The Catfood Commission

I'd also been planning to comment on the Fiscal Commission's Chairperson's report. (Atrios has been calling it the Catfood Commission, since it's long been expected to produce cuts in Social Security.)

I'm pretty conflicted on it.  First of all, the good: It's a solution to our long-term budget crisis. We haven't seen too many of those floated, not honest ones. The GOP tends to favor symbolic but useless ideas (Eliminate Earmarks!) and magical thinking on tax cuts. The Dems haven't really addressed the deficit other than to oppose, then cowardly roll over on, the Bush Tax cuts.  This report is what a solution looks like, and it is actually honest about some of the painful compromises that might have to be made. Taxes will go up. Sacred programs (defense!!) might need to be scaled back.  It's one of those "everybody hates it, so it must be near the mark" sort of compromises.

The bad: As a progressive and as a pragmatist, there's a lot to hate here.  In no particular order:

It's a bad deal for liberals.  

As is always the case among DC's Very Serious People, the compromise is the median position between the hard-right and the center right.  The Social Security Cuts are very much the Holy Grail for the right, as is the flatter, more regressive tax code, it kills the EITC, it would repeal much of the health care reform law. It's not clear what -- if any -- liberal priorities are reflected in the outcome. I guess higher taxes, to the degree that liberals aren't zealots who are fanatically opposed to "revenue solutions." But that's not a substantial offset in return for multiple major policy concessions for liberals.  It's not really a compromise, though. It's got some points that reflect conservative priorities and some that conservatives will hate, but no real points that reflect things liberals have historically prioritized.     (NB: I've seen the flatter tax structure described as both more regressive and more progressive by different authors. I don't really know what the truth is on that point, but being a liberal I'm used to being played for a fool, so I assume the worst.)

It's not timely

I made this point recently, but again, during a recession, austerity measures and fiscal discipline are not good policy, economically. Deficit spend to get the economy going and pay it back in boom times.  As Clinton did. There is a real possibility of this plan creating a demand trap and making the economy worse.

It misses the point

The commission makes some radical changes in Social Security, when Social Security is not the major budgetary threat. Medicare is the threat.  A couple of trivial tweaks in Social Security would make it solvent for as far as it's possible to meaningfully predict, but the Commission would means-test it and index it out of existence. When Medicare (or more precisely, the rate of inflation of health care spending) is the real long-term budget buster, as this 2008 chart from the CBO makes clear:

A serious deficit proposal would spend very limited effort on discretionary spending and Social Security and most of its time on health care expenses. This proposal does exactly the opposite. In fact, it punts on the hard points, arbitrarily defining caps for Medicare spending and vaguely stating that "Congress will do something" to cut Medicare if it exceeds that cap. If you want to know how that will work out, look at the annual game Congress plays with the SGR, which defines what doctors are paid in Medicare. The formula is broken, every year it calls for massive across-the-board cuts, and every year Congress just puts it off another year. For ten years running, now.

I guess it's all kind of pointless, since this proposal seems to be very much dead.  Reactions to it seem to be somewhere between "I don't like it" and "over my dead body" from both sides of the aisle. It's not going to get the support of 14 of the 18 commissioners.  Congress probably won't take it up en bloc, and they will be able to muck with it as much as they like.  Given that the GOP pretty clearly has no interest in productive legislation (that Obama would get credit for) I suspect we won't even see a symbolic vote on a deficit reduction package based on this.

However, I am VERY interested in what's going on in England. Being a parliamentary democracy, the party in power has sweeping powers, and they seem to be actually taking major steps to fix their deficit and radically change their society. They are making painful cuts, ones the GOP never even contemplated in the heady days of one-party rule in DC.  I'm fascinated (and a little horrified).  I don't know if the outcome there will be good or bad, but wow. I just can't imagine something like that happening here. The two parties we have are either dishonest, cowardly, or incapable of actually putting broad policy measures in place, and the system has too many veto points. It's so amazing to see a modern industrialized society turn on a dime and re-invent itself.