Why I Oppose The Proposed Federal Fiscal Commission and Why You Should Too.

By: John H Ramsey, Founder The  Project

Let’s agree there is plenty wrong with our federal government’s financial management, and it is not just federal spending and our national debt, large and ominous as they are.

Under the proposed H. R. 5779 we may be about to form another Blue Ribbon Fiscal Commission to try to deal with our nation’s extensive, and expensive federal fiscal mess. Instead of doing that why don’t we really fix the problems this time?

FISCAL COMMISSIONS HAVE NOT WORKED VERY WELL

Throughout our history our political leaders have employed blue ribbon commissions as a vehicle to deal with uncomfortable reforms by burying them amidst the ceremony of independent review. Unfortunately, that tactic has worked reliably well.

To believe that a new fiscal commission will help solve our nation’s fiscal dilemma requires that we ignore the lessons of recent history from The Grace Commission (1984), The Simpson Bowles Commission (2010), and The Domenici Rivlin Commission (2010, 2012).

No meaningful, permanent solutions to the fiscal mess in our national government have resulted from these Commissions’ efforts. Simpson Bowles could not even get enough votes from its Commissioners to send its recommendations to Congress.

AN EXCEPTION- THE BASE REALIGNMENT AND CLOSURE COMMISSION (BRAC)

Congress established in 1988 a special Commission to recommend realignments and closures of U.S. military bases. Its work lasted 17 years, hundreds of installations were closed or consolidated, and the documented savings exceed $12 billion annually, a big success.

BRAC worked exceptionally well for two principal reasons…

• Commissioners and the Commission were independent of the Department of Defense, the agency affected by the Commission’s work.
• Congress agreed in advance that the Commission’s recommendations would have to be voted up or down as an indivisible package, denying members the ability to cherry pick or veto individual recommendations.

Independence and adherence to agreed, effective processes for final disposition were crucial to BRAC success.

THE PROPOSED FEDERAL FISCAL COMMISSION IS STRUCTURED TO FAIL

The Foxes Guarding The Hen House

So far the only members of this newest Commission allowed to vote on its proposals will be members of Congress, the institution that has caused our fiscal problems in the first place. The proposed voting members of the Commission will have been appointed by and beholden to the leadership of both parties in both houses, and therefore are in a conflict of interest and cannot effectively develop and advocate real policy reform. Hardly the structure needed to produce the common sense, permanent reforms we desperately need.

Both Policy Goals Are Wrong

H.R. 5779 proposes that the Commission provide recommendations to achieve two policy goals. Unfortunately both of those policy proposals are wrong and hurtful to the country. They are…

• Within 10 years our national debt should not exceed 100% of our nation’s GDP.
• Federal trust funds, mainly Social Security and Medicare, should be made sustainable for 75 years.

As to the first goal, The Congressional Budget Office estimates that the US 2033 GDP will exceed $39 trillion, so achieving parity between GDP and our national debt will probably permit our existing national debt of about $34 trillion to increase by approximately $5 trillion.

While admittedly easier on Congress, this policy goal ignores the corrosive effect on our federal budget of rising interest costs. According to The Peterson Foundation, “Rising interest rates and growing national debt cause federal interest costs to rise. And interest costs, in turn, contribute to the growth of federal spending — continuing a vicious cycle of borrowing, interest, and higher debt. Interest costs also crowd out opportunities for investment in other important priorities. In fact, the government is already on a path to spending more on interest costs than its spending on education, research and development, and infrastructure combined. If unaddressed, the growing borrowing costs will pose significant challenges for our nation’s fiscal future.”

If interest expense will crowd out other discretionary spending by the federal government, then the policy goal should be to reduce outstanding national debt, and therefore interest expense, rather than sanction adding another $5 trillion to the debt. Achieving the goal of stabilizing the debt at 100% of GDP will mean that we will probably increase both federal interest expense and the national debt over the next 10 years, not reduce it.

Regarding the second goal, solvency of both our Social Security and Medicare programs as currently structured depends on many more people paying into those programs than are beneficiaries receiving payments. The number of workers per beneficiary has been declining for years, compounded now by the surge in beneficiaries as baby boomers retire. That is the problem that must be fixed, not by legislating the number of years solvency is to be assured under the current operating systems, but rather to establish new operating systems.

Both programs must transition, starting immediately, from financing based on man hours of labor to one based on wealth production by the country. Individuals’ payments into Social Security and Medicare must be invested over their working careers by best practices from professional fiduciaries managing the people’s money held in trust for their retirement and health care when they become senior citizens.

There will still be cash gaps, big ones, in both Social Security and Medicare over the next several years, but changing the system is necessary to mitigate these cash shortfalls in the future.

Amend The Constitution, Not Change The Law

H.R. 5779 requires the Commission to propose new laws, new legislative language, to accomplish recommended fiscal policy outcomes. When will we learn?

We have lesson after lesson that Congress ignores the laws it passes when such laws require them to do difficult things they do not want to do. One of the biggest examples of an effort to achieve meaningful federal fiscal reform through legislation was Gramm Rudman Hollings, a seventeen year debacle lasting from 1985 to 2002 involving court challenges, bickering, cheating, bureaucratic end-runs, no real progress in reducing government spending, and eventually capitulation.

History teaches us that when Congress is confronted with major problems their solutions will adhere to three general, unwritten rules…

• Solve the problem at the last possible minute;
• Provide a patchwork that will cause minimum disruption to the way things are; and,
• Avoid additional controls, restrictions, or discipline on the processes and behavior of Congress.

In short, Congress does not regulate itself. Recommending that Congress do what it has been unwilling to do for 234 years represents the ultimate triumph of hope over experience.

The goal should be to control the behavior of Congress and that requires Constitutional solution.

A FISCAL COMMISSION OF WE THE PEOPLE

Fixing the federal fiscal mess is the business for We The People, no one else. This is what wise forebears warned us we might have to do, hopefully only on rare occasions.

The problem is there are no rules in our Constitution about what Congress may, must, or cannot do with our money. None. No safeguards that require wise financial policy.

To fix this while we still can, we need a Fiscal Commission of We The People charged with producing a non-partisan solution, developed independent of Congress, consisting of clear Constitutional process amendments to control the behavior of Congress, for the benefit of all of us– young and old, from left, center, and right, of modest and significant means.

A model for the output of such a People’s Fiscal Commission is The , BOFR for short, that will require adherence to specific Constitutional instructions, with penalties for non-compliance, in Taxation, Spending, Regulations, Social Security and Medicare, Accounting and Independent Auditing. It is four pages long in total. Here is the text: https://bofrusa.com/bill-of-financial-responsibilities/. Additional details are spelled out in a Background Paper here: https://bofrusa.com/wp-content/uploads/2022/10/US_Fed_Gvmnt_Fiscal_Mess_how_to_Fix.pdf

Recommendations of The People’s Fiscal Commission must be shared broadly with all our citizens to enlist their active support. We need to start now to build this nationwide citizen awareness and solid support for a package like BOFR so that when the Article V Convention takes place, and/or Congress takes it up, we are ready with specific, broadly supported solutions, to bring our nation back from too many years of fiscal malpractice, while we still can.