Barack Obama's greatest mistake as president is likely the opportunity he didn't take — the opportunity to endorse and push for the reforms proposed by the Bowles-Simpson deficit reduction commission. The proposals, which went nowhere after the much-ballyhooed panel reported back to the president, would have reduced the federal deficit by $3.6 trillion or so. It called for some tough cuts, including reductions in Medicare and Social Security spending, and it called for new revenues. In other words, it was a bipartisan plan, which was devised by a bipartisan panel of smart, experienced and realistic committee members. It could have given the president some shelter from inevitable criticism — this is what the committee recommended. But Obama let the controversial plan wither without his endorsement and without any effort to follow through on the course he had initiated.
Now, another panel, this one composed of highly partisan members of Congress looking out for their own and their party's political future, is tasked with coming up with a deficit reduction plan by Thanksgiving — or else. The "or else" is automatic spending cuts that would reduce government spending across the board, slashing essential spending as well as optional spending and entirely forgoing the option of raising revenues, which most Americans say they favor.
It's too late for Obama to go back and reconsider endorsing the Bowles-Simpson plan. His cowardly error has put us on this path that leads to potential chaos in only three weeks.
I can't think of a worse error in his presidency.
Showing posts with label deficit reduction. Show all posts
Showing posts with label deficit reduction. Show all posts
Friday, November 4, 2011
Thursday, July 7, 2011
Seize opportunity to cut deficit
In about three weeks, the United States of America might default on its debts. Think about that! The richest country in the world, the paragon of democratic governments, could become a deadbeat.
The problem is not that America cannot come up with the money to pay its obligations. Its credit is good, even though it has made a habit of spending more than it takes in. This problem is more political than fiscal. Congress must approve an increase in the debt limit in order for the Treasury to come up with the money to pay the bills on time.
Republicans in Congress, particularly those who were elected last year on pledges to never, ever, under any circumstances raise taxes, don't want to increase the debt limit. They think America should live within its means. Good sentiments, but America cannot fight wars all around the globe, pay the promised benefits to Social Security and Medicare recipients, fight terrorism at home and abroad, respond to catastrophic natural disasters, maintain a space program, keep up interstate highways, pay the interest on debts already incurred, provide nourishment for the poor and all the rest without either raising taxes or borrowing money. If raising taxes — and many in Congress and the political action groups that do their thinking for them — say any increase in revenue, even if it comes from closing tax loopholes and ending unjust preferences in the tax code, is a tax increase. And any tax increase in any form is off the table.
New York Times columnist David Brooks (one of the most thoughtful and sensible columnists I've read) decries the no-tax ideology of the Republican right wing. If Republicans are unwilling to compromise, if they are unwilling to snatch the deal of a lifetime when it's being handed to them, they are no longer a political party; they are a medieval college of cardinals burning at the stake people who say the earth is round and revolves around the sun.
America's $14 trillion in debt is a real problem. Our $1 trillion-plus budget deficit is shameful. But the answer is not to force the government to implode into anarchy. President Obama is offering to go along with $4 trillion in spending cuts if Congress will agree to less than $1 trillion in revenue increases, mostly from tax reforms and closing loopholes. It's a heckuva deal for Republicans; it represents significant cuts in federal spending. All they have to do is agree to comparatively minor and relatively painless revenue increases.
I think the American people might go along with even harsher measures. Rep. Paul Ryan's highly touted deficit reduction plan, which has become an icon of the Republican Party (it raises no taxes), would not eliminate the budget deficit. The Bowles-Simpson deficit reduction commission did a better long-term job of reducing the deficit but still didn't put the federal government back in the black.
No politician seems prepared to boldly make the elimination of the deficit and the paying off of the federal debt a national priority. This could be done by returning to tax rates in effect before the 2002 Bush tax cuts and reducing federal spending in a deliberate and rational way. Remember that those 2001 tax rates already had been reduced from peak rates of the 1950s by Kennedy's and Reagan's income tax cuts. Who will stand before the public and pledge, "Before this decade is out, we shall pay off the federal debt"?
The problem is not that America cannot come up with the money to pay its obligations. Its credit is good, even though it has made a habit of spending more than it takes in. This problem is more political than fiscal. Congress must approve an increase in the debt limit in order for the Treasury to come up with the money to pay the bills on time.
Republicans in Congress, particularly those who were elected last year on pledges to never, ever, under any circumstances raise taxes, don't want to increase the debt limit. They think America should live within its means. Good sentiments, but America cannot fight wars all around the globe, pay the promised benefits to Social Security and Medicare recipients, fight terrorism at home and abroad, respond to catastrophic natural disasters, maintain a space program, keep up interstate highways, pay the interest on debts already incurred, provide nourishment for the poor and all the rest without either raising taxes or borrowing money. If raising taxes — and many in Congress and the political action groups that do their thinking for them — say any increase in revenue, even if it comes from closing tax loopholes and ending unjust preferences in the tax code, is a tax increase. And any tax increase in any form is off the table.
