Top question for fiscal commission: Are Americans better than leaders ask us to be?

This morning President Obama signed an executive order establishing a new, bipartisan “National Commission on Fiscal Responsibility and Reform” and made it clear that the commission would be welcome to suggest tax increases as part of their recommended policy mix for deficit reduction. And just a little later this morning, a desperate man crashed his small plane into an IRS building in Austin, Texas, because he was outraged about his high tax burden. (Read his suicide note here.)

On the commission, here is budget director Peter Orszag’s blog post, and as CNN’s Jeanne Sahadi explains:

NEW YORK (CNNMoney.com) — President Obama issued an executive order on Thursday that formally creates a bipartisan fiscal commission, a first step to forcing painful decisions needed to get the U.S. debt load under control.

Raising taxes, cutting spending and reforming Medicare and Social Security are all fair game, and thought to be impossible without the backing of both Republicans and Democrats.”Everything’s on the table. That’s how this thing is going to work,” the president said immediately after signing the order.

The commission must deliver a report to the president by Dec. 1 that makes recommendations for bringing annual deficits to no more than 3% of the size of the economy [by 2015]…

The commission will also be expected to suggest ways to permanently lower the country’s total debt…

The president formally named the two co-chairmen he has chosen for the commission: Alan Simpson, a former Republican senator from Wyoming, and Erskine Bowles, a Democrat who served as White House chief of staff under President Clinton.

He said the two men “are taking on the impossible: they’re going to try to restore reason to the fiscal debate.”…

Deficit hawks say that the country cannot adequately address the looming fiscal shortfalls without addressing both taxes and spending.

The presidentially-appointed commission might not be as “toothy” as a Congressionally-legislated commission, but (again, from the CNN story):

…there is a chance that recommendations from the presidential commission will be given serious consideration. Senate Majority Leader Harry Reid, D-Nev., and House Speaker Nancy Pelosi, D-Calif., have given their assurances — in writing — that they will bring the group’s recommendations to the floor for procedural votes before the end of the year. The House will only take them up, however, if they pass the Senate first.

Voting for the commission’s recommendations will likely be a tough pill for both parties. But the idea behind a bipartisan panel is that it can give political cover to lawmakers since no recommendation can be made unless it has the support of 14 of the 18 commissioners.

Matt Miller has it right to emphasize that the toughest obstacle to establishing fiscal sustainability isn’t in figuring out the right economic policies, but rather in having the political will to see them through (emphasis added):

The good news from the Clinton experience is that the chronicle of debt foretold in Obama’s budget is perfectly consistent with a return to fiscal sanity much sooner. The bad news is that our bipartisan blend of fiscal dishonesty and political calculation has reached the point where it’s hard to know who will spark the debate we need about the real choices America faces.

Republicans act as if near-term deficits are a bad thing, when in fact the flood of spending both from the stimulus and the Federal Reserve’s creative liquidity injections brought the economy back from the brink. The new Republican “it” boy on fiscal policy, Rep. Paul Ryan of Wisconsin, indulges in the mathematical and political fantasy that we can keep taxes at their historic level of 19 percent of GDP while doubling the number of people on Social Security and Medicare.

Democrats, meanwhile, are boxed in by Obama’s unsustainable pledge not to raise taxes on Americans earning less than $250,000 — a policy that only “works” if we think we can borrow all the cash for the baby boomers’ retirement from China. Nor will Democrats explain to their liberal base that trimming Social Security benefits for better-off retirees will be a progressive way to fund better teachers for poor children in the era of permanent fiscal pressure ahead.

It’s such a surreal moment that admissions of cowardice somehow pass for evidence of fiscal rectitude. Whatever its merits — and let’s all wish it well — the very need for Obama’s new fiscal commission amounts to an extraordinary confession.

“We refuse to risk our hold on power,” our leaders are essentially telling us, “by coming clean on our own about the tax increases and spending cuts we know are needed to pass a sound nation to our children.” Thus “political leadership” becomes an oxymoron. Odds are we’ll fix the budget once enough of us show our leaders it’s safe to do what needs to be done…

The late Paul Tsongas, one of the co-founders of the Concord Coalition, said at Concord’s birth in 1992 that:

“We are better than what we are being asked to be by our leaders.”

Now, we who work at today’s Concord Coalition must still hold some degree of optimism on the being “better” part (or else why would we keep doing what we do); see our participation on this joint statement (with two other organizations) on the fiscal commission. But I have to admit that (the motive for) today’s plane crash in Austin, and the result of two recent polls on the willingness of Americans to make the tough choices to reduce the deficit, do challenge that optimism. First, a Rasmussen poll (discussed in further detail by Eric Kleefeld of Talking Points Memo) suggests that many Americans (particularly Republicans) would rather have budget deficits and tax cuts than a balanced budget with higher taxes. (Never mind that there’s no such thing as a “free” tax cut and that deficit-financed tax cuts just turn into much larger required tax increases in the future.) Additionally, a New York Times/CBS News poll that was cited in yesterday’s NYTimes article by Jackie Calmes told us that Americans believe Bush Administration policies are to blame for the large deficits but that they’re not willing to reduce the deficit by cutting health care or education or (even) military spending. One question Jackie did not report on was the following (#39): “The Obama administration has proposed letting the tax cuts passed in 2001 expire for households earning about $250,000 a year or more. This would increase federal income taxes for those people. Do you think this proposal is a good idea or a bad idea?” The responses: 62% said “good idea,” 31% said “bad idea,” and 7% said “don’t know.” But that is not surprising, because far more than 62% of the people are being asked about a tax increase on someone else.

So the question about the tax increase on the rich is not a very helpful one, because the response only reflects the perception suggested by the first (tongue-in-cheek) comment in the story about the Rasmussen poll:

I favor balancing the budget by raising everyone’s taxes but mine. I also want a magic pony.

All this empirical evidence on how much Americans understand the deficit (not very well) and what they want to do about it (nothing themselves, if they can help it) tells me that the first thing the President’s fiscal commission needs to do is to start getting out there and talking with real Americans, educating them about why we even need to worry about the budget deficit, and asking them about the (hard) choices they’re willing to make (or not). Once Americans better understand how deficits adversely affect the economy and hence impose broadly distributed costs on society, the question that needs to be asked is not just about the kind of broad-impact spending cuts and narrow-impact (only on the rich) tax increases people would be willing to see, but whether they’d be willing to see higher taxes as part of a deficit-reduction package, even if those taxes are their own. More specifically, if the President’s commission quickly comes to the realization that not raising taxes on households under $250,000 is NOT an option, would a majority of Americans still say “yes” to the survey question on the 2001 tax cuts if the income floor were struck from it?

Are we Americans indeed better than our leaders have (thus far) asked us to be?

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