Fiscal Commissions: Promises and Disappointments

This paper is part of an initiative from the Peterson Foundation to help illuminate and understand key fiscal and economic questions facing America. See more papers in the Expert Views: Fiscal Commission series.

G. William Hoagland

November 13, 2023

In an announcement by former House Speaker McCarthy on September 20 outlining a strategy to adopt a stopgap funding bill, the Speaker proposed establishing a commission to study the debt. Similarly, the House Budget Committee’s FY 2024 Budget Resolution, adopted the same day, included aspirational language to create a fiscal commission.

On September 29, Congressman Bill Huizenga (R-MI) and Congressman Scott Peters (D-CA) introduced the Fiscal Commission Act of 2023. The bipartisan bill with 18 cosponsors (9R, 9D) received an initial hearing in the House Budget Committee on October 19.1 The commission would be charged with recommending policies to balance the budget at the earliest date or at a minimum stabilizing the debt to GDP metric at today’s figure of 100%.

Punchbowl News, an online news service, was quick to comment that the creation of a commission to study the debt was a “well-worn Washington tactic that rarely bears fruit.” History would be on the side of the news service. But history can inform, guide, and recommend new approaches that could make such commissions more fruitful.

History of Commissions

In my career, there have been at least four major commissions created with the goal of addressing broadly the federal government’s fiscal future. These commissions were established either by executive order or by statute and often followed from weaknesses of the existing legislative process to address fiscal concerns. Along the way special commissions, public and private, have been created to address specific policy issues, such as the Greenspan Commission in 1981 to address an eminent Social Security funding crisis,2 and the Base Realignment and Closure (BRAC) Commission established in 1990.

The focus here will be on extraordinary commissions with a broader mandate and exclude (1) the “regular order” of congressional committees’ numerous hearings and deliberations; (2) private activities such as the CSIS Strengthening of America Commission in 1991 and the Domenici-Rivlin 2010 Debt Reduction Task Force in 2010 and (3) the occasionally, self-established “gangs” of bipartisan legislators operating outside normal legislative channels, e.g., Gang of Six.

The Grace Commission, 1982.

The Private Sector Survey on Cost Control (PSSCC) referred to as the Grace Commission was authorized by President Reagan’s executive order in June 1982. The charge to the Commission was to “eliminate waste and inefficiency in the federal government.” PSSCC was popularly referred to as the Grace Commission, after its Chairman J. Peter Grace. The Commission consisted of over 150 business leaders, and 36 Task Forces reviewing individual executive branch agencies. The final report was presented to the president and Congress in January 1984 with over 2,500 recommendations. Most of the recommendations, especially those that required legislation, were never implemented.

A final review of the myriad recommendations was issued by the Congressional Budget Office and General Accounting Office CBO/GAO. GAO found that about two-thirds of the recommendations had merit; CBO found that deficit reduction over the 3-year period (1985–87) would reach nearly $100 billion, less than the $424 billion estimated by the Commission.

Of particular interest: (1) there were no elected officials on the Commission, (2) funding for the Commission was provided through a separate organization that raised private donations to fund the PSSCC, and (3) the White House Office of Cabinet Affairs assumed responsibility for tracking the recommendations.

In 1982 the federal debt held by the public compared to the nation’s GDP was 33.1%.

In the current 118th Congress, only 3 House members (Hal Rodgers, Chris Smith, and Steny Hoyer) and 2 Senators served in Congress in 1982 (Grassley and Schumer — Schumer was in the House in 1982), less than 1.0% of all current members.

National Economic Commission, 1987.

Following the stock market crash of October 1987, and faced with forthcoming automatic spending reductions from the Gramm-Rudman-Hollings law, Congress statutorily established the National Economic Commission in the Omnibus Budget Reconciliation Act of 1987. Its mandate was to “recommend ways of reducing the federal budget deficit that would encourage economic growth without disproportionately undermining any particular group in society or region of the country.”

Fourteen individuals were appointed to the Commission. President Reagan appointed co-chair Drew Lewis; Speaker of the House James Wright appointed co-chair Robert Strauss.3 “Specific” recommendations were to be adopted by a majority of the members. The Commission gathered the views of citizens from around the nation and published two volumes in March 1989 summarizing the public comments. However, no recommendations were included in this interim report. By the fall of 1989, with the election of President George Bush, it was evident that there would be no compromise on the budget, and the Commission issued no final report and failed to recommend policies to “reduce the federal deficit.”

