Fiscal Commission Act: Just the FAQs

The House Budget Committee recently reported the Fiscal Commission Act (FCA), sponsored by Reps. Bill Huizenga (R-MI) and Scott Peters (D-CA) on a bipartisan basis. Senators Mitt Romney (R-UT) and Joe Manchin (D-WV) have introduced the similar Fiscal Stability Act (FSA) in the Senate.  

There has been plenty of commentary on these proposals and unfortunately some misunderstandings. This piece aims to answer Frequently Asked Questions (FAQ) based on the FSA as introduced and the Committee-reported version of FCA. Those questions include: 

We also include a comparison of different versions of the Fiscal Commissions Act and Fiscal Stability Act in the table below.

What would a fiscal commission entail?

Both the Fiscal Commissions Act (FCA) and Fiscal Stability Act (FSA) would establish a commission tasked with providing recommendations to rein in our ballooning national debt. The commission’s primary goal would be to develop legislation to achieve a sustainable debt-to-GDP ratio, below 100 percent, by 2039. However, this goal is not binding. The commission would be free to consider the entire federal budget. 

The proposed commission would include 12 Members of Congress and four outside experts. These commissioners would be appointed by leadership from both parties and from both chambers with each chamber and party getting four appointees. 

The bills require a majority vote backed by Members of both parties to report recommendations; the FSA calls for support from at least three commissioners of each party while the FCA mandates a minimum of two. Neither bill offers outside experts serving on the commission to vote on recommendations, though they would participate in their development.  

Though the FCA and FSA are very similar, there are a few small differences. They feature different reporting deadlines: the FCA would require the commission’s report by December 12, 2024, with the possibility of extending that deadline to May 15, 2025, while the FSA would set a deadline of May 1, 2025. The FCA also provides for the possibility of an interim report should commissioners see fit and tasks the commission with initiating a public education campaign regarding the nation’s fiscal health.  

The table below offers a full side-by-side comparison of the bills. 

Why do we need a fiscal commission?

The federal debt is on an unsustainable course, and lawmakers have been unable or unwilling to correct it. A fiscal commission would bring Members of both parties and chambers together to facilitate a conversation over how to solve these problems, without pre-prescribing any particular solution (or a solution at all). 

Commissions have often succeeded in advancing policy solutions, as explained in a recent paper on the topic. Historically, commissions have been successfully implemented to close unneeded military bases, strengthen key trust funds, and improve our national security. In 1983, the Greenspan Commission’s recommendations led to Congress passing reforms that significantly improved the solvency of Social Security. 

The national debt is approaching a new record as a share of the economy, interest costs are now the second largest line-item in the federal budget, and major trust funds face looming insolvency. 

High and rising debt reduces incomes, slows economic growth, pushes up interest rates, and worsens geopolitical risk. Rising debt also reduces fiscal space to address new crises and emergencies, drives up interest costs at the expense of other parts of the budget, and imposes burdens on younger and future generations. In a worst case scenario, excessive debt could lead to a fiscal or financial crisis. 

Why does the national debt matter?

The national debt is approaching a new record as a share of the economy, interest costs are now the second largest line-item in the federal budget, and major trust funds face looming insolvency. 

High and rising debt reduces incomes, slows economic growth, pushes up interest rates, and worsens geopolitical risk. Rising debt also reduces fiscal space to address new crises and emergencies, drives up interest costs at the expense of other parts of the budget, and imposes burdens on younger and future generations. In a worst case scenario, excessive debt could lead to a fiscal or financial crisis.

When would the commission's recommendations take effect?

The commission proposed under the FCA or FSA would not have the power to change law or make policy. The commission would produce legislation for Congress to consider. If the House and Senate pass the commission legislation and the President signs it, then recommendations would take effect whenever specified in the legislation. The deadline to report legislation is December 12, 2024 under the FCA, with the possibility of an extension until May 15, 2025, and May 1, 2025 under the FSA. 

Which programs would be affected?

