What are the Prospects for an Effective Fiscal Commission?
It's no BRAC, but at least it's something
It’s looking like Congress is getting ever closer to establishing a bipartisan, bicameral commission to tackle federal debt (un)sustainability. The House Budget Committee just recently passed the Fiscal Commission Act of 2024 back to the floor, joining its Senate counterpart, the Fiscal Stability Act.
The plan seems to be that this group would consist of 12 lawmakers (evenly split between parties) and four independent experts (in only an advisory role), all appointed. They would be tasked with drafting legislation to reduce the debt-GDP ratio to 100% within 15 years. It also includes instructions to “propose recommendations that meaningfully improve the long-term fiscal outlook.” All changes to trust fund programs that result must improve their 75-year solvency.
Proposed legislation would then go to Congress under expedited procedures, limiting debate time and banning amendments or points of order. Just a simple thumbs-up/down.
Sounds promising. The sponsors of these bills clearly understand the radioactivity that surrounds reforming mandatory spending, hence kicking it to a commission in the first place. Further, they have ensured balanced bipartisan participation (even appointing the experts is split between parties), relatively clear objectives, and expeditious approval on the floor.
However, it is important to remember similar attempts in the past. Huffington Post’s Jonathan Nicholson lists some familiar failures:
2010: Bowles-Simpson. “While the ideas had majority support among committee members, they did not have the needed supermajority; and the three House Republican representatives, Reps. Paul Ryan (R-Wis.), Dave Camp (R-Mich.) and Jeb Hensarling (R-Texas), voted as a bloc against it”
2011: Super Committee. “After months of talks, mostly behind closed doors, the committee closed up shop without agreement, and the across-the-board budget cuts took effect in 2012, with both parties blaming the other.”
2011: Obama-Boehner talks. “[Boehner] said it fell apart at the end when the White House wanted more revenues.”
On the other hand, these were in a different era, with different structures. The Committee for a Responsible Federal Budget argued in a paper that commissions, properly designed, have had historical success. Commissions have successfully:
Recommended policy changes implemented in full.
Facilitated bipartisan negotiations.
Developed and socialized policy solutions.
Elevated public discourse around important policy issues.
Perhaps the gold standard for commission efficacy cited by CRFB is in the Base Realignment and Closure (BRAC) commissions from 1988-2005, which resulted in over 350 closures or consolidations of military bases. Romina Boccia of Cato has written on the differences between the new fiscal commission and BRAC:
Commissioners: The Fiscal Commission Act relies primarily on legislators as commissioners, including experts only in a non-voting, advisory capacity. A BRAC-like commission is either composed entirely or primarily of independent experts, enabling a more objective assessment of policy solutions.
Approval: The BRAC-like commission uses silent approval, avoiding the need for an affirmative vote in Congress. The Fiscal Commission Act requires members to vote on the commission proposal before it can go into effect. While expedited procedures will help, such a vote will be politically risky and could undermine the commission’s success.
Rather, the fiscal commission is closer in structure to the Greenspan Commission of 1981, also a success according to CRFB. This was formed in response to impending Social Security insolvency, with a rather urgent deadline at the time.
After a series of fits and starts, the Greenspan commission released recommendations based on proxy negotiations between President Reagan and House Speaker Tip O’Neill. Based on their recommendations, Congress enacted a package of revenue, benefit, and eligibility changes that ultimately extended the life of the trust fund by 50 years.
Boccia does not share their optimism about the Greenspan model. She argues that dire urgency played a key role:
Social Security was within a couple months, and perhaps within only a few weeks, from running out of legal borrowing authority as its trust fund ledger was about to run into the red.
Further, that commission had a far greater proportion of independent experts (with voting power!) and Presidential input.
“A series of fits and starts” seems like a rosy way to put it, but that’s up to the reader’s judgement. I suppose it’s a glass half-full vs. empty sort of thing.
What is the point of going this route? Simply put, the usual incentives faced by legislators are in the wrong direction. The days of reckoning are beyond most of their time horizons, the necessary reforms (tax hikes and spending cuts) are extremely unpopular with voters, and at least in public, partisan animosities are too toxic. There is no appetite for major change on the floor of Congress.
