Meet the Commission to Save the Country From Default
portfolio.com
It looks like the Obama administration is taking this deficit thing seriously.
The fiscal hole for this year is expected to reach $1.6 trillion, and the total public debt is $12.39 trillion, which is an amazing tab considering that the economy ran a surplus as recently as 2001. To put that in perspective, consider that the deficit is about 10.6 percent of the economy, which is not that far from the 12.7 percent level of Greece.
Like Greece, the United States wants to bring its debt down to 3 percent or less, which is the limit for members of the EU and is considered a proper benchmark for fiscal sanity.
So far, Greece has had a rough time coming up with a workable plan. The government is pointing fingers at bankers and currency speculators, and members of the public, especially the young, has disavowed any responsibility for the mess. Strikes and street protests have followed, and the confrontations between police and angry, unemployed demonstrators with no faith in the future are increasingly rough. The EU is demanding tough budget cuts, but it's hard to see how the public will accept them. What lies ahead? It won't be pretty.
Now the question is whether the U.S. can do better. President Obama has started to assemble an 18-person bipartisan commission to come up with a plan for cutting the deficit. It is a broad group, including voices from business, labor, and academia. The president announced his remaining four picks on Friday. They include former Fed vice chairman Alice Rivlin of the Brookings Institution, Honeywell CEO David Cote, Young & Rubicam CEO Ann Fudge, and Andy Stern, president of the Service Employees International Union. Last week, the president named former senator Alan Simpson and adviser Erskine Bowles as co-chairmen of the National Commission on Fiscal Responsibility. The House and Senate will fill the remaining 12 seats.
This is a step in the right direction. But the success of commissions has been mixed. The Pecora Commission that investigated the causes of the Great Depression did a good job and laid the groundwork for the Glass-Steagall act, a sound law that lasted for 60 years until its repeal ushered in the fiscal and financial mess that the country now faces. But recent panels on health care reform and the reform of financial market regulation have gone nowhere.
The commission needs to establish a few ideas—that fixing the deficit is everyone's responsibility and that everyone will share the pain. And there will be plenty of pain. Also, that the problem is fixable and that the benefits of addressing the problem before its too late vastly outweigh pain of treatment or the long-term costs of ignoring the debt.
Steve Rosenbush is the blogs/industry editor for Portfolio.com. |
