Surging Bond Yields Make a Strong Case for Fiscal Sanity

The recent surge in bond yields is directing renewed attention to America’s grim fiscal outlook. The harder you look at those numbers, the more intractable the problem seems. Because the situation has been allowed to fester so long, the usual patches and short-term fixes will not be enough. Higher bond yields could abruptly deepen the fiscal hole.

So what’s to be done? My main suggestion will make your eyes roll: Establish a fiscal commission, with buy-in from both Congress and the administration, and task it to find answers. Yes, sigh, it’s been tried before. And yes, these initiatives have rarely succeeded as hoped. Granted, in today’s hyper-polarized political climate, calling for bipartisan consensus-building seems absurd.

Bear with me.

For a start, the record of previous fiscal commissions is better than skeptics claim. The last ambitious effort was the Simpson-Bowles commission (as it came to be called) established by President Barack Obama in 2010. It produced an impressive blueprint for spending cuts and tax increases that would have put the economy on a stable fiscal footing. Then Congress refused to enact the plan, and over the next decade and a half, the ratio of federal debt to GDP roughly doubled.

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