Statement from Dean Baker on President Obama's National Commission on Fiscal Responsibility and Reform

For Immediate Release

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Statement from Dean Baker on President Obama's National Commission on Fiscal Responsibility and Reform

Simpson-Bowles' Violation of Charter is Characteristic of Their Approach

WASHINGTON - 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 over the course of 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 its own charter and Simpson and Bowles should look for another
vehicle to pursue their agenda."

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The Center for Economic and Policy Research (CEPR) was established in 1999 to promote democratic debate on the most important economic and social issues that affect people's lives. In order for citizens to effectively exercise their voices in a democracy, they should be informed about the problems and choices that they face. CEPR is committed to presenting issues in an accurate and understandable manner, so that the public is better prepared to choose among the various policy options.

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