New York Times columnist David Brooks (one of the most thoughtful and sensible columnists I've read) decries the no-tax ideology of the Republican right wing. If Republicans are unwilling to compromise, if they are unwilling to snatch the deal of a lifetime when it's being handed to them, they are no longer a political party; they are a medieval college of cardinals burning at the stake people who say the earth is round and revolves around the sun.
America's $14 trillion in debt is a real problem. Our $1 trillion-plus budget deficit is shameful. But the answer is not to force the government to implode into anarchy. President Obama is offering to go along with $4 trillion in spending cuts if Congress will agree to less than $1 trillion in revenue increases, mostly from tax reforms and closing loopholes. It's a heckuva deal for Republicans; it represents significant cuts in federal spending. All they have to do is agree to comparatively minor and relatively painless revenue increases.
I think the American people might go along with even harsher measures. Rep. Paul Ryan's highly touted deficit reduction plan, which has become an icon of the Republican Party (it raises no taxes), would not eliminate the budget deficit. The Bowles-Simpson deficit reduction commission did a better long-term job of reducing the deficit but still didn't put the federal government back in the black.
No politician seems prepared to boldly make the elimination of the deficit and the paying off of the federal debt a national priority. This could be done by returning to tax rates in effect before the 2002 Bush tax cuts and reducing federal spending in a deliberate and rational way. Remember that those 2001 tax rates already had been reduced from peak rates of the 1950s by Kennedy's and Reagan's income tax cuts. Who will stand before the public and pledge, "Before this decade is out, we shall pay off the federal debt"?
Friday, February 19, 2010
Don't do that to your grandchildren
President Obama could hardly have found two better co-chairs of his new deficit reduction commission than Erskine Bowles, the former White House chief of staff and current UNC president, and Alan Simpson, the retired Wyoming senator. But it's hard to be optimistic about the commission's chances.
On the day of Bowles' and Simpson's appointment, conservative Republicans were engaging in an ideological purity festival, egged on by former Vice President Dick Cheney. These conservatives sounded an alarm that they were ready to destroy their own political party (and its golden opportunity in 2010 elections) by demanding fealty to their doctrine. Their purge would eliminate anyone willing to consider new or increased taxes to solve the nation's deficit problem or anyone willing to even talk to Democrats. Disregarding the catastrophic consequences of doing nothing, these true believers made it clear they would prefer to destroy the nation than to raise taxes.
Democrats seem no less intransigent. The Democratic leadership in Congress seems just as adamant about its own ideology and its unwillingness to make serious spending cuts in a federal budget that is $1.4 trillion in the red this year or to abandon the system of earmarks to which they've become addicted. Both parties seem more interested in making partisan points than in governing. It's no wonder the public's faith in Congress is astoundingly low.
Simpson and Bowles made it clear that everything would be on the table in their deliberations. That means Social Security benefits, payroll taxes, income taxes, estate taxes, Medicaid, Medicare, defense, entitlements, etc., etc. That is as it has to be. There is no easy way out of this dilemma, and time is short before our profligate spending really hits the fan. Whole programs will have to be eliminated; revenue will have to be increased.
If these painful actions are not taken, both Bowles and Simpson emphasized, our grandchildren will suffer egregiously. Why would we do that to our grandchildren?
On the day of Bowles' and Simpson's appointment, conservative Republicans were engaging in an ideological purity festival, egged on by former Vice President Dick Cheney. These conservatives sounded an alarm that they were ready to destroy their own political party (and its golden opportunity in 2010 elections) by demanding fealty to their doctrine. Their purge would eliminate anyone willing to consider new or increased taxes to solve the nation's deficit problem or anyone willing to even talk to Democrats. Disregarding the catastrophic consequences of doing nothing, these true believers made it clear they would prefer to destroy the nation than to raise taxes.
Democrats seem no less intransigent. The Democratic leadership in Congress seems just as adamant about its own ideology and its unwillingness to make serious spending cuts in a federal budget that is $1.4 trillion in the red this year or to abandon the system of earmarks to which they've become addicted. Both parties seem more interested in making partisan points than in governing. It's no wonder the public's faith in Congress is astoundingly low.
Simpson and Bowles made it clear that everything would be on the table in their deliberations. That means Social Security benefits, payroll taxes, income taxes, estate taxes, Medicaid, Medicare, defense, entitlements, etc., etc. That is as it has to be. There is no easy way out of this dilemma, and time is short before our profligate spending really hits the fan. Whole programs will have to be eliminated; revenue will have to be increased.
If these painful actions are not taken, both Bowles and Simpson emphasized, our grandchildren will suffer egregiously. Why would we do that to our grandchildren?
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