Opinion: Potential great for deficit-reduction supercommittee

The creation of the supercommittee was one of the exceptional events in recent legislative history. But the charge it was given to reduce the deficit by $1.5 trillion over the next 10 years has little bearing on its true importance.

One-and-a-half trillion dollars in deficit reduction is a light lift and will have no significant effect on the long-term fiscal insolvency our nation faces. In fact, should this supercommittee only reduce the deficit by that number, it will fail to settle the markets, improve the economy or avoid further downgrades of our debt.

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Although its goal may be anemic, the opportunity this supercommittee has to fundamentally improve our nation’s desperate fiscal situation is extraordinary. For the first time there has come into play a process that can allow our inherently dysfunctional political system to take on the big issues and move them toward positive resolutions. This type of action usually only occurs when the nation is in a crisis. The implications and importance of the opportunity cannot be understated.

Among the powers the supercommittee has been given is the ability to put forward legislative proposals that need only a majority vote to pass and cannot be amended. That gives Congress the exceptional power of actually being able to get something done. The chance for the fundamental reform that is necessary to right the fiscal boat of our nation is now in the hands of this committee. The question is, will it have the courage and creativity to take advantage of this truly unusual chance?

Its membership is talented. But is it a group that sees the problem as acute and potentially disastrous, as it truly is, and thus requiring extraordinary action? Do they have the originality and personalities to work out what will have to be an inventive and bipartisan approach?

I think they do. The co-chairmen are both strong players, but they do not have a history, or for that matter an inclination, of going across the aisle. They are dedicated to their respective ideological bases. Yet, they are also leaders. At a time such as this, they can see the chance to not only change their role but to potentially save the nation from the trauma of a fiscal meltdown. It is a Churchillian moment for them.

The supercommittee needs to use its authority to go well beyond the $1.5 trillion reduction called for and set specific and enforceable procedures for getting our long-term debt on a sustainable path. The way to accomplish this would be to do the following:

First, they should agree how much the federal government should consume of the gross domestic product. Historically, this has been about 19.8 percent. The Simpson-Bowles Commission suggested pegging it at approximately 21.3 percent, while the strong bipartisan bill sponsored by Sens. Bob Corker (R-Tenn.) and Claire McCaskill (D-Mo.) sets the number at approximately 20.5 percent. The Republican House Conference has essentially suggested 18 percent. A number somewhere in this range should be agreed to and set as a hard target. That would be a massive contribution to the effort to determine, in a bipartisan way, how we handle our debt.

Second, they should propose a hybrid reconciliation bill. This would give Congress the structure to direct the committees of jurisdiction to meet the target set for the size of the government by changing entitlement programs and reforming the tax code. It would be essentially a new procedure aggressively enforced to guarantee that by the end of 10 years we would reach the targeted size for the government and balance the budget.

Obviously, the difficult part is that to accomplish the two goals, both Medicare and taxes would have to be on the table. Historically, revenues have run at about 18.6 percent of the gross domestic product. Major tax reform that radically reduces rates in exchange for eliminating or reducing most deductions and exemptions could easily meet a target such as that proposed by the Corker-McCaskill bill through economic growth and better compliance.

And, on the Medicare side, the doubling of retirees in this country as the Baby Boom generation retires means the massive subsidies in the system simply are no longer affordable. Parts B and D especially need to have much greater participant responsibility. This, coupled with a real push to replace the system that now rewards use with one that rewards outcomes and value, would go a long way toward cutting the Medicare deficit.

The chance to do something great and positive is now sitting there. It is a once-in-a- lifetime opportunity to lead in a way that assures America’s future. Let’s hope the folks on the supercommittee appreciate their extraordinary opportunity.

Judd Gregg is a former governor and three-term senator from New Hampshire who served as chairman and ranking member of the Senate Budget Committee and also as ranking member of the Senate Appropriations subcommittee on Foreign Operations.