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Attendees agree to disagree on deficit

From NBC's Ali Weinberg
A forum featuring some appointees to President Obama's bipartisan deficit-reducing commission resulted in two major points of  consensus: current spending levels will eventually lead to another fiscal crisis, and ideological differences, combined with lack of political will, may prevent the commission from producing concrete recommendations on how to reduce the nation's record deficit.

Kicking off the half-day Peter G. Peterson Foundation fiscal summit, the co-chairs of the Commission on Fiscal Responsibility and Reform, Erskine Bowles, a Democrat, and Alan Simpson, a former Republican senator, said that while political differences may bar the commission from hammering out individual suggestions, its baseline goal should be to raise awareness of an impending crisis with a public still reeling from the effects of the 2008 implosion. 

"Progress is educating the American people and getting a push on elected officials to face up to these problems," Bowles said. "We have to convince the American people that this problem is real," he added.

Simpson reiterated President Obama's assertion that everything is on the table when it comes to deficit-reduction strategies, even a concept like the value added tax, political kryptonite to Republicans.

"VAT tax, what the hell," Simpson said, explaining that the measure, which adds market value to a product at each stage of its manufacture, would have to be accompanied by some reductions to income taxes to ease the burden on consumers faced with a tarrif on once-untaxed items.  "It's not like they're slapping it on top of the income tax," he added.

Bowles' and Simpson's predictions of partisan gridlock later played themselves out during a panel discussion featuring widely divergent viewpoints on responsible deficit-reduction strategies.

Rep. Paul Ryan (R-WI), also on the debt commission, warned that unsustainable levels of Social Security and Medicare payouts, compounded by high levels of spending on government programs, would "sink" the American economy.

"There is a huge, massive structural problem," Ryan said. "Excessive spending and more borrowing is driving the deficits." He added that President Obama's tax increases on high-income individuals and businesses making over $250,000 a year would stifle overall economic growth.

"The Fed's going to be raising interest rates and tightening up the money supply," he warned.

More liberal members of the panel, however, advocated continued government spending policies geared towards an incremental goal of job creation before turning toward long-term systemic reforms.

"The first step towards deficit reduction is generating jobs, which may drive the deficit in the short term," Economic Policy Institute president Lawrence Mishel said. He added that the Social Security shortfall is "the least of our problems."

Alice Rivlin, also on the debt commission and the first director of the Congressional Budget Office, struck a conciliatory tone, saying that while there was "too much talk about Social Security," raising the retirement age in the future would prove that Washington is "grown up enough to do something about" the program, which most economists agree is dangerously close to reaching insolvency. 

Bob Greenstein, the founder and executive director of the Center on Budget and Policy Priorities, had a recommendation for members of both parties on the debt commission: don't aim for major policy changes.

"It's difficult to get 14 of 18 members to agree," he said. "I would actually recommend not that we give up, but that we don't set expectations too high because one thing we don't need is another storyline of another failure," he added.

During the summit's conclusion, former Federal Reserve Chairman Alan Greenspan also advised the commission to keep the president and Congressional leaders of informed of its progress, and not attempt to be immune to political sensitivities.

"There is no such thing as an independent commission that doesn't link itself up in real time to the political mechanism," Greenspan said.

"I would very much suggest to these veteran co-heads, who know more about this issue than I could ever know, that they make certain as they go forward that the President's on board and senior people in the Republican congress are shaking their heads in agreement," Greenspan said. "If that does not happen, the commission will write a very interesting report and everyone may read it, and it goes on the shelf for posterity."