By Steve Brawner
© 2014 by Steve Brawner Communications, Inc.
Is it possible to bring the government’s debt under control by focusing only on one area – raising taxes, for example, or cutting defense spending? Let’s return to the Debt Stabilizer to find out.
I wrote last week about the Debt Stabilizer, an online tool created by the Committee for a Responsible Federal Budget that lets average citizens make tax and spending choices – hopefully better ones than Congress has made – in order to reduce the public debt.
Currently $12.6 trillion, the public debt is the portion of the $17.6 trillion national debt that doesn’t include what the government has borrowed from itself, such as from Social Security. It’s currently 78 percent of the size of the economy and headed to nearly 150 percent by 2050. Historically, it’s been 40 percent.
The goal of the Debt Stabilizer exercise is to reduce the public debt to 60 percent of the economy by 2024. Doing so requires improving the government’s balance sheet by $4.84 trillion over 10 years – equal to $1.54 million for every American.
I managed to reduce the public debt to 59 percent of the economy, mostly by cutting spending while raising the gas tax and closing tax deductions, and then wrote about it in my last column. After I emailed the link to the CRFB, communications director Jack Deutsch replied with an observation: Try playing various roles – the defense cutter, the tax raiser, etc. You’ll see how one-sided approaches don’t work well.
Let’s see if he’s right.
I started by trying sort of a House Republican approach: Oppose most defense cuts, support most spending cuts, and support most tax cuts. That approach left me at 69 percent of gross domestic product by 2024 and at 60 percent by 2028. However, some of those spending cuts, including the steeper ones for Social Security and Medicare, are unlikely to materialize.
I next was more of a congressional Democrat – cut defense, increase social spending, tax the rich, etc. That option reduced the debt to 73 percent of the economy but did not put the country on a path to 60 percent. “Uh oh! You failed to reduce the debt to a sustainable level,” the Debt Stabilizer said.
Other imbalanced approaches were unsuccessful. I tried one that would be popular with many Americans – cut taxes and spending without touching Social Security and Medicare. That got me to 73 percent, same as the congressional Democrats. The same percentage was reached when I cut defense spending and pulled us out of Afghanistan but left everything else alone. Doing almost nothing but cutting foreign aid left the debt at 78 percent of the economy. Foreign aid is 1 percent of the budget.
There were several imbalanced approaches that reached 60 percent. Raising every tax on the list and ending every deduction reduced the debt to 57 percent of gross domestic product. Cutting spending wherever I could and leaving taxes alone reduced the debt to 56 percent. Cutting all the taxes and all the spending reduced the debt to 60 percent.
However, those spending cuts included politically unpopular reductions for Medicare, Social Security – even $30 billion less for school breakfasts. Realistically, they wouldn’t happen. My tax increases included similarly unlikely scenarios such as ending deductions for the powerful oil industry and reducing the amount that average Americans can deduct for charitable gifts.
When I started this exercise, I hoped to play the parts of Rep. Tom Cotton and Sen. Mark Pryor, but I soon decided I couldn’t do their positions justice – particularly Pryor, who can be hard to pin down. Safe to say that Cotton takes pretty much the congressional Republican approach, which requires a number of unlikely spending cuts. Pryor – at least based on how he’s campaigning – is somewhere in the neighborhood of congressional Democrats, who, as the Debt Stabilizer makes clear, “fail to reduce the debt to a sustainable level.”
If a family’s debt needed stabilizing or a small business were in trouble, everyone would gather around the table to consider what to cut and where extra income could be found. Probably no one would get everything they wanted, and if one tried to dictate, the rest would not buy in.
At some point, Americans and their elected officials hopefully will realize that the government is no different – that choices and compromises must be made. If that happens, the debt will be reduced to a sustainable level.
And if that never happens? Uh oh.