Astrophysicist Arthur Eddington once sarcastically questioned who the third scientist was that understood Albert Einstein’s theory of general relativity, highlighting the complexity of the topic. In contrast, there is no mystery surrounding the predictable fiscal crisis that the nation is currently facing.
The crisis is clear, and there is a widespread understanding of what needs to be done to address it. However, there is a sense of fatalism when it comes to the political system’s ability to take action. This fatalism can be challenged, but it raises concerns about further diminishing Congress’s power, which would only worsen the issues created by an overbearing executive branch and an unaccountable administrative state.
The current entitlement state is heavily impacted by demography. As the population ages and life expectancy increases, a significant portion of government spending goes towards transferring wealth to the elderly. Medicare spending, for example, has a quarter of its budget allocated to services in the last year of life, with 40% of that amount spent in the last 30 days. Additionally, the declining birthrate and limited immigration reform mean that the workforce needed to support entitlement programs will not be adequately replenished.
Without substantial changes, Social Security and Medicare, the main contributors to federal deficits, will continue to drive up government spending and deficits. Fitch’s recent credit rating downgrade reflects this certainty. In the next decade, Medicare providers and Social Security beneficiaries are expected to face payment and benefit cuts, respectively. However, it is unlikely that these cuts will actually occur, as general revenue, including borrowed money, will be used to protect incumbent legislators and avoid potential social unrest.
If entitlement reforms are not implemented, interest rates will rise, causing a decline in private investments, economic growth, and federal revenue. To prevent risk-averse politics from creating a vicious cycle of doom, the Cato Institute’s Romina Boccia suggests creating a fiscal commission similar to the Base Realignment and Closure (BRAC) commission.
The BRAC commission successfully closed military facilities that were crucial to communities’ prosperity, accomplishing what the political class had been hesitant to do. Boccia proposes an independent expert-driven commission tasked with stabilizing the nation’s debt at a level that does not exceed the gross domestic product. However, there are concerns about expanding the sphere of “independent” expertise, as it echoes progressive aspirations to limit politics.
Boccia acknowledges the potential controversy surrounding her proposal and suggests making the commission’s recommendations self-executing upon presidential approval, without requiring Congress to vote on their enactment. This approach would provide legislators with political cover to object to necessary reforms in the national interest that would otherwise be impossible to pass through normal procedures.
The idea of a self-executing fiscal commission without Congress’s endorsement raises questions about the paradox of sovereignty. Can a legislature pass a law that divests itself of lawmaking power? Congress often delegates broad discretion to executive agencies, potentially violating the Constitution’s principle of legislative power vested in Congress.
Senator John McCain supported the BRAC mechanism, despite acknowledging that Congress had abdicated its responsibilities. He recognized that Congress is incapable of taking action in any other way. Boccia points out that the base closings were relatively insignificant compared to the challenges of entitlement reform, where Congress’s abdication of responsibility remains ongoing.
Adopting Boccia’s proposal for a new mechanism to force action would acknowledge Congress’s weakness while seeking to address important issues. This measure could be seen as the Odysseus approach, where in the face of temptation, Odysseus ordered his crew to bind him tightly to the mast to resist the Sirens’ voices. Similarly, Congress would admit its weakness and bind itself to a mechanism that would force action.
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