The Greenspan Commission Failed

What is most commonly known as The Greenspan Commission — the group created by Ronald Reagan to deal with Social Security that was chaired by Alan Greenspan long before he became chairman of the Federal Reserve Board — is generally thought to be the prototype for federal commissions because it supposedly succeeded in dealing with an otherwise politically intractable economic issue.

Except that it didn’t.

As this excellent story by Jackie Calmes in yesterday’s New York Times points out, former Social Security Commissioner Robert Ball, one of the Greenspan Commission’s most prominent Democrats, has written in a yet-to-be-published memoir that the commission wasn’t able to agree to anything. Instead, Reagan and House Speaker Tip O’Neill, neither of who were members of the commission, privately agreed to a deal. The Greenspan Commission was pushed to take credit for it so that it looked more bipartisan-partisan and less of a backroom deal that was really the case.

There are several things about the Ball memoir and Calmes’ story that are important.

First, as Bruce and I (here and here, for example) have been saying at least since the subject of a budget commission started to be discussed seriously this year, commissions not only are not the panacea many make them out to be, they typically just don’t work. No matter how much you might wish it to be otherwise, you can’t take the politics out of a decision like reducing the deficit that is inherently, fundamentally, and genetically political. As a result, as Calmes quotes Ball, “we should not allow ourselves to fall into the trap of expecting miracles from another Greenspan Commission — by deluding ourselves into believing, mistakenly, that the first one was a great success.”

Second, it was Reagan and O’Neill who agreed to something. Today’s politics are far more difficult, however, and it’s not at all clear who would be able to agree to that type of deal today for the Republicans and Democrats and make it stick.

Third, the Greenspan Commission is the one that would be most analogous to a budget commission because it started with no prior consensus on what needed to be done. The only other commission that is typically cited as a success — the Defense Base Closure and Realignment Commission — deals with a very different type of issue because it starts with an agreement that bases and other DOD facilities should be cut. The only question, therefore, is which ones. The budget equivalent of that would be something like “We’ve decided to cut some agriculture programs and we need a commission to make recommendations on which should go. That type of consensus doesn’t exist, however. In fact, there’s no political consensus on the most fundamental question of cutting spending vs. raising revenue.

Finally, for all those who think that C-Span was providing a tremendous public service by demanding that it be allowed to televise the behind-the-scenes negotiations being held on health care reform, notice in the Calmes’ story that the only way an agreement was reached on Social Security back in the Greenspan Commission days was with very private discussions. Had C-Span aired those the strong likelihood is that nothing would have been achieved.

Finally, you have to love the picture above from the Calmes’ story if for no other reason than we all get to remember what Greenspan looked like with hair.

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