Blame Congress for the Fiscal Cliff
President Barack Obama and House Speaker John Boehner appear to be tiptoeing their way toward some form of an agreement to avert an automatic $600 billion of tax increases and spending cuts at year-end. It will not be the grand bargain envisioned by many of the non-profit groups devoted to fixing the debt. At best it will be a small compromise that raises taxes, provides some additional "stimulus" (spending by another name) and promises to fix the long-run entitlement problem next year.
Politicians claim that there isn't enough time to put together a major tax or entitlement reform in the 11 days that remain. And they're right. But that's because they ignored it when then had the opportunity.
The president's National Commission on Fiscal Responsibility and Reform, a.k.a. Simpson-Bowles, issued its final report on Dec. 1, 2010. Co-chairmen Alan Simpson and Erskine Bowles released a separate report a month earlier. Obama said thanks, but no thanks, to the proposal to address the country's looming debt problem, simplify the tax code and promote economic growth. He filed it in his bottom drawer until the negotiations over the debt-ceiling began in July 2011, at which point Simpson-Bowles was the solution to everything that ails us.
There was still plenty of time to produce a major fiscal reform when the supercommittee entrusted with finding $1.2 trillion of spending cuts folded on Nov. 21, 2011. The Budget Reconciliation Act created the commission and charged it with finding savings in order to avert a year-end sequester. Once again, nothing was done.
So the next time you hear a politician say there isn't enough time to reform entitlement programs like Medicare and Social Security, ask him what he's been doing for the last two years.
Read more breaking commentary from Bloomberg View at the Ticker.