Important and precedent setting for future commissions, Federal Judge Joyce Green ruled in January 1989 that the Commission could not conduct its deliberations in secret, violating the Federal Advisory Committee Act of 1972.

In 1987 the federal debt held by the public compared to the nation’s GDP was 35.1%.

In the current 118th Congress, only 6 House members and 6 Senators served in Congress in 1987, 2% of all current members.

Bipartisan Commission on Entitlement and Tax Reform, 1993.

The Commission was created by President Clinton’s executive order. Co-chairs were Senators Bob Kerrey (D-NE) and Jack Danforth (R-MO). It was charged with recommending long-term budget saving measures involving (1) revisions to statutory entitlement and mandatory programs, and (2) alternative tax reform proposals. The Commission consisted of 32 members that included 12 U.S. Senators (6 R, 6 D) 10 members of the House, 10 members of the public.4

The Commission went beyond the two major entitlement programs of Social Security and Medicare to include all entitlements with the overall goal of reducing costs in all programs.

The Commission issued a set of 10 recommendations:

  1. Enact a comprehensive “affluence test.”
  2. Accelerate the rise in the Social Security retirement age.
  3. Trim the federal pension benefit package.
  4. Limit the tax exclusion for employer-paid health insurance.
  5. Raise Medicare premiums and coinsurance.
  6. Enact a federal health benefits budget.
  7. Expand the taxation of federal benefits.
  8. Limit the home mortgage tax deduction.
  9. Reduce farm aid.
  10. Increase user fees.

The Commission failed to reach a consensus (30–32) on these 10 recommendations and went out of business. But it did adopt (24–6) a set of five broad principles that could guide future policy work: (1) the time period for policy considerations should extend beyond the traditional five-year budget window, (2) generational equity should be included in any recommendations, (3) public participation is essential, (4) reform of the tax system is essential, and (5) immediate action is necessary.

In 1993 the federal debt held by the public compared to the nation’s GDP was 43.1%.

In the current 118th Congress, only 19 House members and 12 Senators served in Congress in 1993, 6% of all current members.

National Commission on Fiscal Responsibility and Reform, 2010.

The genesis for the Commission was originally proposed in statute by Senators Kent Conrad (D-SD) and Judd Gregg (R-ME) in January 2010. The legislation would have required the Congress to vote on the Commission’s recommendations without amendment. In January 2010, the proposed legislation failed in a Senate vote of 53–46.

President Obama, followed with an executive order creating the Commission, co-chaired by former Senator Alan Simpson and Erskine Bowles former White House Chief of Staff. The Commission consisted of 18 members and one executive director appointed by the president. The executive order required that a supermajority, 14 of the 18 members, had to agree to any final recommendations before they were sent to the Congress.

The Commission’s plan was released on December 1, 2010. Fully implemented it was projected to stabilize the debt held by the public at roughly 60% of GDP over the decade. The plan had six major components (dollars over period 2012–2020):

  1. Discretionary spending reductions; $1.7 trillion.
  2. Comprehensive tax reform; $1 trillion increased revenues.
  3. Health care cost containment; $350 billion.
  4. Other mandatory savings; $215 billion.
  5. Social Security reforms to ensure long-term solvency and reduce poverty; $240 billion.
  6. Process changes

It failed to reach the supermajority threshold on a vote of 11–18.

Interestingly, in March 2012, Representatives Jim Cooper (D-TN) and Steve LaTourette (R-OH) advanced a bill in the House modeled on the plan with somewhat less in tax increases. It was rejected 382 to 38; 22 Democrats and 16 Republicans supported the bill.

The federal debt to GDP in 2010 was 61.1%.

In the current 118th Congress, 98 House members and 39 Senators served in Congress in 2010, 25% of all current members.

Three Structural Reforms

Today, the federal debt to GDP stands at nearly 100% and CBO projects it to continue to grow over the next decade reaching 115% by 2033 and 181% by 2053. Just to stabilize the debt at the current 100% over the next decade would require a combination of spending reductions and revenue increases of over $7 trillion.

