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Wed., Jan. 27, 2010

Smart Bombs: Slogans don’t kill. People do

Try as I might, I can’t compress the point I’m about to make into a soundbite. Nonetheless, here it goes.

The nation cannot seriously address the budget deficit without a bipartisan commitment to control ideological reflexes. Bipartisanship cannot be achieved unless voters demand it. People tell pollsters they want deficit reduction, and President Barack Obama has responded with a plan. But it isn’t a serious one, because the proposed spending freeze would affect only one-sixth of the federal budget. It is merely a message of concern.

If people respond favorably, then they don’t really want deficit reduction or they don’t know the extent of the problem. Tom Haugh, a retired business and financial analyst in Spokane, sent me an e-mail that displays the challenge that lies ahead. He is a political independent, which makes it easier to tell the truth. He notes that 2000 was the last year we had a budget surplus (albeit with accounting trickery that counted excess Social Security and Medicare funds) and then does some math, according to government data:

“In the last 10 years we have grown federal expenditures by 7 percent a year and tax revenues by 1.4 percent. The end result is we have spending of $3.6 trillion and income of $2.3 trillion and a federal deficit of $1.2 trillion a year,” Haugh wrote.

At this point anti-tax forces generally crow, “Cut the spending!” And the other side proclaims, “Raise taxes!” OK, the other side doesn’t say that; they’re too chicken. So they point out the services that would be lost.

But the truth is that aligning spending with such meager revenue gains isn’t realistic. Inflation and population gains gobble that. Then there are the whopping increases in health care costs for federal employees and pensioners, a new prescription drug program, an overhaul of homeland security, two wars and a stimulus package. Then again, raising taxes to cover all that would’ve been damaging to an economy already crippled by the 9/11 terrorist attacks and the recent recession. In any event, our leaders put this new spending on the national credit card.

Now the nation has taken a recent peek at the mounting bill and has gotten nervous. Good. The answer is a combination of spending discipline and tax increases. If someone tells you an all-cuts budget is possible in the long term, ask them to show it to you and make sure they include Medicare and defense spending.

We achieved that surplus in 2000 because both parties gave up something. In 1990, President George H.W. Bush compromised with Congress and secured pay-as-you-go budget discipline in exchange for an income tax increase. For this, he was immediately pounded by his own party and by the Democrats in the 1992 election for reneging on his “Read my lips: No new taxes” pledge.

However, that flip-flop was instrumental in deficit reduction. President Bill Clinton also signed a tax-hike bill and he teamed up with a Republican Congress for more budget austerity, including cuts to welfare programs. The Congressional Budget Office calculated that the five-year savings from the 1990 budget deal was $580 billion (in 1997 dollars). The savings continued until 2002, when “pay-go” budgeting expired. Without that handbrake, Congress was able to pass the 2003 tax cuts and the Medicare prescription drug program without paying for them. The wars were treated as emergencies and were added to the deficit, too.

Pay-go budgeting looks to be returning, but it won’t be enough. Tax increases need to be in the mix, and this is where voters come in. Thirty-three members of the Senate and 172 members of the House of Representatives have signed pledges to never raise taxes. This includes Idaho Sens. Mike Crapo and Jim Risch and U.S. Rep. Cathy McMorris Rodgers. If they break the pledge, then Grover Norquist’s group Americans For Tax Reform would alert voters. But if voters insist on deficit reduction, politicians could be emboldened to face down that threat.

I don’t have a slogan for this solution, and crafting one to kill it would be simple. Unless, of course, voters mean what they say.

Smart Bombs is written by Associate Editor Gary Crooks and appears Wednesdays and Sundays on the Opinion page. Crooks can be reached at or at (509) 459-5026.

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