THE BLOG
12/06/2010 03:42 pm ET | Updated May 25, 2011

The Deficit Commission Report: A Good Start, But Only a Start

Final reports from government commissions are not generally known to be stirring or often acted upon. Most of the time, that's OK. Commissions are usually government's way of pretending to address a problem without really doing so.

Last week, though, the National Commission on Fiscal Responsibility and Reform -- the Deficit Commission -- released a document that I would strongly suggest everybody read. Tasked eight months ago by President Obama to come up with recommendations for reducing the deficit, the bi-partisan Deficit Commission actually did something noteworthy for a government exercise: They told the truth.

While any set of recommendations that aims to cut the deficit by $4 trillion over the next ten years is worth a close look, I believe that the must-read portion of the report is the brutally honest assessment of just how serious our Federal spending problem is.

In less than two pages, the Deficit Commission paints the picture that every American and especially every Member of Congress needs to "get," beginning with the simple statement: "Our nation is on an unsustainable fiscal path."

Here are a few facts the Commission lays out in its report:

Right now, the federal debt is 62% of the nation's Gross Domestic Product (GDP) -- twice what it was in 2001.

Even worse, on our current path, the federal debt will be 90% of GDP by 2020, and 185% of GDP by 2035. That's right. Unless we change what we are doing, the public debt will be almost twice the size of the entire American economy.

How about this fact: By 2025 -- only 15 years from now -- federal revenues will only be sufficient to pay the interest on the debt and Medicare, Medicaid and Social Security. Nothing else. No military, no domestic spending, no nothing except interest and entitlements without borrowing or printing more money.

As I travel the country, it is obvious that Americans realize government spends too much. On that point no one disagrees. But what this Presidential Commission has done is put an official stamp on a stark reality: A nation whose debt equals or surpasses its entire economy simply cannot survive. As the Chairman of the Joint Chiefs has said, our debt may be the most serious threat to national security we face.

Right now, more than half our public debt is owned by foreign creditors, the largest, of course, being China. If the debatable "threats" in Iraq and Afghanistan merit going to war, what does having countries like China own half our debt merit?

The Deficit Commission, and many of the rest of us, speak of the imperative for "across the board" spending reduction. Absolutely, anytime we can make government spend less in everything it does, that is a good thing. However, as anyone who has ever managed a government can attest, simply directing government agencies to spend less in a given year is a temporary solution at best.

It is simply human and institutional nature that those agencies will reduce spending by deferring outlays, not hiring new folks, and doing the least painful things they can find. Any bureaucracy can find a percentage point here and a percentage point there to reduce -- without really changing what it does.

Those kinds of restraint are better than nothing, certainly, but they are not the long-term answer. Truly cutting government spending for the next generation and beyond requires much more than number games or deferrals. It requires fundamentally reducing what government does.

Yes, we can direct the federal Department of Education to spend only $60 billion instead of $70 billion and save some money, or... we can do what we really need to do, which is recognize that education has not been well-served by federal meddling, and get rid of the entire department and its entire $70+ billion annual price tag.

We can give HUD a little less money with which to distort the real estate and mortgage markets, or we can acknowledge that the government really has no place in the housing business and take that entire agency' and its $40 billion budget off the books forever.

The list goes on, but the point is simple: While the Deficit Commission's report may be the boldest such document we have seen from official Washington in a long time, it isn't bold enough. Eliminating waste, requiring government to do more with less, freezing salaries, etc., while laudable, won't do it. Plain and simple, we need to cut what government does, not just what it spends trying to do it.

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