Conrad-Gregg Modified, but not Defanged
by Bruce Webb
In recent weeks there has been some furor over the new push to tie an increase in the debt ceiling to the establishment of a new Deficit Commission based on proposals but forth on the Senate side in Conrad-Gregg or on the House side in Cooper-Wolf. Ezra Klein today tells us (rather scornfully) that really we have nothing to worry about because would just be The Little Commission that Couldn’t. Well Ezra got pawned. Below the fold is my comment to his post.
Ezra you have been pwned a little bit here.
The original Conrad-Gregg proposal had 16 members, 8 R’s and 8 D’s with two D slots allocated to the Administration meaning an 8 to 6 Congressional split between R and D. And in practical terms there would be no way to keep Conrad of Conrad-Gregg and Cooper of Cooper-Wolf off the Commission. If we assume that Republican leadership would name 8 members hostile to Medicare and particularly Social Security, then add in the votes of Conrad and Gregg for ‘reform’ then the Commission starts off with 10 votes for that and with Administration buy-in would have its 12 vote super-majority on the way in the door. You can see a description of the original version here right from Conrad’s office:
http://budget.senate.gov/democratic/documents/2007/bipartisantaskforcehearingrel102307.pdf “Senators Conrad and Gregg introduced the Bipartisan Task Force for Responsible Fiscal
Action Act (S. 2063) on September 18. The bill would establish a 16-member task force comprised of eight Democrats and eight Republicans, designated by Congressional leaders and the President. Fourteen members of the task force would be current Members of Congress, and the remaining two members would be from the current Administration.”The new proposal by adding two members would change the dynamic a little if they are both congressional democrats thus restoring and 8 to 8 R to D balance among Congressional members but makes the numbers not shift much. Assuming that Conrad and Cooper are two of those eight and Admin buy in progressives dems would have to hold 5 out of the 6 remaining Dems to block action. And given the state of the Senate you know that at least one of the three spots under Reid’s effective control will go to another Conservadem (and Baucus would be a natural choice) giving reformers at least 13 of their needed 14 votes, and if Reid bends and adds a centrist perhaps 14. Even if by some miracle Reid preserves two spots for liberal to progressive members, blocking action would mean Pelosi needing to having to name three defenders of Social Security while blocking any additional Blue Dog or centrist Budget Hawk. Probably not possible and even if it happens leaves progressives staring at a 13 to 5 split and the labels ‘obstructionist’ and ‘denier’. If under that pressure one of the 5 remaining Dems cracks the proposal goes on a fast track basis to Congress where that same dynamic repeats. Having explicitly admitted that there is an ‘entitlements crisis’ by allowing the Commission to be established in the first place Democrats would be stuck in a lose/lose position, allow the bill’s recommendations to be adopted (and no amendments are allowed) or block it and be revealed as feckless tax and spend ostriches with heads firmly stuck in the sand.
Going to 18 members seemingly eliminates the clear imbalance of the original proposal but does not in practice allow the non-Blue Dog democrats anymore than a figleaf of cover.
Update: Baucus comes out strong against Conrad-Gregg, though mostly it seems because he doesn’t want to have his Committee bypassed. http://thecaucus.blogs.nytimes.com/2009/12/10/baucus-dont-outsource-my-committee/
This doesn’t change the dynamic much, you could substitute Lincoln or Nelson for Baucus and have the same outcome outlined above.
This type of control was already tried and struck down as unconstitutional by the supreme court for violation of the separation of powers doctrine. Anything besides comptroller authority will not work because the legislator can always overrule their own laws.
Bruce,
Entitlements are going to be on the table and there’s nothing you can do to stop it. This includes social securiy. You argue that the social security funding is not in jeopardy because you can point to a funding source that included the trust fund. But to make the trust fund work we have to take money from the general fund that will require tax hikes, spending cuts or a combination of the two. Nothing right now is automatic. Everything is in play and will be determined by the political process.
Cantab your argument does not hold water. If we can fund a war by borrowing, we can fund repayment of a debt that the Trustees admit is backed by Full Faith and Credit.
