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National Commission on Fiscal Responsibility and Reform

By the Children’s Home Society of Florida Foundation

In a surprise press conference on November 10, 2010, Co-Chairs Erskine Bowles and Alan Simpson of the National Commission on Fiscal Responsibility and Reform decided to release a preliminary report. Bowles is a Democrat who served as the Chief of Staff for President Bill Clinton. Simpson is a Republican who previously was a Senator from the state of Wyoming. They indicated that in their view a joint presentation that explained the current positions of the Fiscal Commission would be preferable to leaks by staff members of various provisions. In order to discuss the full range of tax and budget provisions, they released the initial report.

There are 10 guiding principles for the first phase of the report:

1. Patriotic Duty – The “American people are counting on us to put politics aside, pull together not pull apart, and agree on a plan to live within our means and make America strong for the long haul.”

2. Washington Leads the Way – The national government must lead the nation in shared sacrifice and “tighten its belt.”

3. Truth in Promises – The federal government must be truthful and explain the tough budget choices. Washington must be sure to avoid promises that cannot be kept.

4. Gradual Implementation – The economy is still recovering. Budget cuts would not start until 2012 to allow the economic recovery to continue.

5. Protecting Those In Need – There must be an “affordable and sustainable safety net.”

6. Promoting Growth – Government spending will need to continue to support education, infrastructure and research and development.

7. Spending Reductions – All areas of government including defense, domestic spending, entitlements and tax expenditures are up for consideration. Total government spending will be changed initially to 22% of Gross Domestic Product (GDP) and later to 21% of GDP.

8. Government Productivity – The government must also become more efficient and set a target goal of 3% annual increase in productivity for all employees.

9. Simplify the Tax Code – The tax code should be reformed to broaden the base and bring down the deficit. There will be a cap of 21% of GDP for tax receipts.

10. Sound US Finances – Protect Social Security finances, support healthcare and stabilize the federal debt.

Now, based on those ten guiding principles, the Fiscal Commission then established four specific goals:

1. Deficit Reduction – A total of $4 trillion of deficit reduction by the year 2020. Two-thirds or more of that reduction is accomplished through reduced spending, while the balance is through increased taxes.

2. Deficit Level – Reduce the deficit to 2.2% of GDP by the year 2015.

3. Federal Debt – Stabilize the federal debt by 2014. Reduce debt to 60% of GDP by 2024 and 40% of GDP by 2037.

4. Social Security Solvency – Make changes to avoid a potential 22% cut in benefits in 2037.

Co-Chair Erskine Bowles acknowledged that the plan is very comprehensive and will produce strong debate. He noted, “What we have done is laid out a strong predicate for how the nation faces up to a very critical problem.” And, Senator Cranston noted that there will be opposition to most parts of the plan. In his view, the bipartisan Co-Chairs had “harpooned every whale in the ocean.”

Assessment

The final draft of the Fiscal Commission report is due December 1^st. Fiscal Commission members will debate the many provisions of the draft report. The hope of the Co-Chairs is that 14 of the 18 members will be willing to vote in favor of the final report. If that happens, the report will then be considered for further action by the House and Senate.

Editors Note: Your editor and this organization take no specific position on these proposals. This information is offered as a service to readers because it has potential impact on all Americans. Because the support transferred to philanthropy depends upon a solid economy in the nation, it is in the interest of all charitable organizations that a bipartisan agreement be achieved. Hopefully, a bipartisan agreement will stabilize the federal fiscal position and restore economic growth that will lead to greater support of philanthropy.

Conclusion

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