The independent and non-partisan Congressional Budget Office has predicted a budget deficit that, in monetary terms, is the worst in the nation’s history. The deficit will reach a record of nearly $1.5 trillion in 2011. (As a percentage of gross domestic product — 9.8 percent — the deficit will be slighter smaller than the record.) It’s time for our elected leaders to get serious about reducing the sea of red ink without cutting spending too quickly and pushing the still-sputtering economy back into recession.
As the first essential part of the exercise, Republicans need to admit that the record-high deficit was exacerbated by extending the Bush tax cuts. Strange as it is, our political dialogue over the deficit is handicapped by the fact that one of the two major parties refuses to admit the rules of basic arithmetic.
President Bush and the GOP-dominated Congress arranged for their massive tax cuts to have a sunset clause after ten years. They did that because the CBO usually makes decade-long estimates. Bush knew his tax cuts would cause the deficit to explode after a decade. From the WSJ:
The federal budget deficit will reach a record of nearly $1.5 trillion in 2011 due to the weak economy, higher spending and fresh tax cuts, congressional budget analysts said, in a stark warning that will drive the growing battle over government spending and taxation.
As the next step, Democrats and Republicans need to come to terms with a combination of tax cuts and spending increases that will put the nation on a longterm path to economic stability. Most mainstream economists agree that it will take both.
As for spending cuts, even Republicans don’t have their act together on that front. For all their electioneering around taming spending, many of their proposals for cutting seemed aimed at programs that liberals like. The Washington Post’s Dana Milbank has described the ultra-conservative Republican Study Committee’s list of spending cuts as a new front in the culture war. Nor is a gimmick like the balanced-budget amendment going to solve the problem.
While GOP leaders such as Paul Ryan, head of the House Budget Committee, insist that all spending, including military spending, has to be on the table, several Republicans don’t want to cut the Pentagon. They don’t even want to go along with the cuts proposed by Sec Def Robert Gates, although the Pentagon accounts for roughly 20 percent of federal spending. From The NYT:
To hear the Republican leadership tell it, the once-sacred Pentagon budget, protected by the party for generations, is suddenly on the table. But a closer look shows that even as Speaker John A. Boehner and Representative Eric Cantor, the House majority leader, insist on the need for military cuts, divisions have opened among Republicans about whether, and how much, to chop Pentagon spending that comes to more than a half trillion dollars a year.
Those differences were on display Wednesday on Capitol Hill, where the traditional Republican who now leads the House Armed Services Committee, Representative Howard P. McKeon, fought back against proposed cuts in the Pentagon budget even as fledgling committee members supported by the Tea Party said that the nation’s debts amounted to a national security risk.
Nor do Republicans plan to cut agricultural subsidies, though profits from the farming sector are soaring. Those funds, after all, flow into conservative districts. From Politico:
As eager as they are for a fight with the White House, Republican budget cutters have a problem in their own back pasture: what to do about a system of farm subsidies that’s still pumping billions into GOP districts at a time of record income for producers.
Net cash farm income for 2010 is projected to finish near $92.5 billion — a 41 percent increase even after subtracting payments from the government. Yet conservatives are almost tongue-tied, as seen last week with the Republican Study Committee’s proposal to eliminate relatively modest subsidies for an organic food growers program without mentioning the nearly $5 billion in much larger government direct payments to farm country — including to the home districts of many of the RSC’s members.
And, most important, voters have to grow up about the causes of the long-term deficit. It is fueled not by foreign aid or “waste, fraud and abuse” but by spending on entitlement programs, especially Medicare. But Americans are under the impression that chipping away at programs that don’t affect them will bring the budget under control. From a new CNN poll:
But it seems that most Americans would prefer that the biggest government spending programs are off the table. The survey indicates that more than seven in ten Americans say that deficit reduction is less important than preventing cuts in Social Security, Medicare, Medicaid, education programs and veterans’ benefits. At least six in ten feel the same way about unemployment benefits and roads and mass transit. . .
“According to the OMB data, the three items that a majority of the public is willing to cut – federal pensions, welfare, and foreign aid – may account for about 13 to 15 percent of total federal outlays in 2010. That appears to leave about 85 percent of the federal budget off-limits in the public’s mind,” says CNN Polling Director Keating Holland. “Add in defense spending and the programs that the public may be willing to cut goes up to roughly a third of the total budget, with about two-thirds still off the table.”
That public attitude is going to make curbing the deficit a very risky exercise.
— by Cynthia Tucker