September 22, 2014

Guest Opinion: Ask Candidates How They Would Reduce U.S. Deficit

The following op-ed was by Paul Hansen was published by the Billings Gazette on June 30, 2012

With the federal government running annual deficits in excess of $1 trillion, voters must demand realistic solutions from the candidates. However we choose to do it, we need to balance spending and revenue.

Because the projected gaps between future government revenue and expenditures are so large, nothing should be left off of the negotiating table. Exempting some parts of the budget would mean even higher taxes or bigger cuts elsewhere. It would undermine the concept of shared sacrifice needed for public support of politically unpopular reforms.

One viable prescription for a “grand bargain” on deficit reduction rests on a fundamental compromise: Democrats agree to a structural change in Medicare that will reduce projected spending and Republicans agree that a portion of new revenue from economically efficient tax reforms can go to deficit reduction.

Success, both politically and economically, will require both spending cuts and new revenue. The problem is too big to be solved with ideological purity. That was the guiding premise behind the well-respected report by Alan Simpson and Erskine Bowles, who co-chaired The National Commission on Fiscal Responsibility and Reform.

So far, both presidential campaigns have missed the mark.

President Barack Obama’s budget relies on both spending cuts and tax increases to bring the deficit down. In that sense, everything is on the table. The Obama budget stops short, however, of the structural changes needed to keep the debt from rising to more unsustainable levels. After 10 years, the debt would actually be higher relative to the size of the economy.

The Ryan plan that Mitt Romney supports claims to reduce the debt faster than Obama. But Ryan’s plan resorts to implausible assumptions to get there. Spending on everything other than Social Security, Medicare, Medicaid and defense would virtually disappear in the coming years — as would many popular tax breaks that are defended by powerful Republican constituencies. For all this pain, the Ryan/Romney budget doesn’t get back to balance until 2040. This budget inadvertently demonstrates how unlikely it is that an exclusive focus on spending cuts can get the federal budget back on a sustainable track. More revenue is needed as well.

The Concord Coalition offers “Key Questions Voters Should Ask Candidates About Our Nation’s Fiscal Future” on our homepage. They include these five straightforward questions.

  • Do you support the $4 trillion 10-year deficit reduction target and the comprehensive approach that the president’s bipartisan fiscal commission (Bowles-Simpson) recommended and, if not, what would your target be and which areas of the budget would you exempt from deficit-reduction efforts?
  • Do you support changes in the tax code that eliminate many of the $1 trillion in tax preferences that now favor specific categories of individual taxpayers, companies or industries?
  • What should be done to improve the U.S. health care system, assure health care quality, expand insurance coverage and curb the rapid rise in costs?
  • Do you believe Social Security reform is necessary and, if so, what changes would you support?
  • Since neither political party has the strength in numbers or the public credibility to force its own agenda through the Congress, can you suggest credible ways to move forward and compromise in a bipartisan manner?

Obama and Romney and members of Congress could show leadership by providing some real answers to these questions during their campaigns.