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Entitlement Triggers Abound Around Long-Term Deficits

More than two decades ago, former Congressional Budget Office Director Rudy Penner said this of proposals to attack the deficit with process changes: "The process is not the problem; the problem is the problem."

A few weeks ago, however, Penner and a group of 15 other economists (including former CBO Directors Alice Rivlin and Robert Reischauer) said a process change may be the only way to reverse long-term entitlement deficits.

Penner's conversion is a sign that relying solely on "political will" to eliminate deficits is no longer a realistic expectation. Congress has done little to address projected entitlement insolvencies since they were flagged several years ago. Nor is there any hint in the latest budget resolutions of a willingness to do so. Moreover, none of the presidential candidates is seriously discussing the matter.

So, when even the graybeards of yesteryear, who once eschewed procedural gimmickry, call for some kind of deficit defibrillator to jump-start "will," you know our condition is seriously worsening. I was a big fan of Rudy I, but I am at least willing to give Rudy II and his cohorts a fair hearing on their procedural fix du jour, along with several others being floated.

The thing all these proposals have in common is an action-forcing mechanism or "trigger." The Penner-Rivlin-Reischauer proposal calls for Congress to set 30-year budget totals for Social Security, Medicare and Medicaid, and revisit them every five years to determine whether they're on track. If not, the trigger would be pulled and either Congress would take legislative action to remedy the projected shortfall or, failing that, an automatic ax would fall according to a preset formula to make up the difference. The automatic formula could involve a reduction in benefits, an increase in revenues or some combination of both. Congress could only avoid this extreme guillotine by enacting an alternative or by blocking it with a statutory waiver.

Penner and friends refer to this approach as a "hard trigger." The other pending approaches involve a "soft trigger" because they goad Congress to take action without real consequences if it doesn't. The most notable of these has been introduced by Senate Budget Chairman Kent Conrad (D-N.D.) and ranking member Judd Gregg (R-N.H.). A companion bill has been introduced in the House by Reps. Jim Cooper (D-Tenn.) and Frank Wolf (R-Va.).

The bills would create a Bipartisan Task Force for Responsible Fiscal Action consisting of 16 Members: eight from the majority party and six from the minority (drawn equally from the two chambers), and two administration representatives. The task force would be required to report to Congress, by Dec. 9, detailed legislative recommendations "to significantly improve the long-term fiscal balance of the Federal Government, including the fiscal balance of the Social Security and Medicare programs." The proposal would be introduced at the beginning of the 111th Congress and put on a 20-day fast track for required committee and floor action, without change. A three-fifths vote would be required in both chambers for approval.

A third approach, which applies only to Medicare, is already in law and the soft trigger has already been pulled. It was enacted as part of the Medicare prescription drug law in 2003. Under the law, the Medicare board of trustees must issue a "Medicare funding warning" if it projects in two consecutive annual reports that the combined costs of the three Medicare programs will, within the next seven years, consume more than 45 percent from general revenues (as opposed to payroll tax and premium revenues). The trustees issued their funding warning in April 2007, saying the ceiling will be breached in 2013.

Under the law, that warning triggered a requirement that President Bush submit legislation to address the excess within 15 days after release of his fiscal 2009 budget. Health and Human Services Secretary Mike Leavitt sent the required legislation to Congress on Feb. 15. The bill mandates higher drug premiums for affluent seniors and greater use of electronic medical records by physicians and hospitals. Ten days later the measure was introduced (by request) by bipartisan leadership representatives: Reps. Steny Hoyer (D-Md.) and John Boehner (R-Ohio), and Sens. Max Baucus (D-Mont.) and Gregg.

The "appropriate" House committees and the Senate Finance Committee must report the legislation no later than June 30, with or without amendment. If they do not report, any Member of that body may offer a motion to consider the bill after July 30. The process calls for 10 hours of debate and amendment in the House and regular order consideration in the Senate (meaning filibusters and amendments are allowed).

Any amendments reported by committee or offered on the floor must achieve sufficient savings to bring general revenue spending back within the 45 percent ceiling. Congressional Democrats have already declared the president's bill "dead on arrival." However, the process still keeps alive the opportunity for a vote on floor consideration.

While procedural devices can be symbolic substitutes for real solutions, they can also serve as the proverbial 2-by-4 on a mule — the only way to get Congress' attention. In this case, a bipartisan two-step process can avoid stepping on too many toes at once. The first step of getting consensus on confronting the challenge is far preferable to Congress' record to date of total avoidance.

For those who think Trigger is Roy Rogers' dead horse — stuffed and standing in a museum somewhere — look again. Multiple Triggers are alive and well and galloping to a budget reform theater near you. Happy trails.