Beware Commissions Bearing Gifts

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Fiscal Solutions: Though timid, some of the ideas floated by the co-chairmen of President Obama's "deficit commission" are praiseworthy. But is this a bait-and-switch - to be followed by destructive new taxes?

The purported sneak preview of the National Commission on Fiscal Responsibility and Reform's proposals released on Wednesday by the panel's co-chairmen - Clinton's second-term White House chief of staff Erskine Bowles and former moderate Wyoming Republican Sen. Alan Simpson - screams politics.

This unusual "chairman's mark" threatens to seduce presumptive House Speaker John Boehner and other GOP leaders - and even Tea Party activists - into trusting the bipartisan commission as it moves toward a final report supported by a majority of its members.

But being composed of 10 Democrats and eight Republicans, including the pliant Simpson, this is one commission taxpayers better not turn their backs on. There are, however, some refreshingly heroic ideas among the proposals:

• Bring federal spending from its present 25% of GDP down to 21%. Nice, but as the Cato Institute's Chris Edwards noted Wednesday, "federal spending was just 18% of GDP in President Clinton's last two years in office."

• Cut the federal work force by 10%. A great start, but place its $13.2 billion in savings by 2015 alongside the trillion-dollar stimulus schemes taxpayers are financing, and it becomes clear that it is indeed only a start.

• Freeze federal government salaries and bonuses for three years, saving $15.1 billion by 2015. Admirable, but how about closing some agencies and Cabinet departments? The country - and the global economy - would be in far better shape had, for instance, the Housing Department never existed to poison the mortgage market.

• Cut discretionary spending by $200 billion, or 15%, from Obama's proposed level of $1.3 trillion. That's progress, but as Edwards points out, discretionary outlays were just $615 billion as recently as 2000.

• Raise the retirement age to 68 in 2050, to 69 by 2075. A long-delayed necessity, but true reform would give Americans individual control of their retirement monies.

• Cut the corporate tax rate from 35% to 26%. That helps, but like Oliver Twist, U.S. companies seeking global competitiveness will tell its government masters: "Please, sir, I want some more."

• Various Medicare savings. Fine, but structural entitlement reform utilizing innovative market-based solutions such as Medicare vouchers would go after the disease of big government rather than just the symptoms.

That's the good news. Simpson and Bowles also want to hike federal gasoline taxes by 15 cents beginning in 2013, which would raise costs on all products and services, since everything depends on transportation. They would also treat capital gains and dividends as ordinary income - the last thing our battered private sector needs.

And they present the political nonstarter: scrapping the mortgage interest deduction as a prerequisite to cutting income tax rates. This would not only discourage people from buying homes, it would make it far harder for current homeowners to sell.

As Steve Forbes proved, you can lower and flatten rates without ending cherished deductions; just let people choose between a reduced flat-rate income tax and the old structure.

Cato Institute senior fellow Dan Mitchell on Wednesday exposed the shallowness of what this commission is really up to. "You can let spending increase 2% each year and balance the budget by the end of the decade," he said, and even keep the 2001 and 2003 Bush tax cuts while doing it.

That simple approach doesn't require a commission; just a president and Congress possessing the will and guts to do what's right.

"Blue-ribbon panels" are almost always to be feared. The 1983 Greenspan Social Security commission raised taxes and badly botched "saving" Social Security by underestimating the system's ability to sustain itself. The 2006 Iraq Study Group delivered a recommendation to surrender.

And besides, the voters, fed up with big government, just sent new bosses to the House of Representatives. Let's hear their ideas.

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