President Orders Deficit Cutting Commission, Critics Skeptical

Published February 15, 2010

After approving the largest budget in American history, with a record deficit projected at more than $1.5 trillion, President Obama (D) and Congressional Democrats announced they are now keen to start whittling down the nation’s government debt.

In late January Obama issued an executive order to create a deficit cutting commission similar to one earlier proposed by Rep. Jim Cooper (D-TN) and Senator Kent Conrad (D-ND). In January the Senate rejected their proposal, prompting the President to issue his order.

However, many policy experts are attacking the idea as “undemocratic” and “mere cover” for raising taxes.

The president would appoint commission members, who would recommend raising taxes, cutting spending, or doing both to curb a national debt the Congressional Budget Office warns could top $17 trillion by 2019, more than the nation’s current annual economic output. Under the proposal rejected by the Senate, lawmakers would have had to accept or reject commission recommendations. Under the Obama order, Congress would not be compelled to take action on commission recommendations.

Purely Political
Peter Ferrara, director of the International Center for Law and Economics at the Institute for Policy Innovation, said he believes the deficit commission is being proposed only for political reasons.

He said support for the deficit commission “will be all dog and pony show meant to fool the voters this year and not accomplish anything, or it will be more serious, intended to snooker Republicans into providing political cover for the largest tax increase in world history in 2011, posturing all through 2010 as a fiscal conservative, deficit hawk effort.”

Diana Futchgott-Roth is likewise suspicious about the motivations behind the deficit commission. She is a policy expert on Congressional budgeting for the Hudson Institute, a think tank in Washington, D.C.

No Action
“Congress frequently sets up a ‘commission’ when it does not want to deal with a problem, but this is an example also of hypocrisy,” Futchgott-Roth said. “Democrats say they are going to set up a ‘commission,’ but they are not going to do anything with it. Look at what happened to Paul Volcker’s tax commission that President Obama created. [Volcker was head of the Federal Reserve during the Reagan administration in the 1980s and is now an Obama administration adviser.] Nothing happened. His commission came forward with a recommendation, and nothing happened.”

David Henderson, editor of the Concise Encyclopedia of Economics and an economics professor at the Naval Postgraduate School in Monterey, California, is upset over the idea of a deficit commission.

“I have really strong views about this deficit commission,” Henderson said. “The whole idea is to get a bunch of ‘reasonable’ people in one room who will figure very quickly when they get together that the most vulnerable group is taxpayers, and while they may have a budget cut here and another budget cut here, what they will come up with is a tax raise over budget cutting.

“The Democrats know it, and the Commission will provide them with political cover to raise taxes because they can say, ‘we had to vote for this whole thing [recommendations of the Deficit Commission] up or down,'” he added.

Political Cover
Jason Clemens, director of research at the Pacific Research Institute in San Francisco, said if Democrats hope the deficit commission will give them political cover against the charge they have nearly bankrupted the nation, it will not work.

“Even if the Democrats do set up a Congressional commission, it will only give them cover to the extent that they can say they are trying to do something. But they own this out-of-control spending issue. They control the House of Representatives, the Senate, and the White House. They own where the economy will be eight months from now, and where the economy will be in 2012,” Clemens said.

“This is part of the fact that what they have done in the past year has been an abysmal failure,” Clemens added.

Thomas Cheplick ([email protected]) writes from Cambridge, Massachusetts.