10) Isn’t the Fiscal Commission plan just a series of “magic asterisks” that set goals for savings without specifying how they would be achieved?
No – every dollar of savings within the ten-year window is either accounted for with a tangible and scoreable policy, or else called for through a credible process in which specific parameters are set, illustrative examples are provided, and an enforcement mechanism is put in place to guarantee the savings will be achieved.
On discretionary spending, the Commission proposed multi-year statutory caps enforced by a point of order and sequestration. Such caps are the only way to control discretionary spending beyond the current year, and similar caps were very effective in controlling discretionary spending in the 1990s. On top of these caps, though, the Commission offered about $200 billion in annual illustrative savings, and calls for several specific cuts up front (for example, freezing federal pay) in order to make it easier to meet the caps and to act as a down-payment.
With regards to mandatory spending, the Commission proposed over $600 billion in specific tangible policies to reduce the deficit, most of them scored by the Congressional Budget Office; among them included over $400 in specific reforms to reduce federal health spending. Beyond 2020, the Commission did recommend limiting the growth federal budgetary commitment to health care GDP + one percent, since there is no expert consensus on the best way to control costs. The combination of the cuts scheduled in law under PPACA and those from Commission recommendations should make meeting this cap far easier, however the Commission recognized that other changes – for example premium support for Medicare and/or a public option in the exchanges – might be necessary. Even without this long-term cap, the Commission plan would still stabilize the debt through at least 2040.
On tax reform, it is true that the Commission did not have the time to work out every minor detail of fundamental tax reform – particularly with regards to transitions rules – and so recommended that those details be worked out by the committees of jurisdiction. But the Commission also does not offer a “vague call” for tax reform, as some have suggested; it puts forward a serious and credible process with very specific parameters, targets, and enforcement mechanisms. In particular, it instructs the relevant congressional committees to develop reform based on the premise of “zero based budgeting” of tax expenditures, and requires any plan to reduce the top (and corporate) rate to 29 percent or lower, raise an additional $80 billion in 2015 and $180 billion in 2020, maintain or increase the progressivity of the code, and move to a competitive territorial system. It enforces this call through an automatic “failsafe” that would cut tax expenditures across the board if the committees do not comply by the end of 2012. And finally, to show what a reformed tax code could look like after transition, the Commission offers an illustrative tax reform plan which sets rates to 12 percent, 22 percent, and 28 percent, creates a 12 percent mortgage interest and charitable giving credit, limits the size of retirement accounts, and phases out the health exclusion, among other changes.