The most promising aspect of the new, independent creature of Congress, the National Economic Commission, is that there is not a single trained economist among the 12 members. This means there are no completely closed minds on the panel. So there is at least a small possibility it will not do too much damage. The "job" of the commission, as George Will put it in his column, is to "provide momentum for painful recommendations and to provide political cover for those who enact them." Which is why the panel is already being referred to as the National Tax Commission. "Our debt crisis won't be solved without higher taxes and lower spending," says Lee lacocca, a commission member. "Our job will be to carry the news to the American people. And if we do our job right, all of it will be bad news. All of it will involve some pain." The idea came from Mario Cuomo and was hatched last month in the omnibus spending bill with the backing of Senator Dole, who expects to be President next March when the bipartisan commission reports on its blueprint for economic policy. The President-elect in November gets to name two added members, which means the recommendations will tilt toward his tastes.
It's much too early to speculate on what the commission will recommend. It will distill conventional wisdom as it gels after the November 1 elections, its report massaged to fit "political realities." The central operative idea is that whoever is President will have to have a recession in 1989 so the pain will be forgotten by re-election time in 1992. But if the deficit path is on a positive track by year's end, that will have important bearing on the Pain Plan. A year ago, Alan Greenspan asserted his belief in the therapeutic value of an '89 recession. Now he is pushing the hoary "crowding out" argument, telling Senator Proxmire that the economy will grow faster with spending cuts and tax increases because interest rates will fall on the lower federal borrowing requirement. Harvard's Larry Summers is making similar arguments with Michael Dukakis, but Dukakis is boasting about balancing budgets without raising taxes. Summers' mentor, Martin Feldstein, is in the George Bush camp. But interestingly, Bush has derided the need for this elite commission, arguing there are enough democratic institutions available to grapple with economic policy and sounding as fervent as Reagan in foreclosing tax hikes. Among the Democrats, Richard Gephardt has segued into a low-tax posture, attacking Albert Gore as an "elitist" and taxer.
As lacocca puts it: "We'll have to agree on the facts. Some ways to cut spending make good sense, and others just make good rhetoric. Some new taxes can help the American economy grow and become more competitive, and others can hurt it. We've got to agree on what's smart and what's not." That will not be easy. lacocca himself opposes an oil-import tax, which several others on the commission like. Lane Kirkland, Robert Strauss and Rep. Bill Grey would no doubt go for income-tax surcharges while some of the Republicans, like Pete Domenici, Drew Lewis, Donald Rumsfeld, and Rep. Bill Frenzel would be more amenable to "consumption" taxes, a la VAT, which would be poison to the auto industry. No consensus recommendations on spending cuts are likely to emerge, and there are no members known to see monetary reform as a means of cutting into debt-service costs.
Still, it is a novel idea to put together a national economics commission without any economists. It will be most interesting to watch them wrestle with their Pain Plan and observe the result. There's even one chance in a dozen they will do some good. Let's hope they have it on C-SPAN.