Make an argument that the actual amounts needed in any given year are of a magnitude to require a tax hike, spending cuts, or a combination. Arguing that this is true a priori is simply to make a claim that numbers just don’t matter at all. You are pushing an impressionistic argument. It seems plausible, making payments for anything from the General Fund implies some sort of crowding out. Except that logic is never applied to anything favored by the right.
Not only that but we can tax our way out of this. We can deliver 100% of scheduled benefits by phasing in a total 2.0% increase in payroll over 32 years with only 0.3% needed up front. Or $1.50 a week for the median income household. Make an actual case for the kind of crowding out your argument requires or stiflle it (which is more polite than what I originally typed).
Your argument manages to be both stale and puerile, which is quite the achievement.
Seriously the idea that the Commission couldn’t find enough Democrats in the Senate and House to get enough votes is foolish. And in no way will this Committee’s recommendation go the way of the Iraq Study Group. There will be huge pressure from the Broder’s of the world to accept whatever idiotic plan that comes out.
Absolutely right. You could call this the ‘Stupak Factor’. Near unanimity on the Republican side plus a large majority of Blue Dogs and you are not that many ‘sensible Centrists’ away from that 60% supermajority. “But, but, but, people LIKE Social Security!” Well yes they do, but supporters of the cuts will be able to argue with a straight face that they were driven by The Iron Hand of Necessity (Pay no attention to the Republicans dancing and pissing on FDRs grave).
Under the actual Conrad-Gregg proposal the recommendations of the Commission are only advisory and require a Congressional super-majority to boot. So I don’t think separations of powers come into play, not at least for Conrad-Gregg where 16 of 18 Commissioners are Congressmen to start with. But even in a Commission where Congressional participation is limited (Cooper-Wolf would limit that to 4 of 16) the precedent of the Greenspan Commission and the BRAC Commission show this as doable.
Certainly Congress could reverse course, just as it could take all those closed military base sites back by Eminent Domain, but in practical terms the processes are set up to be one-way.
Bruce,
Your argument manages to be both stale and puerile, which is quite the achievement.
So is reality. You wanted to play this game of chicken on taxes — now those that listened to people like you are going to have to pay the price.
The base closing commission won’t work on taxes because basically too many people are going to be effected. What’s my insentive to allow someone I did not elect to take my money. he base closing commission mostly affected the communities surrounding the base. So it was easier to do.
Cantab,
The problem with cutting Social Security is that it is a very large voting bloc. So the solution will be to screw a smaller voting bloc – they will means test social security payments. The rich will always get out voted.
“The rich will always get out voted.”
Absolutely that is why we were able to jack top marginal rates from a quite reasonable 33% in 1979 up to a confiscatory 69% in 2009 and plan to get it to 90% by 2019.
Oh wait a minute, it actually happened the other way around! Once you leave SammyLand where apparently the slogan is “First they came for the rich people” apparently the second most persecuted minority after the white male. Because God knows neither the rich nor the white and especially not the rich white EVER got a break in this country.
(Sammy-Farnham’s Freehold was a novel.)
The problem with cutting Social Security is that it doesn’t need to be done and that only liars and ignorant people say that it does.
cabtab,
Look, go read the archives that Bruce put together (and coberly). I beleive you have a link at the top. I’ll summerize (and totally agree with) what they put together. Bottom line: Social Security, IN ISOLATION, is totally solvent and even in the worst case would need just a slight adjustment to stay that way. There is no crises. None at all.
The crises is in the general fund. The fact that the general fund has a bundle of IOUs to the Social Security fund does NOT mean that SS is in a crises. (Unless you beleive we will defualt on T-Bills in which case we have more to worry about). The reason entitlements are “on the table” is that no one wants to cover the already immense and growing hole in general funds budget. Obama’s policies will make this even worse with deficits that make the worst of Bush look like a rounding error. Why people keep attacking SS is becuase they don’t want to repay the IOUs (basically making permanent the transfer of funds from SS to the general fund).
Yes, you are 100% correct that we will need to rasie taxes AND cut government spending if we ever plan to get the budget under control. Neither party seems to have any appetite for this since the Clinton dot-com bubble popped. So we borrow and spend with impunity. And we will continue to do so as long as we can sell T-Bills – which we don’t seem to be having any problem doing.
