Spokane7
65°
September 26, 2010 in Opinion
Mount Deficit is very taxing
Listening to politicians talk about the nation’s deficit is like planning an ascent of Mount Everest without checking to see how high it is. A chief difference is that Mount Deficit continues to grow as you climb it. If you dally or get diverted, the top gets farther away.
Apparently, politicians in the midst of campaigns are too busy to check the altitude or to plot a course to the top. Oh, they’ll put various paths “on the table” to “take a look at” … once the election is over. However, if you’re like me, you’d like to see an actual route before climbing it. So I headed off to a veteran budget sherpa to learn just how challenging this will be.
The Concord Coalition was formed in 1992 by the late Sen. Paul Tsongas, D-Mass., and former Sen. Warren Rudman, R-N.H., to educate the public about “the causes and consequences of federal budget deficits.” A Democrat and a Republican working together. Quaint, I know. Anyway, if you want to understand the current and projected height of Mount Deficit and the difficulty of conquering it, concordcoalition.org is the place to be. Once there, look around for the policy brief titled “CBO update casts doubt on campaign rhetoric.” Read it, but make sure to have a bathroom nearby. You can only swallow so much campaign baloney.
The Democrats cannot address the deficit without getting much more serious about cutting spending. The Republicans will also fail if they refuse to raise taxes. Given the campaign rhetoric, it would appear as if Republicans, thanks to the insurgent tea partiers, are more serious about this matter. Appearances are deceiving.
Before congressional Republicans even get started on the current deficit, they want to deepen it by extending all of the Bush tax cuts. In addition, they want to keep the fixes that have protected six-figure earners from the alternative minimum tax. This will make the budget hole $3.9 trillion deeper over the first 10 years. Financing this debt will bring the total to $4.8 trillion. Left unchecked, these cuts will continue drilling a hole. Compare that with the “out of control” stimulus measure, which was a one-time $787 billion expenditure, or TARP, which is being repaid and will end up costing taxpayers an estimated $66 billion.
In addition, Republicans want to “repeal and replace” the new health care law. Say what you will about the plan, but at least it pays for itself with identifiable revenue sources. How will the GOP finance its replacement without raising taxes? Also, health care reform will largely close the hated Medicare Part D “doughnut hole,” which is a gap in coverage where seniors must pay 100 percent of drug costs. I’ve yet to hear how any replacement health care plan addresses Medicare Part D, so it’s fair to assume that the doughnut hole will be reopened.
But wait! There’s more!
Health care reform has extended the solvency of Medicare’s Hospital Insurance Trust Fund by 12 years and cut projected program costs for Medicare Supplementary Medical Insurance by 23 percent over 75 years. So repeal the law, and new revenue will be needed or the long-term prospects for Medicare grow dimmer.
So let’s take a breath and reassess.
If Republicans follow through on extending all the Bush tax cuts and repealing the health care law, they will be facing a much taller Mount Deficit. Seems a crazy way to run an expedition.
You can’t handle the truth. The truth is that few people want to hear the truth. You can’t climb Mount Deficit without raising taxes and taking on Social Security, Medicare, Medicaid and defense spending. Those are the four biggest budget items, not counting the annual interest we pay on the debt. Freezing discretionary spending, banning earmarks, ending stimulus and “going through the budget line by line” are all fine if the goal is summiting the tallest hill in Kansas.
Now, not all politicians are hiding the pain. The “Young Guns” in the Republican Party are talking about it. To his credit, U.S. Rep. Paul Ryan, R-Wis., has a “road map” to a balanced budget. It involves steep tax cuts for the wealthy, the elimination of most deductions and credits and the introduction of a federal consumption tax that would keep taxes about the same for the middle class. It would turn Medicare into a voucher program, wherein seniors would be given a lump sum to go buy private health insurance, and it would remake Social Security and Medicaid. Overall, it would slash spending to 1951 levels.
It’s bold. It’s ambitious. And it balances the budget and pays off the debt … in 2080, according to the Tax Policy Center. To get there sooner, Ryan would need to raise taxes.
Smart Bombs is written by Associate Editor Gary Crooks and appears Sundays on the Opinion page. Crooks can be reached at garyc@spokesman.com or at (509) 459-5026.
Smart Bombs: Greatest generation? Not us 
hawken on September 26 at 7:28 a.m.
Yes…. Approaching $55 Trillion and growing in US Total Debt….. $110 Trillion in Unfunded Liabilities! My first, newly born grandson became liable for over $365,000 of the Unfunded Liabilities the day he was born. Madness! Immoral! Selfish! Corrupt! Major changes need to be made in Congress beginning this November. Those who have a record of Tax and Spend need to be replaced. Those who have a record of borrow and spend need to be replaced. What’s just as scary is that the books of the Federal Reserve are not open for anyone to see but the Federal Reserve. We need Congress to open the books of the Fed…. We’re printing so much money today the printing presses must be wearing out at alarming rates.
MatthewRoot on September 26 at 10:43 a.m.
good editorial, but one minor point.
The stimulus was not a “one-time $787 billion expenditure.”
It was a package of $499 billion in expenditures, including federal contracts, grants, entitlements and loans.
It was also a package that included 288 billion in tax cuts, including those $400 “making working pay” credits that went to all working people (at least those making less than $190,000 for joint filers) and the tax credit of $250 for all Social Security recipients, retired railroad workers, and disabled veterans.
Tax cuts may reduce revenue, and thus increase the deficit in the same way as expenditures, but they are not expenditures (and no, the tax cuts do not “pay for themselves”). It is interesting that the Republicans criticize these tax cuts because they add to the deficit, but somehow they continue to say that the Bush tax cuts do not.
misjustice on September 26 at 11:12 a.m.
The Bush tax cuts created jobs! Why, if not for the tax cuts, imagine how much worse the great recession would have been!
@ Chip Jones; thanks for the breakdown, and the reminder of what the stimulus contained; it’s easy to forget some of the finer points when the complex legislation gets reduced to a seconds long sound bite.