Well, at least we didn’t default. That’s probably the best thing to say about the proposed debt deal. But the question is: If this wasn’t the moment to put in place the framework for a real debt deal to fix the problem, when will we? The Bowles-Simpson commission laid out a plan to save $4 trillion and stabilize the debt. The Senate Gang of Six worked out several proposals to move such an idea forward. And the Boehner-Obama discussions were on the right track, covering further health-care savings and an overhaul of the tax system.
In the end, however, we’re going with the plan that doesn’t save nearly enough, that doesn’t require the critical issues of entitlement and tax reform to be centerpieces of the deal, and that relies on a trigger (which doesn’t even kick in until after the 2012 election) with about as many teeth as a 6-month-old.
But all hope is not lost. Let’s hope the members of the super-committee are lawmakers who have sincere interest in addressing our fiscal challenges and a willingness to work across the aisle. Markets and outside institutions such as the Fed, the International Monetary Fund and the credit rating agencies are likely to maintain the pressure to do something real. It is conceivable that this committee could go for the brass ring, exceeding its mandate and expectations. If it does, we still have a chance to fix our fiscal problems with a package that can preserve the key priorities of both parties: pro-growth tax policies and protection of public investments and those who depend on government programs. If the committee doesn’t, this task will only get harder over time.
