newjerseynewsroom.com

BY IRWIN STOOLMACHER

COMMENTARY

Bravo to President Obama's federal debt commission. The Commission, led by former Republican Sen. Alan Simpson and former Clinton Chief of Staff Erskine Bowles, has done a good thing. They developed a plan that is creative, controversial and credible in the sense that it would apparently work from a mathematical perspective. By cutting spending by 57% and increasing taxes by 25% the plan would dramatically reduce the nation's $13.7 trillion national debt.

Unfortunately, almost no one seems to find the nasty-tasting medicine the Commission is prescribing politically palatable. Almost every politician from both the left and right has indicated that they are opposed to considering the painful options. It appears that neither pro-spending liberals nor anti-tax conservatives are willing to make concessions that are counterintuitive to their beliefs in order to arrive at a compromise that is good for the country.

Liberals and conservatives need to re-think their positions, as many of them did, when we were facing the real possibility of a full-blown depression almost two years ago. At that time many congressional liberals, who protested for years about the evils of deregulation, voted to bail out the very banks whose greed caused the nation's economic meltdown. Likewise, various fiscally conservative congressional Democrats voted to support the President's stimulus package in spite of their real concerns about the nation's growing deficit.

My suggestion --- President Obama should ask Colin Powell, President Clinton and President George W. Bush for their help. This troika should be asked to review the deficit commission plan and see where they agree or feel modifications are in order. The troika's compromise plan should be brought to the Senate for a vote and if they approve it should go to the House for a vote. The President needs to reach out to the American people and make the case that now is the time for each of us to give a little for the greater good. He should urge the public to pressure Congress to pass a compromise deficit reduction plan that reflects shared sacrifice.

In order to strike a deficit reduction deal we all must be willing to accept elements of the debt commission plan that we find distasteful. The following are compromises that this dyed-in-the-wool liberal would be willing to swallow in order to stabilize the national debt by 2014 and reduce it to about half of today's level by 2037.

Commission: Begin reducing revenue and spending in fiscal year 2012

Me: I'd be willing to let the Bush tax cuts stand for America making below $500,000.

Commission: Make $100 billion in defense cuts from the $717 billion defense budget. This would freeze Defense Department salaries and non-combat military pay at 2011 levels for three years, cutting overseas bases by one-third and doubling proposed cuts in defense contracts.

Me: I'd accept the proposed cuts as is, even though I'd like to see a much larger cut in defense contracting and in overseas-based reductions. I'd also be willing to free defense spending for five years at the current level and limit future growth to the rate of growth of the economy.

Commission: Gradually increase the retirement age (at rate of one month for every two years) so it reaches 68 in about 2050 and 69 in about 2075.

Me: I'd be willing to accelerate the increase in the retirement age by two months a year. The retirement age would increase to 68 in 2030, 69 in 2040 and 70 in 2075.

Commission: They recommended making the Social Security benefit formula more progressive.

Me: I'd be okay with maintaining current benefit levels for all recipients until we substantially reduce the deficit. I'd give cost of living increases if inflation exceeds 5% annually, for those who earn less than $250,000 annually.

Commission: Remove the mortgage deduction rates from the tax code.

Me: I'd leave the mortgage deduction.

Commission: Gradually increase gas tax by $0.15 beginning in 2013.

Me: I'd increase the gas tax by $0.50 per gallon over the next fifteen years. This would generate more revenue, reduce gas consumption and reduce carbon emissions. I'd propose a target tax incentive for auto manufacturers that dramatically increase their vehicles' fuel efficiency.

Commission: Cut the federal workforce by 10 percent (hiring two for every three who retire) and freeze federal salaries for three years.

Me: Cut the federal workforce by 5 percent and freeze federal salaries for those earning more than $100,000 for the next three years (cost of living adjustments only if inflation exceeds 5% annually).

Commission: Slow the rate of foreign aid to save $4.6 billion a year.

Me: I'd go along with the recommendations although I'd be in favor of cutting foreign aid in half and savings $15 billion a year until we get the deficit under control.

There is no question that we must come up with a comprehensive plan to dramatically reduce America's deficit. The status quo is not an option. A pivotal question is when to trigger the plan. While earlier is better, we need to weigh whether now is the best time to begin, given the vulnerable state of the economy. My instincts tell me to hold off a bit until we see if the economy has begun to turn around. Laying off people in the government or in the defense industries prior to the domestic economy rebounding could be devastating. The very last thing we want to do, at this time, is increase our nation's unemployment rolls.

Irwin Stoolmacher is President of Stoolmacher Consultant Group, which consults to the nonprofit sector.

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