Hoping to sidestep debt ceiling gridlock, Senator Joe Manchin (D. WV) wants a “rescue committee.” The government’s dwindling trust funds are his concern. Whereas the trust funds had contained the extra revenue collected by programs like Social Security and Medicare, now the surpluses have shrunk. Without a trust fund surplus to make up for inadequate revenue, benefits could diminish or taxes could rise. Manchin’s committee is supposed to find a solution.
Not at all new, a similar rescue plan was proposed in 2010. It was called Simpson-Bowles.
Debt Reduction Committees
Simpson-Bowles (aka the National Committee on Fiscal Responsibility and Reform) had something for everyone to dislike. Groups on the left opposed the provisions that cut Social Security and Medicare. Meanwhile those on the right were against the plan’s higher taxes. Everyone thoough might have been happy that by 2014, we would have had a stable debt. (They even suggested a 3-year pay freeze for members of Congress!)
Specifically, the 65-page report dealt with six categories:
- Discretionary spending cuts
- Comprehensive tax reform
- Health care cost containment
- Mandatory savings (like cutting agricultural subsidies)
- Social Security
- Process changes (like measuring inflation more accurately)
The Congress did nothing.
Our Bottom Line: the Debt Ceiling
Catchy, funny, and deadly serious, in less than a minute, the West Wing expressed the perils of not raising a debt ceiling The first problem is not being able to pay all that we already owe. Responding, the U.S. credit rating would plunge. Then, continuing a distastrous ripple, defaulting encourages lenders to send their money elsewhere. And finally, as the interest we pay rises, so too will our deficit.
Do take a look at what the West Wing said:
Or, as Yankee catcher, manager, and coach Yogi Berra (1925-2015) would have said, a debt reduction commission is “déjà vu all over again.”
My sources and more: For questions about the debt ceiling, econlife has some of the answers. Then, for more on Simpson-Bowles, this this Atlantic article and this 2010 CNN article are oerfect. And finally, I suggest reviewing econlife’s summary of the federal budget.