The commission described in the FCA and FSA would not be mandated to change specific programs. Rather, the bills would task the commission with examining the entire federal budget and tax code and providing recommendations for reaching or moving toward certain fiscal goals. Ultimately, Congress and the President would have to decide to enact or reject the recommendations. 

Why do we need a bipartisan commission to address the debt? The growth in the debt is mostly the fault of the other party. Don’t we need to just cut spending without raising taxes? Or don’t we need to just raise taxes without cutting spending?

Both parties are responsible for growth of the national debt. About three-quarters of the debt can be explained by bipartisan laws enacted since we last balanced the budget, and the rest can be explained by partisan actions from both parties.  

In addition, both spending growth and tax cuts can help explain what has driven the growth in debt – see "From Riches to Rags: Causes of Fiscal Deterioration Since 2001," which looks at this question two different ways and reaches the same conclusion. Projected increases in the debt are driven by fast-growing spending and revenue that fails to keep up. 

Will a fiscal commission cut Social Security and Medicare?

Neither the FCA nor FSA would require changes or cuts to Social Security or Medicare. The commission would develop recommendations to reduce our debt trajectory, but the commission has no power to make policy. The commission must achieve majority support plus a minimum bipartisan threshold to report recommendations. The recommendations would need to pass in the House and Senate and be signed by the President to become law. The recommendations would need 60 votes in the Senate to pass.   

Will a fiscal commission raise taxes?

A commission established under the FCA or FSA would not be required to make revenue changes, as there are no preconditions on the policies the commission may consider. The commission must achieve majority support plus a minimum bipartisan threshold to report recommendations. Those recommendations must pass the House and Senate and be signed by the President to become law and have an effect. 

Past fiscal commissions passed policies I don’t like (for example Social Security benefit changes, tax increases, etc.). Won’t a new commission be more of the same?

Every commission is different and develops its own set of recommendations. In any case, the commission has no policymaking power. Any recommendations must pass the House and Senate and be signed by the President to take effect. Without 60 votes in the Senate and majority support from both chambers, and the President, no recommendations can be turned into law.

Past commissions often included spending cuts and tax increases. But only one side stuck, and the other was reversed. Won’t it be the same with any deal reached by this commission?

No legislation – whether from a commission or regular order – can bind a future Congress. But when commission recommendations have been enacted into law, they have generally proved more durable on both sides of the budget than partisan legislation. For example, all parts of the 1983 Social Security solvency package were allowed to go into effect, and none have been reversed. 

Despite claims to the contrary, the same has generally been true of bipartisan deals made outside of a commission.  

With regard to the 1990 budget agreement, for example, a CBO retrospective found that it “appeared to curb the growth in both discretionary and mandatory spending,” successfully raised revenue, and that Congress generally abided by PAYGO and the discretionary spending caps (other than for Operation Desert Storm).  

The same was true of the 1982 budget agreement, and claims suggestion otherwise have been refuted by Bill Gray, Bob Dole, David Stockman, and the House Budget Committee. 

Simpson-Bowles would have been a huge tax increase. Why should policymakers support another commission?

All commissions are different, and there is no reason to think a new commission would repeat the recommendations of a past one. 

The Simpson-Bowles plan included an ambitious plan to substantially reduce deficits and debt, which included substantial health care savings, discretionary spending caps, spending cuts, Social Security reforms, and new revenue. 

Under the Simpson-Bowles plan, new revenue would be generated mainly as part of comprehensive tax reform that eliminated tax breaks and lowered rather than increased tax rates.  

Although the plan would have raised substantial revenue, it included a cap on revenue at 21 percent of GDP in order to prevent revenue from growing indefinitely as a share of the economy. It also coupled revenue increase with spending cuts and entitlement reforms. 

Simpson-Bowles supported huge Social Security and Medicare cuts along with tax cuts for the rich. Why should policymakers support another commission?

All commissions are different, and there is no reason to think a new commission would repeat the recommendations of a past one. 

The Simpson-Bowles included proposed to save Social Security from a 23 percent across-the-board benefit cut, lower health care costs for taxpayers and beneficiaries, and raise substantial revenue from the wealthy by cutting inefficient tax breaks. 

