•Press Release Economic Growth Government
November 30, 2010
Simpson-Bowles’ Violation of Charter is Characteristic of Their Approach
For Immediate Release: November 30, 2010
Contact: Alan Barber, (571) 306 2526
Washington, D.C.- CEPR co-director Dean Baker released the following statement today regarding the national Commission on Fiscal Responsibility and Reform:
“The charter that created President Obama’s National Commission on Fiscal Responsibility and Reform explicitly states that: ‘a vote on the approval of a final report is required not later than December 1, 2010.’ Former Senator Alan Simpson and Erskine Bowles, the co-chairs of the commission, have now said they intend to directly violate the commission’s charter by delaying a vote until Friday, December 3rd.
“This changing of the rules, which further reduces the time for Congress to consider any recommendations from the commission, is typical of a commission that was ill-conceived from the onset. The fundamental premise of the commission is that the country suffers from serious deficit problems that Congress is unable to address through its normal processes. This view does not correspond with the facts as can be easily shown.
“There has been no explosion of spending whatsoever. This is entirely an invention of those with their own agenda. The Congressional Budget Office shows that non-interest spending was 19.8 percent of GDP in 1980. Its analysis of President Obama’s 2011 budget projects that non-interest spending will be 21.1 percent of spending in 2020. This means that in 40 years, spending other than interest will have increased by just 1.3 percentage points of GDP.
“Rather than being a cause for concern, the rise in the deficit in the downturn has been essential for sustaining demand in the economy. Annual demand in the private sector has fallen by more than $1.2 trillion as a result of the collapse of the bubbles in residential and non-residential real estate. This led to a plunge in construction and also consumption that was driven by housing bubble wealth. Remarkably, the co-chairs of the commission never seemed to have considered a tax on the financial sector as a source of revenue (a policy that is even recommended by the IMF), in spite of the fact that it was largely responsible for the current crisis.
“The projections of longer-term budget problems are almost entirely due to a projected explosion in health care costs. The United States already pays more than twice as much per person for its health care as other wealthy countries with the same or longer life expectancies. This ratio is projected to rise to three and four to one in the decades ahead.
“However, rather than honestly discuss the problems of the U.S. health care system, Simpson and Bowles have used the projections of exploding health care costs as an argument for gutting Medicare and Medicaid, leaving tens of millions at risk of not being able to afford health care.
“It is time to impose some honesty on the commission’s co-chairs. Under the law, the report is due tomorrow. If they don’t have a report on December 1, the commission will have violated it’s own charter and Simpson and Bowles should look for another vehicle to pursue their agenda.”
