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In an op-ed in the Financial Times, CED spokesperson and Honeywell chief executive David Cote, calls on business leaders to speak out and urge action regarding our nation’s debt problem:

There is no time to waste. As we approach the end of the year, we get closer to the edge of the “fiscal cliff”. If there is no political deal, the US will face a triple witching hour of automatically triggered spending cuts, the expiry of tax cuts, and a failure to raise the debt ceiling. We all saw what happened during the last debt ceiling “discussion”. It wouldn’t be a surprise to see the same dysfunctional process or another agreement to “kick the can down the road”, as they say in Washington.

CEOs can no longer stand on the sidelines. We need to ensure debt resolution is a core part of the presidential election campaign.

Mr. Cote offers five specific recommendations for U.S. CEOs.  He was a member of the US fiscal commission chaired by Erskine Bowles and Alan Simpson.

Ed Crooks from the Financial Times features Mr. Cote’s remarks in his piece.

Last week, Senate Budget Committee Chairman Kent Conrad (D-ND) put forward a budget resolution.  Although on the surface this is an unremarkable event – it is supposed to happen every year, before this time – the particulars were highly unusual.  They underline the degree to which the process of budgeting in Washington is stalled.

The budget resolution, as you know, is an annual outline of the nation’s overall fiscal plan.  It is a “joint resolution,” rather than a law, passed by the House and Senate without the president’s signature or his formal involvement, and it does not have the force of law.  In most years, its major function is to set forth a ceiling for the amount of annual appropriations that the Congress may legislate.  In some years, it also can provide instructions for changes in the law that governs taxes and mandatory (or “entitlement”) spending, which can be passed in the Senate by a simple majority, without the risk of a filibuster.  This year, with political control of the Congress divided, meaningful changes in tax and entitlement policy are far out of reach.  And beyond that, just last August, the Congress and the President negotiated a deal to set appropriations spending levels for this year while increasing the debt limit.  So in some sense, a budget resolution this year might be thought unnecessary.  Even so, many Members of Congress have often repeated, “If you can’t budget, you can’t govern.”  And the Congress has not completed a budget resolution for three years.

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This was a busy week in Washington as the budget battles continue in this election year. Some key highlights from the U.S. fiscal scene:

In an op-ed in the Wall Street Journal, Fiscal Commission co-chair Erskine Bowles expresses optimism about reaching a bipartisan consensus and cutting the deficit:

While letting all $3.9 trillion in the Bush tax cuts expire and implementing mindless across-the-board cuts is surely not the smart way to solve our long-term fiscal problems, that threat should be enough to force across the finish line a grand bargain similar to the one our commission proposed.

In addition to an improving economy, he points out that “the terms of the fiscal debate have fundamentally changed in ways that make lasting progress on the debt far more likely.”

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Wednesday afternoon, the House began consideration of the fiscal year 2013 budget resolution (the basic congressional budget plan, which sets the limit for appropriations).  Late in the evening, the House defeated a proposed amendment that would have implemented a substantial deficit-reduction plan, modeled after the report of the President’s Commission for Fiscal Responsibility and Reform, commonly called the Bowles-Simpson Commission (after its co-chairs, Erskine Bowles and former Senator Alan Simpson).  The language of the amendment mirrored the Bowles-Simpson report fairly closely (a budget resolution is rather sketchy on details), with the major departure being to allow the continuation of a capital gains tax preference, which Bowles-Simpson would have repealed.

The vote was 38 in favor, 382 against the amendment.  Democrats voted against the amendment 22-159; Republicans voted 16-226.  So it was a bipartisan amendment, even in defeat.

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The good news is that we still have time to deal with the deficit problem, but the longer we put it off, the bigger it will become.  This problem is not one that can be solved either simply or quickly.  It is too large to solve solely with economic growth, or only with tax increases or spending cuts alone.  It will take some of all three.  Anyone who says with a straight face that we are going to deal with our deficit in a serious way without touching revenue, defense spending, Medicaid and Medicare and addressing the solvency of Social Security is not telling you the truth.

All of us have to make some sacrifices today so that our nation can remain strong in the future. As my friend and partner Al Simpson says, we all have to be prepared to give up something we like to protect the country we love.

That is the approach we took in the Fiscal Commission. Our plan asked for sacrifice from all but the most vulnerable in society.  We subjected all parts of the budget to scrutiny and cut wasteful and low-priority spending wherever we could find it.  Liberal and conservative Commission members were willing to accept tough choices in areas important to them as long as they saw everyone else willing to do the same with their priorities.  Everyone had to swallow hard and nearly choked on one item or another. None of us thought our plan was perfect. But perfection was not the goal. Getting an agreement on a plan big enough to be equal to the challenge was the goal.  In the end we were able to get a bipartisan supermajority of the Commission on a plan with $4 trillion in deficit reduction, three quarters from spending cuts and one quarter from increased revenue, which would stabilize our debt and put it on a downward path as a percentage of GDP.

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When people asked Al Simpson and me why we agreed to take on the challenge of finding a solution to our nation’s deficit and debt, we originally said we were doing it for our 15 grandkids, my nine and his six.  However, the more we got into the numbers, the more dire we understood our Country’s financial situation to be.  We quickly realized we were not doing this for our kids, much less our grandkids, we were doing it for all of us.  We realized that the fiscal problems facing our Country were enormous, the solutions would all be painful, and there simply was no easy way out.

After listening to economists and budgeters from both sides of the political aisle, it became clear to both Al and me as well as  the other members of our bipartisan commission that we faced the most predictable economic crisis in history; that the fiscal path our Country was on was not sustainable; that these trillion dollar deficits were like a cancer.  These deficits were going to slowly over time destroy our Country from within.  And when this cancer metastasized, it would happen so quickly that no one would believe it.

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