About that federal deficit …
Well, the quadrennial Mock Convention unfurled in all its glory on the Washington & Lee University campus this weekend, and it sure left me thinking.
The convention opened with a (presumed) debate between Ann Coulter and James Carville, (lotta grandstanding) followed by the keynote address from Mike Huckabee (nice guy) on Thursday evening. Next morning, the colorful, clever and sometimes rowdy Mock Con parade wound through town – minus the elephant that resourceful Mock Conners had hired from an outfit in Florida. The elephant was canceled at the last minute after a PETA protest. But we digress. The parade was just fine and a ton of fun even without an elephant, and that we hope that wherever that elephant resides in Florida, it is being well treated.
The weekend really got down to business with the speakers on Friday and Saturday, and concluded with the traditional nomination, which went delegation by delegation on Saturday afternoon, with much cheering and waving of state flags (for a pictorial taste, see http://sceneoncampus.blogs.wlu.edu/.) The whole event was unbelievably professionally run, right down to the big-screen geographic graphics that accompanied each delegation’s nominating report from the podium.
But it was the speakers who gave me most pause for thought. Republicans that they (naturally) were, they mainly urged cuts in “entitlements,” especially Medicare and Social Security, and criticized the Obama administration for the size of our current federal deficit.
So I’ve looked at some stuff from the Brookings Institution and elsewhere, and this is what I can report:
1) Brookings’ panel says consolidate our bureaucracy – for instance, the number of jobs-training programs that reside in dozens of federal agencies. Seems worth thinking about, anyway. And they suggest “devolution” – putting initiatives for change in the hands of the states and cities, because (they said) our needs nationwide are so different, state to state. Denver’s development of high-speed city rail lines was cited as an example. Might work …
2) Experts favor adopting the Simpson-Bowles and/or Domenici-Rivlin committees’ plans to downsize the federal budget, reform the tax code, and tackle “entitlements.”
And I say, Right! Let’s go with former Sen. Pete Domenici on the tax code. Domenici, who with Dr. Alice Rivlin chairs the Bipartisan Policy Center’s Debt Reduction Task Force, said this in December:
“The framework for a grand bargain is already done. There’s Domenici-Rivlin, Simpson-Bowles, and the Gang of Six—each saves somewhere around $4-5 trillion over the next decade and much, much more thereafter. If you don’t like a policy from one, then you can grab a replacement from another…if you show me a plan, and your plan is missing Medicare and tax reform, then I’ll tell you, ‘you don’t have a plan.’”
I like his ecumenical approach. And the Task Force is supposed to have more to say this month. The tax plan is to lower rates overall while eliminating loopholes. Add a Warren Buffett surtax on the top 1 percent (c’mon, folks, let’s stop talking about a chilling effect on creating more jobs and get real: How much money can any one person ever spend in a lifetime?). Surtax, please!
3) Social Security: From a widely circulated set of 12 suggestions to stabilize Social Security, here’s the one I like best. It’s easy to understand, it poses no hardship on anyone, and it would COMPLETELY ELIMINATE the projected SS deficit. What’s not to like? Trust me, of the 12 suggestions, this one is the most comprehensive and also the simplest. To see the rest, go to http://money.usnews.com/money/blogs/planning-to-retire/2010/05/18/12-ways-to-fix-social-security:
Modify the Social Security tax cap. Workers paid into the Social Security system on earnings up to $106,800 in 2010. About 83 percent of worker earnings were subject to Social Security payroll taxes in 2008. If all earned income above $106,800 annually were subject to Social Security contributions but did not count toward benefits, Social Security’s projected deficit would be completely eliminated. If the higher income counted toward Social Security benefits, about 95 percent of the shortfall would be absolved. Other ideas: apply a new Social Security formula to earnings above the current cap or raise the amount of the income cap to apply to 90 percent of all worker earnings.
4) As for the size of the deficit, here’s what the track record shows: There have been alternating deficits and surpluses since the nation’s beginning. Many deficits come out of wartime spending, and that is the story of the 21st century. According to figures drawn from the U.S. Treasury’s Bureau of the Public Debt: During the G.W. Bush presidency, the gross public debt increased from $5.7 trillion in January 2001 to $10.7 trillion by December 2008, largely because of the Bush tax cuts and the Iraq and Afghanistan wars. Under Obama, the debt has gone from $10.7 trillion to upwards of $15 trillion, mainly because of decreased tax revenue caused by the 2000s recession. It was triggered in part by the repeal of the Glass-Steagall Act, which occurred on Bill Clinton’s watch and which I described in a Roanoke Times commentary (http://www.roanoke.com/editorials/commentary/wb/302383).
So under Obama, the deficit has risen in almost four years by as much as it rose under Bush in eight years, but that is due without much question to a situation that Obama inherited. The bank bailouts, for example, were approved under Bush as the breadth of the disaster became apparent in late 2008. Obama wasn’t even in office at that point.
In an interview during the Mock Convention, former Ambassador, sometime Republican presidential candidate and Mock Con speaker John Huntsman recommended that Congress and the president move to adopt the Simpson-Bowles recommendations to reform taxes and “entitlements.” The experts, including Domenici and Rivlin, agree.
So all we are saying is, shelve the partisan rhetoric. Reform the tax code – it hasn’t been done across the board since 1986. Modify the Social Security tax cap. And let’s quit beefing, get bipartisan, and get on with it. Thank you.
