The competing debt ceiling plans from House and Senate leaders have several things in common. Obviously increasing the debt limit, but also discretionary spending caps and creation of a special congressional committee to come up with more savings. Okay, special committee = eye roll. But if it does its job there could be some real savings.

Now, the fact there is even talk of a special committee means Congress hasn’t done its job. Lawmakers in both parties in both chambers can rage all they want about deficits and debt ceilings, but the fact is they have nearly complete control over the budget. If they simply do the job they are elected to do, we won't have any need for special committees, debt ceiling debates, or the endless partisan sniping they produce. But here we are.

The bi-partisan (six Republicans and six Democrats – three of each flavor from each chamber) committee would develop a deficit reduction plan which could include entitlements, discretionary spending, or revenue raisers. Both the House and Senate bills have mechanisms to force Congress to vote on the joint deficit committee's recommendations.

A key point in the charter of this special committee is that the goal is deficit reduction. That means reforms to entitlement programs and tax expenditures – loopholes and breaks in the tax code – are on the table and should be part of the mix. Regardless of what comes out of this debt ceiling debacle, we know that the spending trajectory of entitlement programs is unsustainable and the tax code is ripe for budget saving reform. Tackling mandatory spending, which isn't just Social Security and Medicare (which need reform) but also wasteful agriculture subsidies and other auto-pilot programs, is necessary for our nation's long-term fiscal health. And targeting special interest breaks like the tax credit for blending ethanol , or breaks for the highly profitable oil and gas companies or favored treatment of racetrack owners and movie producers, is critical to having a more fair tax code.

The so-called Gang of Six proposal that was recently released by a bipartisan group of Senators provides a guide for looking at tax reform. The proposal would wipe out scores of tax breaks, reduce the rates and number of personal income tax brackets to three, and cut the corporate tax rate by getting rid of special interest tax earmarks. Lower the rates, broaden the base.

There is, however, a key difference between the House and Senate committee proposals. The House requires $1.8 trillion in deficit reduction, and makes a second tranche of debt ceiling increase contingent on its approval. The Senate gives all the debt ceiling increase up front and sets the deficit reduction goal at three percent of Gross Domestic Product (GDP). That’s not nearly aggressive enough. First, we don’t know whether that’s an average of ten years, or in one particular year – that’s an important distinction. But even more, a deficit of 3% of GDP would have been $440B in FY10 – hardly fiscal restraint or putting our budgetary house in order (the actual FY10 deficit was 8.9% of GDP). The President’s FY12 budget proposal (which admittedly had rosier economic predictions than are likely) predicted a deficit of 3.3% of GDP in FY16! And that was without a commission. Over the last decade we ran deficits less than 3% of GDP for four years and less than 3.5% in three more. Getting to 3.0% of GDP isn’t really much of a budgetary goal considering the deficit bender we’ve been on — we need better.

But the first step is getting the debt ceiling raised, and then Congress has to do its job and aggressively pursue cuts and tax reforms that will right our nation’s fiscal ship.

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TCS Quote of the Week

” … to say that if you get rid of a tax earmark…of $6 billion in subsidy for ethanol, that that’s a tax increase? I mean, you gotta be goofy to get that kind of math.”

– Alan Simpson, former Republican Senator from Wyoming, on CNN Arena, July 28, 2011.