What’s been missing from the debates, after all, is a serious discussion about how to use the budgetary crisis as an opportunity to catalyze economic renewal along with fiscal stability.
Skipping a double-dip recession by avoiding the fiscal cliff is a good thing, to be sure. However, the present moment of crisis holds out the promise of even greater benefit — a path toward steady deficit reduction, a more focused federal budget, and a reinvigorated economy primed for 21st-century prosperity. In light of that, President Obama and Congress need to think deeply and right now about how their deals can be structured to help reenergize the nation’s drifting economy. And that means they need to consider how the budget deals can be used to increase investment in those things that spur lasting growth: research and development (R&D); advanced industry exports, infrastructure, education, skills-building.
So what’s the answer? Given the brutal budgetary situation, our leaders need to set some priorities and pay for them within the parameters of the existing budget. Our leaders should “Cut-to-Invest,” meaning they should identify and reduce or eliminate (cut) redundant, ineffective, or counter-productive programs and then redirect (invest) some of the savings into priority areas with potential to deliver significant public benefits.
For example, the commission could shut down the consumption-oriented mortgage interest deduction for second homes (which costs $1.5 billion a year) and channel half the savings into deficit reduction and half into creating a national network of advanced manufacturing hubs. Or they could begin to slash away at the $400 billion a year of duplicative, under-performing discretionary programs enumerated by the U.S. Government Accountability Office earlier this year, putting half of the savings into debt reduction and half into such investments as the growth-driving R&D tax credit or the proposed Community College to Career Fund to forge new partnerships between community colleagues and businesses to train two million workers for good-paying jobs in high-growth, high-demand industries.
How might this be achieved? The empowerment of a strong Cut-to-Invest Commission represents a proven way for Congress and the administration to get the job done—without lawmakers losing theirs.
Modeled after the successful Base Closure and Realignment Commission (BRAC), the Cut-to-Invest Commission would be charged with identifying at least $200 billion over 10 years in budget savings, applying half of that amount to deficit reduction, and then directing the remaining $100 billion toward high-priority investments in R&D, advanced energies, infrastructure, education, or skills training.
Because the most successful government reform efforts have been bipartisan, the commission would include members of both parties. Likewise, because the assembly of omnibus, up-or-down packages has been shown to break through political logjams, Congress would be required to vote on the commission’s annual reform package without amendment, once the commission had submitted it.
In sum, a powerful bipartisan commission with a mandate to square the twin imperatives of cutting and investing would enlarge the cramped work of budget-balancing and turn it into a discussion of growth as well as austerity.
And that is sorely needed. Cutting spending, reforming entitlements, and raising revenue in a bipartisan manner are essential to restoring fiscal discipline and putting our debt back on a downward track. But if we are also serious about restoring the nation’s economic and social well-being we need to bring growth and the investments it requires onto the ledger.
A bipartisan, binding Cut-to-Invest Commission is the best chance to do just that.
Weinstein directs the MA in Public Management program at the Johns Hopkins University and served as a senior advisor to the National Commission on Fiscal Responsibility and Reform. Muro is a senior fellow at the Brookings Institution and policy director at the Metropolitan Policy Program there.