Do We Need a National Commission on Fiscal Responsibility and Reform?

The President’s National Commission on Fiscal Responsibility and Reform is what everyone really knows it is–a bipartisan group of former and current political elites that will listen to hours of testimony by a select group of witnesses in order to create a report that will justify a tax increase for which there does not exist political support. The fact that the commission is being created by Executive Order rather than by congressional action tells us what the expected conclusion of the commission will be.

We do not need another commission to know that decades of programs that tax those who work in order to provide benefits to those who are in political favor has led to the point where the promises made to millions of Americans cannot possibly be met. To quote from the Social Security and Medicare Board of Trustees 2009 Annual Report: “Projected long run program costs are not sustainable under current program parameters.” This is government-speak for: “the jig is up.” The Social Security cash flow will be negative by 2016, at which time the baby-boomers will start to retire and things go south ever faster.

To again quote from the report: “Medicare’s financial status is much worse…Medicare already runs cash flow deficits…For the third consecutive year, a ‘Medicare funding warning’ is being triggered, signaling that non-dedicated sources of revenues–primarily general revenues–will soon account for more than 45 percent of Medicare’s outlays. A Presidential proposal will be needed in response to the latest warning.” We don’t need a bipartisan commission to tell us what the problem is. Social Security and Medicare have total unfunded liabilities in excess of $100 trillion. We need Presidential leadership that will address the spending problems that are the result of a government that has been shorn of the limitations of the 10th amendment.

Our budget crisis is a crisis of responsibility and a government that no longer is bound by enumerated powers. Friedrich Hayek wrote that a free society probably demands more than any other that people be guided in their action by a sense of responsibility. Rather than letting the system of markets and family satisfy our retirement and health care needs, we have instead created a government retirement program and two government health insurance companies that make up an annual expenditure of $1.5 trillion out of the projected $3.7 trillion 2011 budget. Adding on another $250 billion for net interest on the national debt, and we know what the problem is.

Raising taxes to sustain government transfer programs is not going to solve our budget crisis. Indeed, this is how we got into the problem in the first place. In 1850, Bastiat wrote in The Law that a just government is based upon our natural right to self-defense. An unjust law is one which violates this natural right, by taking the property of one person to give to another. He also argued that once a government engages in what he termed “legalized plunder” several things will happen, one of which is that people will fail to recognize an unjust law when they see it. The government will become, in his words, “that great fiction by everyone tries to live at the expense of everyone else.” We have arrived at that time.

We do not need a National Commission on Fiscal Responsibility and Reform. We need to return to those principles of liberty and responsibility that have resulted in the wealth and social cooperation that we still enjoy. This will include electing representatives that will admit that it is not possible for Americans to retire at the age of 62 with a government pension or to have a government insurance company pay for their medical expenses. We must make the transition to individual retirement savings and a market-based insurance system. This will take strong leadership from our elected officials, not the formation of a commission designed to distract us from the impending difficulties caused by our attempt to use an unbounded government to make us all secure.