Past commissions have consistently focused on four areas of the budget to meet this challenge: (1) discretionary spending, (2) Social Security, (3) Medicare, and (4) revenues. Nondefense discretionary spending has declined 15% as a share of our economy since 1982, while entitlement spending has increased 60% over the same period.

Possible structural reforms, therefore, should focus on three areas: Social Security, Medicare, and revenues.

Social Security

The 2023 Social Security Trustees Report estimates that the program’s trust fund will be depleted in 2033. Further, in 2033 Social Security will account for 16% of the projected deficit that year.6 In order to extend the solvency beyond that date will require not one but several structural changes to the program.

In 2014, the Bipartisan Policy Center brought together a group of former members of Congress, state and local officials, academics, and individuals from the private sector to address the future of Social Security and its impact on the budget. Their final report was released in June 2016. At that time, the Trust Fund’s reserves were projected to be depleted by 2034, similar to today’s projections.

Specific elements of that report are as relevant today as they were seven years ago. The major structural changes follow:

  1. Increase the progressivity of the benefit formula by adding an additional bend point in the formula for calculating the beneficiary’s primary insurance amount.
  2. Apply the benefit formula annually to earnings to more evenly to reward continued work.
  3. Establish a basic minimum benefit to enhance the beneficiaries with low income.
  4. Index the retirement age to longevity to reflect increasing life expectancy.
  5. Change the COLA index from CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers) to a more accurate measure of inflation, C-CPI-U (Chained Consumer Price Index for All Urban Consumers).
  6. Cap and re-index the spousal benefit.
  7. Enhance survivor benefits to help widows and widowers maintain their standard of living.
  8. Increase the Social Security tax base increasing to $195,000.
  9. Increase the Social Security tax rate by 1 percentage point over the course of 10 years.
  10. Tax 100% of Social Security benefits for beneficiaries with annual income over $250,000 single filers and $500,000 joint filers.

Reforming the Social Security program requires not a single change, but a combination of changes. As estimated in 2016 these changes would have moved the long-range actuarial balance of the program from a negative 2.66% of payroll to a positive balance of 2.77%. Importantly, it would achieve this outcome with a balance of revenues (57%) and reduced benefits (47%).


Similar to Social Security, the Hospital Insurance (HI) Trust Fund (Part A) is projected to be depleted in 2031. Medicare will contribute 37% to the estimated federal deficit in 2033.7 Addressing only the pending insolvency of Medicare Part A, overlooks the need to fundamentally reform the country’s complex, public-private health care system. Such is beyond the scope of this paper.

Nonetheless, targeted incremental changes to the current traditional Medicare and Medicare Advantage program could reduce federal costs and delay the insolvency of the HI Trust Fund. These changes would include:

  1. Bring market forces to bear for traditional Medicare and Medicare Advantage plans by implementing a competitive-bidding structure while providing transitional protections for current beneficiaries.
  2. Equalize payment rates for evaluation and management services (e.g., office visits) to the rate in the lowest-cost setting, including facility payments. Further equalize payment at the level of the lowest-cost site for procedures that are conducted at both the outpatient department and in the physician’s office.
  3. Redirect revenues from the Net Investment Income Tax to the HI Trust Fund and expand the base to the tax dedicated to the Trust Fund.
  4. Restrict first dollar coverage for Medigap plans for Medicare covered services.
  5. Reforms to the risk adjustment procedures in the Medicare Advantage plans to include the use of two years of diagnostic data, exclude diagnoses identified solely through health assessments in the risk score calculation, and increase the across-the-board coding intensity adjustment reduction.
  6. Eliminate benchmark quality bonus payments in the MA Quality Bonus program.


In 2033 it is estimated that federal revenues will account for 18.1% of GDP, down from 18.4% this year. While federal expenditures in 2033 will reach 24.4%,8 relatively unchanged at the current 24.2% level today. Narrowing or closing this 6.4% gap will require fundamental changes to the nation’s federal tax code.

Additional revenues will be required to narrow this gap and incremental adjustments to the current code will not raise the revenues required to do so. Therefore, a major structural change in the code that would address both needed revenues while addressing the challenges of CO2 emissions, and encourage savings, investment, and growth, be more progressive, and simpler to administer follows:

  1. Enact a comprehensive carbon tax that would be border-adjusted to levy tax on imports and rebate on exports. To avoid adverse impact on low-income and rural residents’ rebates and reforms to the current tax code would be required.
  2. Tax households on labor market earnings, but not on capital income.
  3. Set tax rates such that the burden of taxation would be borne by higher-income households relative to current law.
  4. Establish a surtax for very high-income households with capital income above a threshold level.
  5. Establish a temporary Deficit Reduction National Sales Tax to remain in effect until debt to GDP reaches 60%.