TWo thoughts: First this about Argentina, more a food-for-thoughts than anything else:
http://hotair.com/greenroom/archives/2009/11/21/dont-cry-for-me-america/
And of course my favorite graph of Obama’s deficits!!!!
Islam will change
Good to know that Cantab’s reality is both stale and childish. Explains a lot.
_________________________
As to BRAC that was a bunch of communities. And where do taxes enter the mix? None of the actual arguments for establishing the Commission raises the issue of tax increases to start with, it all starts and stops with benefit cuts, I don’t think the Northwest Plan is going to be on the table.
And we allow people we individually did not elect to take our money all the time. There are many Senate Committees that have no representation by my state. The Conrad-Gregg Commission would be made up by Congressmen plus a couple of Administration officials of who at least one was subject to Congressional Confirmation (Secty of Treasury). Plus you didn’t even attempt to answer my challenge. So I guess we can add ‘incoherent’ to ‘stale and puerile’.
Buff,
You know they’re not really even IOUs in the lockbox. If anyting was actually owed the holder of that debt would be actually holding title to property. Regardless of what Bruce says the supreme court has already found that we as citizens do no have a property claim to social security. Perhaps we’re owed due process — maybe. So we’ll get whatever process the government and the courts think we’re due and then do what they want to in an orderly manner with social security.
I also disagree with your opinion on taxing the rich. Since I left the Army I’ve only worked in the private sector. All of the people that created and ran the companies that i’ve worked for were either very well off or filthy rich. And where I have never made what they did I’ve done alright. Certainly more than I would have earned at a government job. And I’ve looked at them, some look interesting but they never paid enough (same with working at Harvard or Boston University). So my hats in it with the rich. They’ve done more for me then the government ever will. And don’t forget trickle down economics. If they screw the rich with high taxes and they cut our pay or lay us off then no more lunches at the local sandwich shop, no new car, travel, surfboards, wine, concerts, or all the other stuff.
Thanks for the backup on SS.
As a reward let me put up my not really favorite graph but one that shows an actual result of $1.4 trillion, which was lower than either CBO or OMBs projection but where OMB was closer than CBO whereas the argument here in the Spring was that Obama was low-balling and that we should give more credence to OMB.
“more credence to CBO”
Cantab,
Oh SNAP!
You said the forbidden words here at AB….”And don’t forget trickle down economics”…..Your in big trouble Pal. 😉
Cantab that is not what the Court ruled. Instead it ruled that no beneficiary had a property right in his scheduled benefit. The IOUs as you call them are Intragovernmental Holdings under the control of the Trustees of Social Security.
Most defined benefit pension plans are backed by assets that are not individually owned by the future beneficiaries and generally the fund trustees have full authority to manage those assets. I am vested in a pension plan that will not start paying out until 2023 at which point there may be few of the same assets in the fund as of the day I left employment. That doesn’t mean the pension fund or its assets are just imaginary.
As for your tax the rich argument, many of those people got rich on government contracts. For example Ross Perot made his initial money with a huge data services contract from Medicare.
The whole Phony IOU argument is based on a mountain of special pleading and quasi-legal arguments much like those which claim that the income tax is unconstitutional or that Federal Reserve Notes are a fiat currency. They simply betray a willingness to ignore practical reality and the ability to draw imaginary distinctions.
bruce
conrad and gregg used their budget committee as platform to try to legislate themselves a deficit committee in 2007 and that failed to pass, they have modified their proposal (“sweetened the pot” ) to make it more attractive
i understand conrad and gregg wanting to get the spotlight on their issue, and a little more power than they have
they could not sell the idea before, what makes their proposed committee more likely to occur this time?
Cantab is not in trouble just because he piles Moronity upon Moronity.
Rich people hire workers so that they can extract productivity, no production, no profit. The idea that rich people will simply disinvest because of a minor change in taxes flies in the face of history. Investment didn’t crash through the floor or unemployment soar after Clinton raised tax rates. Everybody understands the theory of supply side, it is just that it is a proven failure, a lame excuse for government to do what the wealthy have always wanted them to do since time immemorial, which is to shift the tax burden to labor from capital.