The Social Security plan included an increase in the wages subject to the taxable maximum and slower benefit growth for higher earners. The Medicare plan included numerous reforms to lower the overall cost of health care rather than simply shift costs onto seniors. And although the tax reform plan lower tax rates, it increased revenue collection from higher earners by cutting tax breaks even more.

Will a fiscal commission go around the Senate filibuster?

No. The FCA and FSA would both preserve the current 60-vote threshold for legislation in the Senate.  

Does either bill create a closed-door process?

No. The commission proposed by the FCA and FSA would feature hearings available to the public, with the date, time, and location announced at least a week in advance. Moreover, the commission’s findings would be released to the public in a final report, regardless of whether its recommendations were adopted or rejected. 

In fulfilling the commission’s responsibilities, its members would collect information, testimony, and opinions from other government officials and fiscal policy experts. Members of Congress on the commission would also continue to communicate with their colleagues and constituents, thereby keeping the process open and free from charges of secrecy. 

The public and members would have input. For example, commission legislation includes provisions for the committees of jurisdiction to submit their recommendations. The commission would be required to hold public hearings.  

Shouldn’t lawmakers use regular order to address the debt? Shouldn’t the committees of jurisdiction do their job?

While lawmakers would ideally address the debt through the normal legislative process, they have shown no success in doing so. If legislation creating a commission is passed by the House and Senate, and signed by the President, that process has the force of law and is as legitimate as another process lawmakers may use. And based on past experience, it is likely to prove more successful.

In fact, Congress often turns to commissions as part of its deliberative process. Over the last 35 years, Congress has enacted more than 160 commissions to assist in developing policy options they can then consider for legislation. There are more than a dozen bills currently introduced that would create commissions on a variety of policy topics, with bipartisan support.

Creating a commission does not inhibit lawmakers from separately moving legislation to improve the country’s fiscal outlook. Existing committees are free to work on these issues at any time they choose. 

There is existing legislation to address the debt. Why don't lawmakers just pass those bills?

Creating a commission does not prohibit Congress from passing any of these bills. Lawmakers in the House and Senate are free to work on legislation in committee and pass it on the floor at any time they choose.  

Where can I learn more?

The below resources include more information on the FSA, FCA, and commissions generally:  

How do the Fiscal Commission Act and the Fiscal Stability Act differ?

The chart below compares the House Fiscal Commission Act as introduced, the Senate Fiscal Stability Act, and the Fiscal Commission Act as amended and reported out of the House Budget Committee.  

Category  House FCA As Introduced Senate FSA  HBC FCA Manager's Amendment
Primary Fiscal Goal  Balance the budget at the earliest reasonable date, at a minimum keep debt-to-GDP below 100%  Sustainable debt-to-GDP below 100% by 2039 Sustainable debt-to-GDP below 100% by 2039
Deadline to Report November 15, 2024, but not before November 6, 2024 May 1, 2025 December 12, 2024, commission may vote to extend deadline to May 15, 2025; option for an interim report with the state of the nation’s finances and consensus recommendations
Description of Scope Discretionary spending, mandatory spending, gap between revenue and expenditures (does not exclude revenue but does not mention it specifically) Discretionary spending, mandatory spending, revenue, gap between revenue and expenditures Discretionary spending, mandatory spending, revenue, gap between revenue and expenditures
Voting Threshold Majority approval with at least 3 from each party Majority approval with at least 3 from each party, only lawmakers vote Majority approval with at least 2 from each party, only lawmakers vote
Commission Structure 16 members, 12 from Congress and 4 outside experts, split by chamber and party 16 members, 12 from Congress and 4 outside experts, split by chamber and party 16 members, 12 from Congress and 4 outside experts, split by chamber and party
Fast Track Requires each chamber to vote on recommendations without amendment  Requires each chamber to vote on recommendations without amendment  Requires each chamber to vote on recommendations without amendment 
Public Education Campaign     Explicitly tasks commission with public education on the state of country's fiscal health and requires a public education campaign

Tags

Trending

What's Next