Charles Wheelan, Ph.D. The Naked Economist

I'm not done with Alan Greenspan yet.

I have one big job left for him. And to do it, he'll need the help of Paul Volcker, his well-respected predecessor as chairman of the Federal Reserve Board of Governors.

While Greenspan deserves credit for artfully steering monetary policy during his nearly two decades at the helm, Volcker did something arguably more important for the American economy. He had the courage to raise interest rates sharply in the early 1980s -- causing enormous short term pain but eventually squeezing inflation out of the system.

Left, Right, and Center

It would be hard to find two more respected economic policymakers. But what makes them uniquely qualified for the task I have in mind is that they lean in different political directions.

Greenspan, appointed Fed chairman by Ronald Reagan, is a small-government conservative and a fervent admirer of Ayn Rand. Volcker falls more center-left, having been appointed Fed chairman by Jimmy Carter.

In short, Greenspan and Volcker know what they're talking about, and they cover a broad swathe of the political spectrum. They're also pragmatic enough to compromise in favor of improving the status quo rather than holding out for a theoretically elegant solution that will never happen.

Which is exactly the reason they could be so useful to America right now. What is it I want them to do?

Anything.

The Answer Men

Let me explain.

There are plenty of policy challenges that defy easy answers, even among people who have the same basic worldview. Just about everything going on in the Middle East falls into this category. So does major healthcare reform. Smart, thoughtful people look at those issues and don't see obvious answers.

But there is a second category of policy challenges that are nearly the opposite, and this is where Alan and Paul (if I may be so familiar) could help the country out of a bind or two.

On these issues, smart, thoughtful people near the middle of the political distribution do see some commonsense solutions -- but they usually involve some political pain. It reminds me of the old joke: Everyone knows how to get to heaven, but not everyone is willing to do what you have to do to get there.

Policy Dodgeball

In short, solving some policy problems requires a better process, not a better answer. Here's what I would propose:

1. The president and Congress would appoint Greenspan and Volcker to co-chair a commission to make detailed recommendations on just about anything they want. (I have a few suggestions on content below.)
   
   
2. Greenspan and Volcker would each invite an equal number of legislators to the commission.
   

   I imagine them standing on opposite sides of the House or Senate floor, picking their teams like an elementary school dodgeball game. Volcker would yell, "I'll take Senator Sarbanes," who would then jump up, jog over to the wall next to Volcker, and begin whispering to him about who they should pick next.
   

   OK, it wouldn't have to work exactly like that, but the point is that this should be a bipartisan working group with Greenspan and Volcker choosing the legislators they would like to work with.
   

3. Congress would agree in advance to give any recommendations from the commission an up or down vote.
   

   That doesn't short circuit the democratic process; Congress and the president would still be the ones passing laws. But Congress wouldn't be able to eviscerate the Greenspan-Volcker recommendations by watering them down with amendments and exceptions. Members would either vote for the commission's recommendations or against them, in much the same way that trade agreements are approved.
   

   Thus, no senator or representative could talk about how much he favors tax reform while quietly slipping provisions into a bill to give tax breaks to the major industries in his state.
   

   I suspect that voting against the recommendations of a bipartisan committee led by Alan Greenspan and Paul Volcker might actually be more politically costly than voting for the bitter medicine they recommend -- which is exactly the point. Their credibility would help us help ourselves.

Change Is Good

Now that you know my plan, here are some sample issues on which I would put the commission to work:

• Tax reform
  

  Not tax cuts, but tax reform, meaning that the tax code gets purged of the thousands of little loopholes that create confusion, distort decision-making, and make tax rates significantly higher than they would be otherwise.
  

  Remember, every time Congress offers an investment tax credit for urban swine producers (or something equally arcane), it means that the rest of us have to pay slightly more to make up the lost revenue. These little giveaways add up and, like a septic system, need to be cleaned out from time to time to make the whole system work better.
  

  The last major tax reform was 1986 (which was an impressive bipartisan effort). We're due for another cleaning.
  

• Regulatory reform
  

  Government regulations can be an expensive, time-consuming drag on the economy. Or they can be the only thing standing between you and a multinational corporation dumping mercury into your drinking water.
  

  The wisdom, obviously, lies in telling the difference. And that's what the commission would seek to do -- a top-to-bottom cost-benefit analysis of the nation's major federal regulations.
  

  As with tax reform, this is the healthy pruning that is necessary every so often. And if the commission gets ambitious, they could probably do some good on tort reform, too.
  

• Social Security
  

  The long-term financial prognosis for Social Security is not good. Americans are having fewer children and living longer, so there are fewer workers paying taxes into the system and more retirees getting checks. Making the math work would be quite easy: Raise taxes on workers or cut benefits for retirees (with raising the retirement age being one logical way to cut benefits).
  

  Do you see why Congress might balk at those options? I've seen the AARP when they get angry, and it's not a pretty sight. (Adding some kind of private accounts to the system would be perfectly reasonable, but that still requires sacrifices to keep the system financially solvent over the next 50 years.) Greenspan and Volcker could tell us what we already know, in which case we might actually do something about it.

To be honest, I don't know if Alan or Paul would be willing to take on this task. But they have both said "yes" when presidents have asked them to do things in the past, so I'm optimistic.

All joking aside, individuals with this level of credibility, knowledge, and experience don't come along very often. Putting them to work together might be one way to help Washington climb out of its partisan paralysis.