Obama's "Deal" on Social Security and the US Deficit

[Verrocchio]

By executive order of the president, the bipartisan National Commission on Fiscal Responsibility and Reform has been formed. President Obama and VP Biden are pictured below, with commission co-chairs Erskine Bowles and Alan Simpson.

Commission.jpg

According to the commission website, The Commission is charged with identifying policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run. Specifically, the Commission shall propose recommendations designed to balance the budget, excluding interest payments on the debt, by 2015. In addition, the Commission shall propose recommendations that meaningfully improve the long-run fiscal outlook, including changes to address the growth of entitlement spending and the gap between the projected revenues and expenditures of the Federal Government. The Commission will meet as a whole once a month while Congress is in session. The Commission will vote on a final report containing a set of recommendations to achieve its mission no later than December 1, 2010. The final report will require the approval of at least 14 of the Commission's 18 members.


Rumor around DC is that Obama's commission will deliver a strong recommendation to trade deep cuts to Social Security benefits in exchange for Republican support for tax increases, with the expected outcome to fix the deficit. A look at the commission membership and leadership lends support to the rumor, as borne out by this video.



In any event, the commission is now part of the Washington political process. The aim will be to reassure potential overseas investors that Treasury issues are "as good as gold."

An alternative view of the commission's work is below.