During the Napoleanic Wars the best path to wealth was lending money to the government at high rates of interest with those Sinking Funds redeemed by steep taxes on consumption. Maybe somewhere in the depths of your memory you recall something about the Stamp Tax and the Tax on Tea, taxes that were deliberated targeted to hit workers hard and wealthy landowners proportionately much less so. Supply Side Economics is just another run at making the tax system as regressive as possible. The arguments for it are not really economic ones aimed at growing overall investment, they are simply another way of justifying tax avoidance by the wealthy.
Because there is now a Democrat in the the oval office and deficits suddenly matter once again. I’ve said before that when the next Democrat was elected suddenly Republicans would rediscover crowding out I just never thought anyone would believe it wehn interest rates hover around zero and the country is going through a huge economic downturn.
They didn’t get outvoted on TARP, or on lack of financial regulatory reform, or on a toothless “public” health plan. Maybe you are looking at another country, but here in the US, we have the best politicians money can buy.
Whether there are trust funds, or not trust funds, or deficits or debts, regardless – if the economy has the capacity to produce sufficient real goods needed by retirees while also providing for the rest of the non-retiree country, we will be fine. The trust funds are an accounting structure to identify the excess taxes the boomers provided through payroll deductions to support a political requirement, not an economic one.
If this idiotic commission goes through – I predict we will all of sudden see the media get on its high horse to “prove” that we can’t afford Social Security (Medicare is already in the middle of being put to death) as well as disability and survivor benefits.
I just want ONE congressman to ask on this commission what the NPV of the US GDP is on an infinite horizon. Quadrillions? Septillions?
For all the talk about economic growth, we don’t seem to like big numbers.
Just to make it clear
under his rationalizations Cantab is arguing that the government has no moral or legal requirement to honor it’s debts / promises to the people who paid the “excess” payroll tax.
so what he is saying is that it is all right to steal Social Security because you can’t trust the government when it’s in the hands of people who think like he does.
Ya want make these guys squirm. Time to start lobbying against the bloated agricultural subsidy. Hell, it makes the bank bailout look reasonable and we should do it because it needs doin.
Coberly,
You missed the point again. It’s not stealing since its not our property to start with.
I prefer cutting social security benefit by raising the retirement age to 70. This fits into my life plan
Too funny.
“This fits into my life plan.”
Sociopath much?
U.S. National Debt and Projected Deficits
As of September 30, 2009, total U.S. Government debt is recorded as $11.91 trillion of which Debt Held by the Public is $7.55 trillion (63.41%) and Intragovernmental Holdings is $4.36 trillion (36.59%).
The United States Government is facing a growing national debt going forward, the Debt Held by the Public portion of which is projected to be in the range of $14.3 trillion (CBO) to $22 trillion by 2019. Debt Held by the Public, to say nothing of growth in Intragovernmental Holdings, is projected to roughly double or triple by 2020. The United States Government total national debt (Total Gross Federal Debt) is projected by CBO to be $20.66 trillion by 2019 and other sources may put that total closer to $24-26 trillion.
CBO projects gross interest payments on Treasury securities rising from $453 billion in 2008 to $1.06 trillion in 2019 and total net interest outlays rising from $253 billion to $722 billion.
As of August 25, OMB’s 2009-19 total deficit estimate under the President’s policies is projected at $9.05 trillion.
The following comparisons between CBO baseline and Concord Coalition deficit projections since 2004 indicate the Federal budget problem going forward.
