Earlier this year on February 18th, President Obama issued an executive order that established a bipartisan deficit commission. The main goal of the commission is to identify recommendations that would balance the federal deficit by 2015. Today the commission published a 66-page report [.pdf] that prescribes six broad categories of reform. Each of these broad categories contains several recommendations to reduce the federal deficit. Altogether, the report contains 69 different recommendations. The general categories of the report include:
- Discretionary spending cuts – the commission provided 17 different recommendations for methods to reduce spending.
- Tax reform – 8 recommendations to change tax policies.
- Health care – 19 recommendations to save money on health care.
- Social Security – 10 recommendations to change social security policies.
- Process reform – 5 recommendations for how certain programs can save money by processing data differently.
- Mandatory policy reform – 10 recommendations for other programs that cannot be eliminated, but could change.
While there are many recommendations, both liberals and conservatives are skeptical about the likelihood of actually implementing these ideas. According to the executive order that established the commission, 14 of the 18 members of the commission must vote to approve the report. If the commission doesn’t approve the report, the report will not be issued to Congress. The commission is scheduled to vote on the report this Friday.
Regardless of whether the commission approves the report, the most important goals of this report are to identify specific methods that can reduce the federal deficit and to also bring attention to the federal deficit. Keep in mind that federal spending made up 24% of the Gross Domestic Product in 2010 – the highest percentage of federal spending since World War II. Further, tax revenues were 15% of the GDP in 2010 – the lowest since 1950. If the current pattern of the budget continues, according to the Congressional Budget Office, the federal deficit will eventually reach 90% of the GDP in 2020. In other words, another financial crisis is looming under the current budget. Clearly, the federal deficit is a pressing issue that demands attention.