THE BLOG
12/10/2010 03:01 pm ET | Updated May 25, 2011

Erskine Bowles is Wrong, the Era of Deficit Denial Is Doing Just Fine

Taken at their word, Tea Party acolytes had among their core message two principles: First, Congress should move quickly to end out of control deficit spending. Second, Congress should stop lying to the American people.

Well, so much for that election.

Over the past few weeks, in short order, Congress swept aside the recommendations of the President's debt commission, ignored the parallel recommendations of the study committee led by Pete Domenici and Alice Rivlin, and moved to prevent the expiration of the Bush-era tax cuts that are set to expire at the end of this month.

Taken together, these actions reaffirm the principle that one ought to judge people on their actions rather than their words. For all of the words of praise directed at Erskine Bowles and Alan Simpson for putting a credible plan on the table -- leading Bowles to foolishly intone that the era of deficit denial is over -- Congress moved swiftly to assure jittery financial markets that such denial is still with us, and that any bold or courageous action by the 535 members of Congress to act on our long-term fiscal problems will not happen on their watch.

Or make that 534 members of Congress. Hats off to Kent Conrad, the sole member of the debt commission who will be in office in January who voted in favor of the debt commission recommendations.

To extend the Bush tax cuts is simply wrong.

Little if anything has been said in the public debate about why those tax cuts are set to expire: They expire to comply with the fiscal rules in place when the cuts were enacted into law. Back in 2001, tax legislation was required to meet a ten-year scoring rule, which required that the tax cuts be paid for over a ten-year horizon. The ten-year requirement itself was a liberalization of the earlier, less flexible, "Paygo" rules that required that changes be paid for on an ongoing basis.

These rules are not in the Constitution or some other founding document, but rather are rules Congress sets for itself, as if to guard the nation from Congress' own penchant for reckless and inappropriate conduct. Congress does not have to approve balanced budgets -- as we all know -- but in the wake of Reagan-era deficits we saw the rise of legislation such as Gramm-Rudman-Hollings that sought to restrain Congress increasing disregard for fiscal prudence.

Simply stated, the Bush-era tax cut legislation provides for rates to return to the levels in effect in 2001 in order to pay for the largesse that was bestowed upon taxpayers over the ensuing years. Not just taxpayers who earn over $1 million, but all of us.

All those who are clamoring for tax rates to remain at the lower levels are giving the lie to the notion that Congress should be subject to any rules, or that such rules should be followed. The argument that tax rates should not be increased in the face of a recession is utterly disingenuous. Those arguing to gut the 2001 and 2003 tax bills now would be doing so regardless of our economic condition.

Look back at the historical record. Even as the tax cut legislation was being considered, Republican leaders assured their base that by 2010 the cuts would be made permanent, and that those who might seek to let the cuts expire would be attacked for raising taxes. That is to say, even at the moment of the original legislation, those who supported it eschewed any intention of adhering to the fiscal rules that Congress itself had imposed. At the time, the cynicism was breathtaking. But as political calculation, it was prescient.

Today, with the reversion to the pre-tax cut rates looming come January, few if any in Congress are prepared to stand on principle and remind their colleagues that those tax increase are the price that was to be paid for the prior years of reduced taxes. Instead, Congress can point to the economic situation as justification for their collective determination to undermine the fiscal rationale of the law that they are now seeking to upend.

The problem with the argument that this is not the time to "raise taxes" is that this was part of the deal. This was part of the rules--and a very limited set of rules at that--that were set in place to protect Congress from itself, and to protect the rest of the nation from Congress. And this will be no temporary action. By supporting a two-year extension, Republican strategists have made the sound bet that regardless of the financial condition two years from now, making those cuts permanent at that time will be an easy sell. After all, 2012 is an election year.

Perhaps further stimulus over the short-term is warranted, as the Domenici-Rivlin group specifically addressed. But ideally such actions would be targeted to have the greatest economic impact over the near term, while not undermining prospects for addressing the longer-term problems, such as providing a payroll tax holiday to boost domestic spending and addressing a corporate tax structure that inhibits the repatriation of foreign earnings and undermines domestic investment.

But the greatest irony is the support of eviscerating the Bush-era tax legislation coming from those who during the very same week supported the work -- if not the specific recommendations--of the debt reduction commission. Both that commission and the Domenici-Rivlin group provided alternatives for balancing the short-term need for economic stimulus with long-term recommendations to address the nation's fiscal situation. They provided our political leadership with the opportunity to stanch the momentum of a nation heading toward a fiscal train wreck. They provided a moment in which serious leaders could stand up and be counted.

How quickly that moment passed.

Representative Paul Ryan's dissembling words in dismissing the work of the debt commission on which he served stand as evidence that for all the talk, most in Washington still do not believe that the problems we face warrant any serious consideration.

"I just don't think this thing (the work of the commission) has the ability to last in policy, and it simply buys us time. I'd rather fix the problem, with the Boomers starting to turn 65 this year, fix it once and for all so we can really get this thing fixed."

Ryan, the architect of his own fiscal reform plan, was simply unwilling to step forward and show the courage of his convictions. Imagine if he had said instead:

"I will support the Commission recommendations not because it is my preferred plan, but because it is the first step to forcing Congress -- all of us who are charged to lead the American people -- to make the hard choices necessary to chart a new course for our nation. I believe Congress must approve this plan. Then, those of us who believe there is a better way can propose changes to that plan that will improve our situation--bring down healthcare costs, further attack the problem of growing entitlement obligations at the federal and state level, increasing the pro-growth structure of our tax code.

"But all of those changes require first that we achieve balance--or something close to balance--and this plan does that. Those of us who believe further--and better--changes are necessary will make that case, to Congress and to the American people. But if this is the plan that gets is to a balanced starting point, we must all come together and support this as an essential first step."

Almost 200 years ago, Alex de Tocqueville commented that "The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money." Paul Ryan, and most others in Congress, will vote soon to bribe Americans one more time, in pursuit of their own narrow political interests.

Shortly thereafter, these same politicians will clamor for deficit reduction and decry the fiscal situation of our nation -- a situation that is a product of their own cynicism, self-interest and unwillingness to do the job for which they were elected.

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