The parallels with BRAC are not exact. BRAC had a lot to do with the interests of specific constituencies, and dealt with spare change compared to the volumes of money now at stake. Yet, it provides an exercise in where the limitations of the normal legislature lie, and how to structure a workaround.
In the same paper, CRFB outlines the components of what makes a commission facing tough choices successful:
Safe space for negotiations. Commissioners need to be able to engage in open and frank discussions without fear of political reprisal or open attack from special interests.
Opportunity for bipartisan cooperation. Commissioners must be able to identify areas of consensus, make compromises, and negotiate trade-offs. In the case of fiscal commissions, this means that both revenue and spending must be considered with no sacred cows.
Input from Congress and stakeholders. Commissions must be able to incorporate diverse viewpoints from those who understand the issue, are impacted by the issue, and must answer to voters on the issue.
Presidential and Congressional leadership. The President and Congressional leaders must be bought into and supportive of the process. Often this is more effective when from afar, where they express general support for a commission’s work and make their most important priorities known without impeding the ability of commissioners to negotiate details.
A fast-track process and/or enforcement. Special rules or penalties are often helpful to incentivize commissioners to reach agreement, to ensure their recommendations are acted upon, and to shift blame in the name of avoiding an alternative.
[Text quoted is truncated for brevity]
The bill as it stands carries a lot of these, but leaves some to be desired. The fact that only a minority are experts from outside Congress, that proposals must go to the floor for an affirmative vote (in contrast with BRAC’s default approval), and that the White House is not throwing its weight behind it will do much to de-fang its endeavors.
Boccia follows up her criticisms with a workable proposal: a second commission to act as a failsafe1.
One of the commissions would be a congressional commission, with members of Congress at the helm, guided by a competent staff and perhaps some outside experts. The other commission would be an independent commission, composed entirely of outside experts, guided by competent staff, and including perhaps some former members of Congress (who do not intend to run for re‐election again, ever).
…
If the congressional committee failed, either in devising a working proposal or in passing it, the independent commission’s proposal could advance through silent approval.
For what it’s worth, this is by far my favorite idea for setting up conditions that encourage lawmakers to be responsible. As rock climbers know, redundancy is key.
Some corners are not keen on the fiscal commission idea. Not because it won’t be effective, but because they fear that it will. A final word on this.
The Center on Budget and Policy Priorities published a short piece arguing against the idea, largely because they believe that Republican resistance to raising revenues will result in deep cuts to their preferred programs. This report focuses almost entirely on policy outcomes instead of processes, completely missing the point. Both tax hikes and spending cuts are politically unpopular, but inevitable components of deficit reduction in practice. The idea for a commission came about because of the impasse between the parties on this issue - it’s designed to be bipartisan to encourage compromise, and “behind closed doors” to ensure insulation from interest groups with parochial objectives. The authors paint the commission as a Republican Trojan Horse, but it exists precisely because Republicans lack the political control to unilaterally pass their agenda.2 The commission’s architects recognize that dealing with the debt is in everyone’s interests, and they ostensibly wish to create a structure that aligns those long-term interests between political opponents and makes compromise possible.
Social Security Works President Nancy Altman referred to the commission as a “poison pill designed to slash Social Security and Medicare behind closed doors.”
and
In a statement, U.S. Senate Finance Committee Chair Ron Wyden (D-Ore.) claimed that congressional Republicans are “resorting to schemes that short-circuit the legislative process, rushing through cuts to Americans’ earned benefits.”
Well, yes. It will probably involve cuts or restructuring to those mandatory programs. It will also probably involve raising contributions, hence the bipartisan setup. To do either of these things in current American politics, “short circuiting the legislative process” is necessary.
See Butler & Higashi (2018) of the Brookings Institution for similar arguments and an in-dept evaluation of committees’ track records.
To be fair, many Republicans are extremely hesitant to cut spending in all but a few politically palatable areas.