Romina Boccia
Romina Boccia
Jamie Dimon sounded the alarm on the deficit and debt on the sidelines of the JPMorgan Tech Stars Conference in London, and Washington should pay attention. With the deficit at 7 percent of GDP and the debt soon to surpass 100 percent of GDP, the United States is facing a serious fiscal threat. As Dimon pointed out, deficits by their nature are inflationary and put the long-term stability of our economy at risk. He’s also right to warn that if we don’t act soon, we could be forced into crisis-mode decision-making, where legislators are forced to make tough choices at the worst of times. But while Dimon’s call for a Simpson-Bowles-style commission to address the deficit is well-meaning, it’s not enough.
To tackle this problem head-on, we need something more powerful. We need a fiscal commission modeled after the Base Realignment and Closure (BRAC) process, which has a track record of success in helping Congress to make difficult decisions by averting the blame.
The numbers don’t lie—deficits are unsustainable at these levels, and absent serious reform we’re headed toward an inevitable debt crisis. Washington has a long history of kicking the can down the road, and every year we wait the problem gets worse. Dimon is right to suggest that we need a commission empowered to act before the fiscal kettle boils over rather than waiting for spooked bondholders to put the heat on politicians.
Where I disagree with Dimon is in his call to resurrect the Simpson-Bowles model. The idea behind Simpson-Bowles was commendable—get a bipartisan group of members of Congress to offer recommendations that could bring the deficit under control. Unfortunately, it didn’t work. In 2010, the commission’s final report was never brought up for a vote in Congress. Even if it had been, the plan required widespread political consensus in an environment where gridlock was, » Read More
https://www.cato.org/blog/simpson-bowles-20-wont-cut-it-brac-commission-has-more-teeth