down and negotiate, there is little hope for a budget solution. In calendar year 2012—a presidential election year—it seems unlikely that the parties will be any more anxious to get together; however, external events like defaults, downgrades and extreme market volatility might encourage bipartisan cooperation.

12:40 [Comment From Karen K: ] Is there any chance that political pressure could force Republicans to accept tax increases?

12:41 William Frenzel: One bit of political pressure that might convince Republicans might be losing the 2012 elections. Another thing that might help would be if the Democrats offered significant entitlement reductions.

12:41 [Comment From Greg G: ] FEMA almost ran out of cash when Americans needed it most following the hurricanes and tornadoes this summer. What does it say about our country when our government can barely help people who need it most?

12:42 William Frenzel: The United States was able to spend a couple of trillion dollars in this calendar year without too much difficultly, and they spread quite a lot of that around, among citizens. It does seem strange they balked at the last $2.5 billion.

12:43 [Comment From Jason: ] Do you agree with the way John Boehner is doing his job?

12:44 William Frenzel: I believe Speaker Boehner has done a good job of opening up House debate and letting the House work its way on bills rather than having the leadership make all the decisions. His job of trying to lead a large number of inexperienced and highly motivated new members is a tough one. I believe he is doing it well.

12:44 [Comment From Ben Lee: ] What do you think of the 9-9-9 proposal by Herman Cain? Would this have any real chance of passing, and if it did, would it do anything to lower the deficit and boost the economy?

12:45 William Frenzel: I don’t think 9-9-9 stands much of a chance if we don’t even have the will to make our current system rational. I don’t believe it will lower the deficit and I don’t know what it will do for the economy.

12:45 [Comment From Gary: ] Do you see any room in the budget for big cuts? if so, where?

12:47 William Frenzel: If we don’t cut entitlements, aka Medicare, we can’t ever get to where we want to go. We also have to cut defense, even though we have to be careful in so doing, and, if we want to get an agreement between Republicans and Democrats, taxes will have to be in there somewhere.

12:47 [Comment From Dana: ] How damaging is this “Solyndra” situation to Obama’s approach to creating jobs?

12:48 William Frenzel: Solyndra is a great example of what happens when the government tries to pretend it is as smart as the market. It’s important because it shows the people how ineffective government is in picking winners.

12:48 [Comment From Thurber James Michener: ] You mentioned congressional term limits as a way to help reduce polarization. Do you have any specific proposals for doing this? Would you limit all representatives and senators to one term?

12:50 William Frenzel: No. Term limits in my judgment are unsuccessful in states like California and Florida because the limitations are too severe. I support generous term limits from 10-18 years for the U.S. Congress, or the constituents could vote out the current inhabitants and save themselves the trouble of amending the Constitution.

12:50 [Comment From Ron: ] To what do you attribute the nasty, uncompromising tone of the current budget debate and of the political discussion generally?

12:51 William Frenzel: I believe it is due to sharp divisions within the country and the political system in which the activists pick the candidates and elect them. The opposition is called the enemy and comity disappears. Animosity reigns.

12:52 [Comment From Frank McN: ] If the House and Senate do not approve the supercommitte budget, then my understanding is that automatic cuts take effect sometime afterwards. Are the rules for these automatic cuts in place or do they still have to be agreed on?

12:53 William Frenzel: The rules are in place. Entitlements, principally Medicare, cannot be cut more than 2 percent. Defense will take the major hits. The sequester will not be effective until 1-1-13.

12:53 [Comment From Abigail S.: ] Obama this summer offered changes to entitlements in the negotiations this summer, and was still unable to get Republicans to increase taxes. What kinds of entitlement cuts are Republicans looking for?

12:54 William Frenzel: I have yet to see a specific offer from the president. And I was not privy to his negotiations with the speaker. He has yet to put any entitlement cuts of a serious nature on the table, just as the Republicans have refused to put any tax increases on the table.

12:54 [Comment From Maria: ] How are Republican presidential candidates addressing the budget crisis?

12:55 William Frenzel: So far, I have not heard a lot of specific plans by GOP presidential candidates to reduce the deficit and the debt. All of them are allegedly budget hawks, but again I have seen no plans.

12:56 William Frenzel: Thank you all for your questions! Have a great day.

12:56 Vivyan Tran: Thanks for the chat everyone.