House Speaker Kevin McCarthy is poring over the history books and considering appointing lawmakers and business leaders as he lays the groundwork for a new committee to tackle the nation’s growing debt.
McCarthy just scored his biggest political victory since becoming speaker in January. He has the White House negotiating a bill that would suspend the debt ceiling until January 2025 while also projecting $1.5 trillion in deficit savings over the next decade. But the legislation focuses on only a small portion of federal spending that occurs each year and excludes programs such as Social Security, Medicare and Medicaid, which account for the bulk of government spending and are the biggest drivers of debt.
McCarthy embraced the idea of creating a new treasury committee to seek further reductions in the deficit. While similar commissions have been successful in the past, the most recent commissions failed to garner enough support for Congress to adopt their recommendations. The speaker has asked Republican Rep. Garret Graves, one of the main debt-ceiling negotiators with the White House, to work with him on the issue.
“I’m looking at different angles to see what works best, some with members. Should I bring in some people from the outside so that the business world has some modern people who look at companies in a streamlined and modern way , to increase efficiency?” McCarthy said. “I thought the combination would work well, but right now I’m spending a lot of time figuring out how to put it all together.”
Many analysts say a dramatic change in the country’s fiscal trajectory would require simultaneous spending cuts and tax increases. But therein lies the problem: Many Republicans will not accept any kind of tax increase, and many Democrats will not consider entitlement cuts.
McCarthy has refused to accept any tax increases as part of debt ceiling negotiations. Asked if he had any such red lines for the debt commission, McCarthy said his current focus was on getting the commission’s structure right, but added that revenue that went into government coffers, which accounted for about 19.2 percent of gross domestic product last year, was at 50. On the high end of the annual average.
Democrats are treading carefully. “I’m not sure what he’s envisioning, but I look forward to having these discussions,” Democratic Leader Hakeem Jeffries (DN.Y) said. “I don’t even know what the outline of the committee will look like so it’s hard for me to comment right now.”
The number of landmines facing the Commission is enormous. Even if McCarthy is able to pass the House, without the participation of the Senate and the support of the White House, the committee’s influence will be weakened. Any outcome of that work could come in a presidential election year — when the political climate is not conducive to a proposal that might require some sacrifice from the voting public.
McCarthy said one thing he could do as spokesman is to present the debt committee’s recommendations one at a time, rather than all at once.
“I can do it like in BRAC,” McCarthy said, referring to the various base realignment and closure rounds initiated by the Department of Defense to reduce redundant infrastructure. “I can take it straight to the floor, no amendments, you vote or vote down and see what passes and what doesn’t.”
“You can go section by section so people don’t get hung up on everything,” he said.
Rep. Steve Womack (R-Ark.) said he likes the idea of the commission.
“We need to get as much of the politics out of the way as possible and just provide the facts,” Womack said. “…The fact is, 70 percent of the entire federal budget is currently on autopilot.”
Womack said he wasn’t calling on Congress to “cut a lot of these programs, but we do have to make them sustainable for the future.”
On the Senate side, Sen. John Thune, the No. 2 Republican, backed the committee’s concept, saying “we’ve got to start embracing these things.”
“I think this makes sense in the world. Let’s bring together the best experts and figure out the best way to solve these problems, make these programs sustainable, and see if we can address the deficit and the debt in a meaningful way ,” Toon said.
But Sen. Ron Wyden, the Democratic chairman of the Senate Finance Committee, said he saw it as a way for Republicans to pursue “ideological booty.”
“Everything I’ve heard, it’s a prescription for trouble,” Wyden said, adding, “They’re looking for a downward path to reduced benefits.”
Recent efforts to reduce the deficit through the committee’s recommendations have failed.
In 2010, the Simpson-Bowles Commission was formed, led by co-chairs Alan Simpson and Erskine Bowles. They drafted a plan that combined painful cuts to safety-net programs with massive tax increases, while reducing the top personal and corporate tax rate from 35% to 28%. It would also raise the retirement age for Social Security and scale back the popular Medicare and mortgage interest tax cuts.
The committee’s recommendation was supported by a majority of members, but fell three votes short of the 14-vote threshold needed to send the package to Congress for a yes-or-no vote.
Sen. Mike Crapo, R-Idaho, a member of the Simpson-Bowles panel, said the committee failed because a better mechanism was needed to ensure Congress would vote on the recommendations. He said he still believes the committee is the best way to make “difficult political decisions” for Congress on the more than $31 trillion in debt.
Following the Simpson-Bowles Act, Congress approved legislation the following year creating a joint select committee to reduce the deficit. But a two-month effort by the so-called “super committee” failed to produce a deficit-cutting plan of at least $1.2 trillion.
Part of the legislation establishing the super commission also lays out a back-up plan – if that fails, cuts to defense and non-defense programs across the board. These cuts finally began in March 2013. But subsequent Congresses have routinely blunted the automatic cuts by raising limits on discretionary spending.