Editor's note: David M. Walker is founder and CEO of the Comeback America Initiative, a nonprofit dedicated to restoring fiscal responsibility, and former comptroller general of the United States from 1998 to 2008.
(CNN) -- This week, co-chairs Erskine Bowles and Alan Simpson issued their joint proposal for consideration by the full National Commission on Fiscal Responsibility and Reform. Their joint proposal represents a commendable, comprehensive, aggressive and good faith effort to address our nation's structural deficit. It recognizes the need for economic recovery now while addressing the structural deficits that represent the real threat to our collective future.
Their proposal puts "everything on the table" and proposes changes in every major area, including budget process, Social Security, health care, defense and other discretionary spending, and tax reforms. It relies primarily on spending cuts to achieve a level of national debt that represents 60 percent of gross domestic product by 2024 and 40 percent of GDP by 2037.
As should be expected, there are a number of proposals that are controversial and additional items that should be considered. While the co-chairs' proposal has far more positives than negatives, several items of concern deserve mention. I'll address just three examples.
The proposed Social Security reforms do not include a supplemental individual savings account that would help to increase our personal savings rate and provide a meaningful pre-retirement death benefit along with a supplemental retirement benefit.
The proposed Medicare reforms do not appear to be aggressive enough in reducing taxpayer subsidies for well-off senior citizens who sign up for Medicare's voluntary programs -- Medicare Part B (physicians and outpatient care) and Part D (prescription drugs). These subsidies should be phased down based on income and eliminated for seniors with incomes over a stated amount.
Finally, some of the spending reductions are not realistic (e.g., eliminating earmarks may be appropriate but doing so will not significantly reduce total federal spending), while some others are too general to be evaluated (e.g., proposed percentage reductions in various types of spending without specifying how to achieve said reductions).
All in all, Bowles, Simpson and the commission staff should be commended for their efforts to develop this proposal. Hopefully, they will be able to agree on a range of recommendations to help defuse our federal fiscal time bomb and put us on a more prudent and sustainable path.
Irrespective of whether the commission can muster the required 14 out of 18 member votes to make formal recommendations, ultimately President Obama will have to decide which proposals from this commission, the Peterson/Pew Commission, the Bipartisan Policy Center Commission and others he will embrace and incorporate into his fiscal 2012 budget proposal and/or broader legislative agenda.
In the final analysis, the president must provide the leadership necessary to address our structural deficits. He must use the bully pulpit of the presidency to make the case directly to the American people. He must also work with congressional leadership from both parties to develop a plan and begin to act on it.
If Obama does not do this, or if the new Republican leadership decides to play politics rather than doing the people's business, we will not make any meaningful progress in the near future. This would be an inappropriate and high-risk strategy that could result in a dramatic increase in interest rates and a dramatic decline in the dollar if investors lose confidence in the ability of the United States to put its financial house in order.
While ideally a comprehensive fiscal reform plan should be designed and adopted all at once with appropriate phase-ins, doing so is not likely to be politically feasible. Therefore, a reasonable phasing of actions should be considered.
First, during the lame-duck session or in early 2011, the Congress should enact a tough 2011 budget that, at a minimum, freezes discretionary spending, eliminates all across-the-board federal pay increases and freezes most federal hiring. That budget should be coupled with at least a two-year ban on earmarks along with economically rational and fiscally responsible decisions on the so-called Bush tax cuts.
These could include, for example, a one- to two-year temporary extension of the so-called middle class tax cuts; allowing the tax cuts for individuals earning $500,000 or more to expire; and a permanent extension of the research and development tax credit and the estate tax, which should have a much higher exemption and much lower effective tax rate than before the Bush tax cuts.
Further actions in 2011 also seem warranted. We should implement tough statutory budget controls that eliminate the trillions of dollars in loopholes associated with the current pay-as-you-go rules, impose tough but realistic discretionary spending caps, require periodic reconsideration of all major mandatory spending and tax expenditures, and set a reasonable debt/GDP target with appropriate enforcement mechanisms.
We should also reform Social Security to make it solvent, sustainable, secure and more savings-oriented. Social Security is not our biggest problem, but if approached responsibly, it represents an opportunity to exceed the expectations of every generation of Americans.
Finally, we should establish a special Transformation Task Force of capable, credible, courageous and nonconflicted individuals who will make a range of recommendations to bring the bloated and outdated federal government into the 21st century.
Realistically, three items will require much more public engagement, consideration and debate and are likely not to be ripe until 2013. These include: what the appropriate role and size of the federal government should be, rationalizing current federal health care promises and reducing health care costs, and pursuing comprehensive tax reform that will simplify the system, improve its competitiveness and raise more revenue.
Do not be deceived by those who want to deny our financial problems or delay making tough but necessary decisions indefinitely. The nation's ticking fiscal time bomb is real and must be defused. The time for action is now.
The opinions expressed in this commentary are solely those of David M. Walker.