Fiscal Commission Brings Pleasant Surprises

Being a part of a legislative or executive blue-ribbon commission is a thankless and often dreadful job.  By definition, a commission’s recommendations reach a consensus . . . a compromise.  Countless hours of hard work (usually unpaid), collaboration with colleagues on the other side of the political spectrum, a little give here, and a little take there.  And for what?  A report that includes tough love recommendations few politicians are willing to stand behind, a report that interest groups love to ends up being hated by both sides,  political spectrum and is relegated to a future on a shelf collecting dust (or these days, on a hard drive getting a virus).

President Obama’s fiscal commission co-chairmen just pre-released their report.  There has been no vote and rank-and-file members have not yet publicly weighed in.  But co-chairmen Simpson and Bowles unveiled a draft that has both conservatives and liberals uneasy (see part of liberal Paul Krugman’s response in the post below).

What I like most about the draft is the acknowledgment that not only does federal spending need drastic reductions, but that the TAX CODE needs to be reformed.  Yes, the commission scores their tax reforms as a net tax increase (and there are increases we don’t support, like capital gains and dividend taxes), but I tend to think that the reforms don’t have enough dynamic feedback effect included in their score.  If top marginal tax rates on both corporate and personal income were slashed by 26 percent (to a top rate of 26 percent), and were coupled with regulatory restraint by Obama (no more financial system overhauls, health care overhauls and the like), billions of private dollars currently sitting on the sidelines would be freed up.   Confidence would perk up.  That’s what history tells us, anyway.

In addition to a ban on earmarks, the flattening and lowering of the personal income tax system, and the corporate tax cut, the commission also calls for medical malpractice reform.

You now see why liberals hate this thing.