The history of fiscal commissions does not exude great confidence of success or substantive outcomes. However, at a minimum, they have consistently highlighted the economic dangers to the country of rising debt and deficits and the necessary steps that policy makers should take.

I believe the first lesson from the history of fiscal commissions is the unquestionable prerequisite that the president, regardless of party, be directly involved in making the case to the public, interest groups, and the business community that fiscal responsibility is real and necessary. The second related lesson — and maybe the hardest to accomplish — the public has to be involved, educated, and understand the consequences of inaction. Legislators will not make difficult decisions unless their constituents see a need and reason to act.

The third — and maybe it will sound inconsistent with the second requirement — but at some point, a commission must request an exemption under Section 9(B) of the Sunshine Act to be able to facilitate reaching final recommendations. Fourth, I have reluctantly concluded that history also tells us that attempting to address the country’s fiscal future in a commission that broadly covers all the components of the budget will not be successful. Targeted commissions that focus individually on the major drivers of federal spending, e.g., Social Security and Medicare, or on reforming our tax code might achieve greater success.

Finally, regardless of how constructed or focused, there must be follow through of the commission’s final recommendations by the Congress. This requires that recommendations be converted into actual legislative text, and a required vote on the legislative language, without amendment. Otherwise, the goal of a commission to effectuate change is a hollow political promise.

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1 On Thursday, October 19th, Chairman Jodey Arrington (TX) and Members of the House Budget Committee held a hearing billed as “Sounding the Alarm: Examining the Need for a Fiscal Commission.”

2 Robert M. Ball, long serving Social Security Administration, served as House Speaker Tip O’Neill’s representative on the Greenspan Commission. In his book: The Greenspan Commission, What Really Happened he concludes: “Nothing, however, should obscure the fact that the National Commission on Social Security Reform was not an example of a successful bipartisan commission…..A commission is no substitute for principled commitment.”

3 Appointed by President Reagan: Drew Lewis and Caspar Weinberger; appointed by Robert Byrd, Senate Majority Leader: Lee Iacocca, Lane Kirkland, Senator Moynihan; appointed by James Wright, House Speaker: Congressman Bill Gray, Felix Rohatyn, Robert Strauss; appointed by Bob Dole, Senate Minority Leader: Senator Domenici, Dean Kleckner; appointed by Bob Michel, House Minority Leader: Congressman Bill Frenzel, Donald Rumsfeld; appointed by President-elect George H.W. Bush: Thomas Ludlow Ashley, Paul Laxalt.

4 Peter G. Peterson was a member of the Commission. Other members: United States Senate — J. Robert Kerrey (D-NE), Chairman; John C. Danforth (R-MO), Vice Chairman; Dale Bumpers (D-AR); Thad Cochran (R-MS); Pete Domenici (R-NM); Judd Gregg (R-NH;) Carol Moseley-Braun (D-IL); Daniel Patrick Moynihan (D-NY); Harry Reid (D-NV); Jim Sasser (D-TN); Alan K. Simpson (R-WY); Malcolm Wallop (R-WY). United States House of Representatives — Bill Archer (R-TX); Michael N. Castle (R-DE); Eva M. Clayton (D-NC); Christopher Cox (R-CA); E. (Kika) de la Garza (D-TX); John D. Dingell (D-MI); Porter J. Goss (R-FL); J. Alex McMillian (R-NC;) Dan Rostenkowski (D-IL); Martin 0. Sabo (D-MN). Public-Private Sector — Robert E. Denham, Chairman and Chief Executive Officer, Salomon Inc.; Thomas J. Downey, Thomas J. Downey & Associates, Inc.; Sandra W. Freedman, Mayor, City of Tampa, Florida; William H. Gray, III, President and Chief Executive Officer, United Negro College Fund; Robert Greenstein, Executive Director, Center on Budget and Policy Priorities; Karen N. Horn, Chairman and Chief Executive Officer, Bank One Cleveland; Thomas H. Kean, President, Drew University; Roy Romer, Governor, State of Colorado; Richard L. Trumka, President, United Mine Workers of America.

