With much fanfare, President Obama created a Deficit Panel yesterday for the purpose of finding bipartisan solutions to the exploding federal budget deficit and national debt. The official name of the Deficit Panel is the “National Commission on Fiscal Responsibility and Reform”. That name is obviously too long for most people to remember, so already journalists are using shorter names to identify the panel. In this article, I’m using the term Deficit Panel, but you may also see or hear it referred to as the Debt Panel, the Deficit Commission, the Debt Reduction Commission, the Deficit Reduction Commission, and other similar names.
I’ve been pretty critical of President Obama in this blog for his excessive federal spending which has led to an explosive growth in the federal budget deficit and the national debt. So I have to give the President credit for taking a step in the direction of fiscal responsibility by creating this Deficit Panel.
The Deficit Panel is co-chaired by former Republican Senator Alan Simpson of Wyoming and former Clinton White House Chief of Staff Erskine Bowles. The two will appoint additional Deficit Panel members from both parties with the hope of creating a bipartisan tone to the panel.
Although I’m pleased with the creation of the Deficit Panel, I have a couple of serious concerns about its potential for actually reducing the federal budget deficit or the federal government debt.
For one thing, the Deficit Panel has no real authority. It can only come up with ideas for solutions, but Congress isn’t required to adopt them. In fact, Congress isn’t even required to vote on them. And given the poisonous political climate in Washington, few people are optimistic that Congress is up to the challenge of seriously tacking our deficit and debt problems.
The second concern I have is that the “goal” of the Deficit Panel is to come up with a plan to reduce the federal budget deficit to 3% of GDP by the year 2015. If you do the math, that would still leave us with a federal budget deficit of close to $600 billion, and a national debt of close to $20 trillion in 2015. Is this going to be our definition of success?
If we are going to be serious about tackling the budget deficit and the national debt, we need a plan that actually balances the budget and reduces our massive federal government debt, not a plan that simply reduces the speed at which we are headed toward the cliff.
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