Federal Budget Deficit Projections For The Next 10 Years
CBO Baseline Total Unified Deficit Projections
CBO – Aug 09 -$7.1 Trillion
CBO – Jan 09 -$3.1 Trillion
CBO – Sep 08 -$2.3 Trillion
CBO – Mar 08 +$270 Billion
CBO – Jan 08 +$274 Billion
CBO – Jan 07 +$800 Billion
CBO – Jan 06 -$0.8 Trillion
CBO – Jan 05 -$0.9 Trillion
CBO – Jan 04 -$1.9 Trillion
CC Plausible Total Unified Deficit Projections
CC – Aug 09 -$14.4 Trillion
CC – Jan 09 -$10.3 Trillion
CC – Sep 08 -$7.8 Trillion
CC – Mar 08 -$6.5 Trillion
CC – Jan 08 -$6.5 Trillion
CC – Jan 07 -$4.9 Trillion
CC – Jan 06 -$5.3 Trillion
CC – Jan 05 -$5.8 Trillion
CC – Jan 04 -$5.3 Trillion
Sources:
The Concord Coalition Plausible Baseline
http://www.concordcoalition.org/learn/budget/concord-coalition-plausible-baseline
CBO Budget Projections
http://www.cbo.gov/budget/budproj.shtml
CBO: The Budget and Economic Outlook: An Update
August 2009
http://www.cbo.gov/ftpdocs/105xx/doc10521/budgetprojections.pdf
Debt Position and Activity Report
September 30, 2009
TreasuryDirect.Gov
http://www.treasurydirect.gov/govt/reports/pd/pd_debtposactrpt_0909.pdf
.
The Obama Administration’s budget projections, 2009-2019
OMB’s Deficit Estimate under the President’s Policies
2009 -$1.58 Trillion
2010 -$1.5 Trillion
2011 -$1.1 Trillion
2012 -$796 Billion
2013 -$775 Billion
2014 -$778 Billion
2015 -$739 Billion
2016 -$795 Billion
2017 -$810 Billion
2018 -$815 Billion
2019 -$917 Billion
2009-2019 -$9.05 Trillion
Source:
CBO: The Budget and Economic Outlook: An Update
August 2009
http://www.cbo.gov/ftpdocs/105xx/doc10521/budgetprojections.pdf
*OMB Fiscal Year 2010 Mid-Session Review: Budget of the U.S. Government (August 25, 2009).
.
I like what Stan Collender at Capital Gains and Games had to say:
http://capitalgainsandgames.com/
this absolutely was the Washington equivalent of “Yo mama.”
Here’s the money quote:
If the Chairman and Ranking Republican Member of the Budget Committee are in such broad agreement on their goals, why don’t they just skip the commission and go straight to their recommendation? That is exactly why Congress created the budget resolution and the reconciliation bill.
In other words, Baucus was saying to his colleagues that, as the senior members of the budget committee, they already have the power to propose changes that will reduce the deficit. Therefore, if you feel so strongly about this, never mind a commission, just go ahead and do it. It’s your job
Yes. On the other hand CBO had revised that 2009 figure downward from $1.85 trillion in early spring and still managed to be 10% off the final figure recorded five weeks after the August outlook when actual FY 2009 came in at $1.4 trillion. CBO does the best it can but given a current year error of 25% ($1.85 tn to $1.4 tn) it would be foolish to treat that $9.05 trillion as gospel. Which was my point eight months ago.
cantab
when you sold your soul did you have to leave your brain in pawn?
social security tax is collected on the premise that it goes to pay social security benefits. trying to weasel words around to make them mean something else is a lie. raising the retirement age would amount to stealing social security from those who were led to believe they would get a pension at age 66, or 62 with reduced benefits. it’s their money. you are trying to steal it.
Bruce
like a lot of sociopaths Cantab shows a lack of normal prudence. the whole point of Social Security is that the best laid plans of mice and sociopaths aft gang agley.
coberlywhen you sold your soul did you have to leave your brain in pawn?
Yes.
social security tax is collected on the premise that it goes to pay social security benefits.
That’s not my premise. To me social security tax is collected, a large chunk goes to pay current benefits, as very small part is used to pay over head, and then the significant part that’s left goes to the general fund to be spent on items not related to social security.
raising the retirement age would amount to stealing social security from those who were led to believe they would get a pension at age 66, or 62 with reduced benefits.
We’re already done this so what’s your point.
it’s their money. you are trying to steal it.
Its my money too and since I’m leading by example by waiting to 70 to get benefits I don’t see what you problems is.
And please stop this “it’s their money” business since its not. Some of would be had Bush got us private accounts. But we killed this effort so we have not ownership claim on future social security benefits.
Cantab
your theory of social security is a fignment of your own imagination. the money has not yet been stolen… though your friends are working on that… it has been lent. those bonds are iou’s.
what all the fuss is about right now is that your friends don’t want to have to pay back the money they borrowed. this is the “new conservatism.”