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It's All Your Money: Debt Commission

President Obama has appointed a debt commission to try to do something neither Congress nor the President could accomplish - find a way to stop deficit spending.

"The future of the economic might of this nation is at stake," Jim Kessler, vice president for policy at Third Way bluntly observes. "Both parties need to get together and get this done."

President Obama's budget forecast for the next decade projects an additional $10 trillion in deficit spending, more than doubling the current national debt to a staggering $20 trillion.

The gloomy forecast leads some analysts like former Congressional Budget Office Director Douglas Holtz-Eakin to suggest our economy is headed for a cliff.

"This looks like Thelma and Louise to me. I mean you know there's the Grand Canyon and we're going to hit the accelerator. Why? You should hit the brake and then turn the car around."

Both former President Bush and President Obama were forced to deal with a financial meltdown and a steep recession, which drove deficit spending up.

But many agree the current trend in spending is simply unsustainable.

"If you look at [Bush's] last year and President Obama's first year, we're spending $5 for every $3 we take in. You just can't do that over a long period of time," Kessler says.

So what to do? In February, President Obama appointed a debt commission which will report their findings after this fall's elections.

"I'm asking them to produce clear recommendations on how to cover the costs of all federal programs by 2015, and to meaningfully improve our long-term fiscal picture," Obama said in a White House event announcing the commission.

But covering the costs of all federal programs excludes interest payments on the debt, which will come to $520 billion in 2015.

Even lightening the task by a half a trillion dollars doesn't make it any easier to cut hundreds of billions in federal spending, especially with the baby boomers retiring and cashing in on their Social Security and Medicare benefits.

"If you look at spending it's going to be very difficult to cut spending much in the next 5-10 years and that's because almost three-fourths of federal spending is either on net interest, the military, Social Security, Medicare or Medicaid," explains William Gale, an Economics expert at Brookings Institution. "If you look at reach of those it seems unlikely we're [going to] cut those."

That would only leave about one-fourth of all other federal spending on the table - everything from highways to education. To balance the budget, minus interest in those programs, would mean cutting to the bone - which is politically unlikely.

"There is no political reward for doing this. Whenever you cut spending, you can, yeah there's the 'Bridge to Nowhere' and ridiculous spending but that is a tiny amount of what the government spends. It's symbolic but it's tiny," Kessler notes.

That's why some would prefer to close the gap with tax increases on the wealthy. But a recent report found that relying on tax increases alone would push tax rates to destructive levels for the economy.

"The Tax Policy Center looked at the administration's preferred policy which is raise the rates on the upper income folks, the top two rates would have to be 92 and 86 percent in order to have that meet the objective of the deficit," explained Holtz-Eakin, who was a leading economic adviser to the 2008 John McCain presidential campaign.

 

Even many Democrats including Michael Linden, associate director for tax and budget policy at the Center for American Progress acknowledges that will not work.

"I think in terms of regular income the top rates, you know, you really don't want to approach 50 [percent]. That does, in terms of marginal rate, gets you into some dangerous territory," Linden said.

So most analysts say it will have to be a mix, and that absolutely everything will have to be on the table, including the most sacred federal programs.

"Nothing is sacrosanct," Kessler offers. "We can't say 'well, this if off the table and that is off the table.' There will have to be changes to Social Security. We will have to do some tightening on Medicare."

The commission will meet through the summer but will not report until after the fall elections. And 14 of 18 commissioners have to agree on any recommendations for them to go to Congress.

Whatever it decides, some believe it can play a critical role in explaining to the public the predicament we're in and preparing voters for some very tough choices.

Be sure to watch Wednesday's Special Report with Bret Baier at 6pm ET for more this story.

Find out exactly where your tax money is going - check out our taxpayer interactive calculator here, part of the It's All Your Money series on Fox News Channel.

Jim Angle currently serves as chief national correspondent for Fox News Channel (FNC). He joined FNC in 1996 as a senior White House correspondent.

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