President Obamaâ€™s bipartisan deficit commission released its results last week. For the first time in my years of writing about the deficit in the Collegian, there is finally an actual proposal on the table that has a realistic chance of being approved that would be able to truly tame the deficit.
Both parties immediately fired off criticism of the proposal, claiming that certain provisions were completely unacceptable.
As is usual, the Republicans immediately stated that the projected tax hikes in the proposal were unacceptable, using their usual mantra that one should never raise taxes during a recession.
And Democrats were similarly recalcitrant to the idea that the government should cut spending, particularly on entitlement programs. House Speaker Nancy Pelosi, D-Calif., called the proposal â€œsimply unacceptable.â€
The sad part of the initial responses of both parties is that they act as if we can truly solve the largest deficit this nation has faced, more than a trillion dollars each year, with their usual list of pet-proposals and small measures.
The Republicans genuinely seem to believe that they can continue to cut taxes while making only minor and cosmetic cuts to government spending and that following this path, the budget will miraculously balance itself. Republicans have been vigorously talking of cutting $100 billion out of next yearâ€™s budget. Thatâ€™s great, but unless you let the Bush tax cuts expire, it wonâ€™t even make a dent in the long-term deficit trajectory.
Democrats are similarly clueless when it comes to fighting the deficit. They believe that some combination of tax hikes and military cuts will balance the budget.
This is true â€“â€“ to a point. But you can only raise taxes so far before you stop gaining additional revenue, as economic activity declines due to the increased taxation. Economically speaking, it is indeed generally bad policy to raise taxes during a recession or slow-growth economic period.
And furthermore, cutting the military is not a cure-all solution either. Even if the entire military was eliminated tomorrow (every single tank, soldier, plane, military base and so on was either sold or fired) and we became the Switzerland of the Americas, we would still have a budget deficit larger than any in American history prior to Bush 43â€™s second term.
The conclusion from all this is that no one method, plan or political party has all the answers. We need to combine the best and most feasible ideas from across the political spectrum to balance the budget.
While Obamaâ€™s deficit panel didnâ€™t produce a perfect proposal, it is a good start, and one that we as a nation should discuss frankly as we attempt to fight the deficit.
The plan makes several bold but necessary suggestions for fighting the deficit. First and foremost, the proposal seeks to cut Social Security benefits while raising the retirement age.
This is obviously going to be unpopular with a large block of voters. But it simply must be done; as Iâ€™ve explained in previous columns, Social Security was set up as â€œold age insuranceâ€ and not a pension program. When FDR created Social Security, the average person died before they were eligible to receive benefits. Social Security was not designed to, nor can it afford to, pay benefits to each and every retired American for decades after they become eligible.
The proposal would eliminate several popular tax deductions and raise the gasoline tax. As a libertarian, I am not a fan of these proposals, but in the spirit of compromise, I am willing to acknowledge that the federal government is collecting less revenue than usual and so I, in the spirit of seeking compromise, am willing to accept these, assuming that spending cuts also occur.
The plan also would make well-deserved cuts to many bloated areas of the government, including the defense department and farm subsidies.
The plan also outlines further cuts in health care spending as well, which would surely be unpopular in the wake of this yearâ€™s already contentious debate about health care.
While very few people endorse the plan in its current state, it would nearly eliminate the deficit and create a sustainable future for our nationâ€™s finances.
Iâ€™m sure that a successful deficit-fighting plan will evolve a lot from this first proposal, but it is a solid start that our leaders should take seriously, rather than dismissing out-of-hand as Pelosi did.
Editorials Editor Ian Bezek is a senior economics major. His column appears Wednesday in the Collegian. Letters and feedback can be sent to email@example.com.