First came the New Year’s tax increases of the “fiscal cliff.” Last week, the automatic budget cuts known as sequestration took effect. Still, Congress will spend much of March negotiating a deal to fund the federal government for the next six months — a deal that, in all likelihood, will mean borrowing hundreds of billions of dollars more.
Lurching from one crisis to the next, however real or contrived each one may be, has not put the country on a more solid, sustainable fiscal path. That’s where Maya MacGuineas comes in.
“We actually know for the most part what the parameters of a fix are,” MacGuineas, head of the bipartisan Committee for a Responsible Federal Budget, told me during a stop in Atlanta two weeks ago. “You know that you’re going to have to look at all parts of the budget.
“You know that a key challenge here is reforming our entitlement programs, as aging and health care are driving the debt, and that … we can reform entitlement programs in ways that are true to protecting people who depend on them — if we get ahead of it.”
True to CRFB’s bipartisan credentials, MacGuineas doesn’t put all the emphasis on the spending side. She also points to the $1 trillion in annual “tax expenditures,” subsidies hidden in the tax code rather than appropriations bills.
“Nobody looks at them,” she said. “These spending programs, dressed up as tax cuts — many of which are not working, many of which are de-leveling the playing field instead of allowing for a functioning economic system, all of which are draining the Treasury — need to be part of that evaluation too.”
So, how do we get politicians to do something they seemingly don’t want to do? One step is for everyone to acknowledge the immediacy of the problem.
“It really concerns me,” MacGuineas said, to hear “the argument, ‘Look at the [interest] rate environment. Why would we want to focus on the deficit? What we should be doing is borrowing more.’ That’s what people who give you credit-card teaser rates say also, to hook you in.”
Government debt that isn’t repaid on time — i.e., virtually all of it — must be refinanced later, almost certainly at higher interest rates. Just a 1-percentage-point increase in interest rates, MacGuineas said, could mean at least $1.3 trillion more in interest payments over the following decade.
“That’s the amount the super-committee [created by the 2011 debt-ceiling deal] failed to find in savings,” leading to the sequester cuts, she pointed out.
Another way is to point out the glaring flaws of proposals on the table.
“I give Paul Ryan credit for putting out a budget that shows how he would do it with spending cuts only,” MacGuineas said, “but don’t forget that budget includes a bunch of Medicare savings he said he opposed during the [2012 presidential] race.”
President Barack Obama’s budgets have their own problems, she said: “One year, he talked about 12-year budgets compared to other people’s 10-year numbers. The next year he counted war savings [after previously announcing the end of the wars in Iraq and Afghanistan], which is really a gimmick.”
MacGuineas said voters “bear a huge responsibility” for continuing to “elect people with a bunch of promises that just are not workable, but they sound good.” That said, she insisted voters “should be able to trust their elected leaders to lead an honest discussion about it. … And that’s not happening.”
She also hopes that if others, such as herself, force that honest discussion upon the country, it will change the political incentives that affect taxing and spending.
“I think what happens in discussions is there are tipping points. And I think if you have enough people talking about this, you have the next ‘Ross Perot moment,’ where it goes from everybody promising fiscal giveaways to, suddenly, we the voters demand they tell us how they’d fix it. And once it gets to that point, then you know that somebody selling you the easy way out isn’t telling the truth, and then it becomes politically more important to have a fix.”
– By Kyle Wingfield