Anyone who's serious about curbing federal spending and budget deficits could fashion a plan that would do both without eliminating one penny of existing government benefits or raising any existing tax. Here's how:The truth? You can't handle the truth!
Not counting lower interest payments on less federal debt, this package would probably save more than $300 billion from 2006 to 2010 -- still not enough to eliminate prospective deficits. Its chances are close to zilch.
- First, you'd repeal the Medicare drug benefit, scheduled to take effect in 2006. For the next five years (2006-2010), the savings would total about $300 billion, estimates the Congressional Budget Office (CBO). Preserving an existing drug benefit for low-income recipients might reduce savings by 5 percent.
- Second, you'd repeal a tax cut scheduled for 2006 that would benefit mainly people in the top brackets (taxable incomes exceeding $182,800 and $326,450 for couples in 2005). These groups have already received big tax cuts; the new reductions involve repealing limits on deductions and personal exemptions. The 2006-2010 savings: about $30 billion, estimates the Tax Policy Center of the Urban Institute and Brookings Institution.
- Third, you'd eliminate all "earmarks" in the recent highway bill. These are projects targeted by congressmen and senators for their own districts. The highway bill contained $24 billion in earmarks, says Citizens Against Government Waste, a watchdog group.
...the only way to solve [the problem] is either to raise taxes or cut benefits. The point of the budget plan I sketched at the outset is to show that even cuts to programs that haven't yet taken effect stand little chance of passage. Worse, the mismatch will only grow as baby boomers age and qualify for Social Security and Medicare. Practical politicians like to confer benefits and tax cuts, not withdraw them. They don't like the discipline of inflicting pain (taxes) to distribute gain (benefits).
It's necessary to defend the inconsistencies. Republicans often justify tax cuts as a way to control spending -- "starve the beast." Government won't spend what it doesn't have. But Bush discredited that theory by both cutting taxes and raising spending. Democrats embrace class rhetoric and a self-serving mythology -- only they are "responsible" on the budget. Look (they say) at the surpluses achieved by Bill Clinton, from 1998 to 2001. The trouble is that those surpluses resulted largely from events beyond his control: the huge tax windfall of the tech and stock market booms, and the end of the Cold War, prompting much lower defense spending.
But who cares about the truth? For most politicians, the real problem is to appear principled even when they're not. If that's not phony, what is?
Friday, November 4
Who cares about the truth?
Fiscal Phonies By Robert J. Samuelson