Commission struggles with spending issues

? Rep. Jeb Hensarling, the four-term Texas Republican, hopes it is true that, as has been said, Americans invariably do the right thing — after exhausting all the alternatives. Regarding the fiscal imbalance that is driving the national debt toward 90 percent of GDP, Americans are running out of alternatives.

Remember, deficits are supposed to add $8.5 trillion to the nation’s debt in this decade. This is the plan — based on an optimistic assumption of 10 years of 3.4 percent economic growth. This year’s second-quarter growth rate was half that — 1.7 percent.

President Obama established the 18-member National Commission on Fiscal Responsibility and Reform, on which Hensarling serves, with, he says, “high hopes and low expectations.” Thus far, Hensarling doubts that the commission is a “stalking horse for a VAT” — a value-added tax, essentially a national sales tax. He is, however, agnostic about whether the president’s purpose in creating it was to enable Democrats to tiptoe past next month’s elections without talking about deficits.

The commission is not, Hensarling thinks, “well designed for success.” Two-thirds of its members were appointed by Democrats, and any recommendations must be supported by 14 members, meaning a minimum of two Republican appointees.

The commission’s co-chairman, Erskine Bowles, former chief of staff to President Clinton, has suggested that the commission should endorse balancing federal revenues (they have averaged 18 percent of GDP over the last 30 years) and outlays at 21 percent of GDP. Republicans could embrace this because spending is now 25 percent and under current law, on reasonable assumptions, will reach 35 percent by 2035.

Hensarling says Bowles has been fairly successful in getting the commission members to accept “a similar set of facts,” less so concerning goals. The commission’s deliberations so far have, he says, resembled sumo wrestling — there has been much staring at one another and the problem, “but the moment of contact has not arrived.”

The commission’s near-term mandate is to propose recommendations designed to balance the budget by 2015 — excluding debt service. That is no mean exclusion: Interest on the debt is projected to be $739 billion in 2015.

If this is all the commission does, Hensarling says, it may do more harm than good because it will take the focus off the need to address the long-term structural debt caused by the big three entitlements.

Fixing Social Security’s approaching insolvency is, Hensarling says, “child’s play” compared to dealing with Medicare and Medicaid, the primary drivers of the government’s fiscal imbalance. Democrats, however, must pretend that they and Obama have fixed health care.

The commission could assure Social Security’s solvency for at least another generation by quickly raising the retirement age to 68 (it is being raised in imperceptible increments to 67 by 2027) and by indexing benefits to inflation rather than wage increases. Of course, Hensarling says, any changes will “grandfather the grandparents.”

The commission’s other mandate is to recommend measures “that meaningfully improve the long-run fiscal outlook,” including the gap between projected federal revenues and expenditures, particularly regarding entitlement programs. A “road map” to fiscal responsibility written by another commission member, Rep. Paul Ryan, R-Wis., does that. But Hensarling is one of only 13 co-sponsors of it. The other 164 House Republicans flinch.

They fear, not without reason, that voters are ideologically conservative but operationally liberal — that voters’ cognitive dissonance makes them ardently in favor of shrinking the deficit, and as ardently opposed to any measures commensurate with the problem. Keynesian economics gave government an easy conscience about doing what it has a metabolic urge to do: spend. The theory was that developed industrial economies tend to save too much, causing the underutilization of labor and capital. Therefore government spending must compensate. Hence deficits can be virtuous, and do become routine.

But Hensarling says that “judging from my 1/435th of the nation” — he represents part of Dallas, plus some suburbs and rural areas — the people have never been more alarmed about deficits. Not even in 1992, when another man from Dallas, Ross Perot, made deficit reduction the rationale of his presidential campaign that netted 19 percent of the vote.

Today’s anxiety is one reason why, when the commission reports in December, the lame-duck session of Congress will contain many zombie members — politically dead but still ambulatory. Having no political future, they may have the gumption to do difficult things but, having been repudiated, will lack the requisite legitimacy.

— George Will is a columnist for Washington Post Writers Group. georgewill@washpost.com