5 Appointed by President Obama: Alan Simpson, former U.S. Senator (R-WY); David Cole, Honeywell International; Ann Fudge, former CEO Young & Rubicam Brands; Erskine Bowles, former WH Chief of Staff; Andy Stern, former President of SEIU; Alice Rivlin, former Director CBO & OMB; Bruce Reed, Ex Director, Chief of Staff to VP Biden. House of Representatives: Paul Ryan (R-WI), Jeb Hensarling (R-TX), Dave Camp (R-MI), John Spratt (D-SC), Xavier Becerra (D-CA), Jan Schakowsky (D-IL). U.S. Senate: Judd Gregg (R-NH), Tom Coburn (R-OK), Mike Crapo (R-ID), Dick Durbin (D-IL), Max Baucus (D-MT), Kent Conrad (D-ND).

6 Table 1-1. The 2023 Long-Term Budget Outlook. Congressional Budget Office, June 2023. Estimated federal deficit of 6.4% of GDP in 2033; Social Security contributing 1.4% of GDP to the deficit.

7 Ibid. Estimated federal deficit of 6.4% of GDP 2033 with Medicare contributing 2.4%.

8 This assumes that the scheduled 2017 tax reductions expire in 2025 raising revenues. In 2024, the year before the tax cuts expire, it is estimated that revenues would be 17.7 percent of GDP. If the 2017 tax cuts were extended it would create an even larger deficit gap.

About the Author

G. William Hoagland is a BPC senior vice president. In this capacity, he helps direct and manage fiscal, health, and economic policy analyses.

Before joining BPC in September 2012, Hoagland served as vice president of public policy for CIGNA Corporation, working with business leaders, trade associations, business coalitions, and interest groups to develop CIGNA policy on health care reform issues at both the federal and state levels. Prior to joining CIGNA, Hoagland completed 33 years of federal government service, including 25 years on the U.S. Senate staff. From 2003 to 2007, he served as the director of budget and appropriations in the office of Senate Majority Leader Bill Frist. He assisted in evaluating the fiscal impact of major legislation and helped to coordinate budget policy for the Senate leadership.

From 1982 to 2003, Hoagland served as a staff member and director of the Senate Budget Committee, reporting to U.S. Sen. Pete V. Domenici, chairman and ranking member of the committee during this period. He participated in major federal budget negotiations, including the 1985 Gramm-Rudman-Hollings Budget Deficit Reduction Act, the 1990 Omnibus Budget Reconciliation Act, and the historic 1997 Balanced Budget Agreement. In 1981, he served as the administrator of the Department of Agriculture’s Food and Nutrition Service and as a special assistant to the Secretary of Agriculture. He was one of the first employees of the Congressional Budget Office in 1975, working with its first director, Alice Rivlin.

In both 1997 and 2005, National Journal listed him as one of the “Washington 100 Decision Makers” and referred to him as a “bottom-liner who is not a hard-liner.” Roll Call consistently named Hoagland as one of the top 50 Hill staffers. In 2002, he received the James L. Blum Award for Distinguished Service in Budgeting. The National Association of State Budget Officers honored him in 2004 with its Leadership in Budgeting Award, and in 2006 he was inducted as a fellow in the National Academy of Public Administration.

Hoagland is an affiliate professor of public policy at the George Mason University and a board member of the Committee for a Responsible Federal Budget, the National Academy of Social Insurance, and the National Advisory Committee to the Workplace Flexibility 2010 Commission. In 2009, he was appointed to the Peterson-Pew Commission on Budget Reform examining the overall structure of the budget, authorization, and appropriations process, and was a member of BPC’s Debt Reduction Task Force that published Restoring America’s Future in November 2010. He coordinated BPC’s 2013 report, A Bipartisan Rx for Patient-Centered Care and System-Wide Cost Containment. In April 2015, he co-chaired the National Academy of Social Insurance report, “Addressing Pricing Power in Health Care Markets.”

Hoagland attended the U.S. Merchant Marine Academy and holds degrees from Purdue University and The Pennsylvania State University. His family’s Indiana family farm was recognized as a “Hoosier Homestead” for having remained in the family for over a century.

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