Now that the elections are over, it’s time to see if Congress is really serious about reducing the deficit. It has less than two months to prove it.
That’s when the Bush tax cuts will expire, resulting in tax increases on most Americans unless Congress decides to act. Lawmakers could, of course, simply extend the cuts or make them permanent, but that’s not a sign of fiscal responsibility. Making the cuts permanent would cause the deficit to double in the next 10 years, the nonpartisan Congressional Budget Office projects.
The Obama administration has talked about a compromise of extending cuts for the middle class and allowing them to lapse for those making more than $250,000 a year. That’s unlikely given last night’s outcome.
The incoming Republican wave talks about cutting spending, yet it offers no specifics on how it would do that. What programs should be cut, and how will those programs affect the deficit?
If the answer is cutting earmarks and controlling government waste, then it’s no answer at all. While those measures may be prudent, they won’t have a meaningful effect on the deficit.
Cutting taxes is always the go-to promise of aspiring politicians, but we have borrowed and spent ourselves into a dark hole. The reality is we face either widespread spending cuts, broad tax increases or both to get us out, and that’s not a message a politician from either party is willing to send.
Even David Stockman, Ronald Reagan’s budget director who’s responsible for much of the free-lunch mentality that has permeated Congress for the past 20 years, has a gloomy assessment of what’s to come.
Neither party, Stockman noted, has shown any ability to cut spending in a material way. Letting the Bush tax cuts expire, Stockman argues, is something we simply can’t afford. We haven’t yet paid the tab for the wanton spending that preceded the recession, let alone for the cost of the recession itself.
I’ve posted this before. It’s the Concord Coalition’s Federal Budget Challenge. Although its for last year’s budget, it allows participants to structure their own budgets by cutting spending or raising taxes. I’ll give you a hint. If you select every revenue enhancer and every spending cut, regardless of the social implications, you still only reduce the deficit by half.
This, by the way, is based on the budget options that Congress actually has, not on pie-in-sky legislation like eliminating Social Security. The point of the game is to illustrate what we’re up against.
It’s not a pretty picture, and it’s the reason our politicians, both newcomers and incumbents, aren’t being honest with the American people. Until that happens, it really doesn’t matter who wins the elections. The losers continue to be courage and truth.