Tam­ing the deficit? No one has the an­swer

The Washington Times Weekly - - Commentary -

There have been many at­tempts to slay the deficit mon­ster that lurks in the ap­pro­pri­a­tions com­mit­tee rooms of Congress, only to see it re­turn to life more men­ac­ing than ever.

Last week, an army of de­ter­mined bud­get war­riors, sent by an an­gry, fed-up elec­torate last year, were go­ing to try to kill the bud­get be­he­moth once and for all.

The spend­ing mon­ster has with­stood many at­tacks in the past, sur­viv­ing Gramm-Rud­man in the 1980s, the “pay-go” rule in the 1990s, and bud­get­cut­ting bills that failed in one way or an­other to drive a stake through its heart.

But this time the deficit hawks say it’s all-out nu­clear war.

They are armed to the teeth with a bat­tery of lethal weapons: spend­ing caps on fu­ture spend­ing, pre­vent­ing any fur­ther rise in the debt ceil­ing to shut down large sec­tions of the gov­ern­ment, and that old standby, an iron-clad bal­anced­bud­get amend­ment to the Con­sti­tu­tion.

But Pres­i­dent Obama and the Democrats on Capi­tol Hill — the cham­pi­ons of big gov­ern- ment — are putting up a fierce fight and they have a lot of weapons at their dis­posal, too.

Let’s look at each of these plans and see what their chances are:

The so-called “Cut, Cap and Bal­ance” plan of­fered by House Repub­li­cans would im­me­di­ately cut a pal­try $111 bil­lion from the fis­cal 2012 bud­get, ex­empt­ing So­cial Se­cu­rity, Medi­care and de­fense; set statu­tory spend­ing caps for 10 years, per­haps at 18 per­cent of the nation’s gross do­mes­tic prod­uct, down sharply from 24 per­cent now; and a con­sti­tu­tional amend­ment to force Congress to bal­ance its bud­get ev­ery year, which would re­quire rat­i­fi­ca­tion by three­fourths of the 50 states.

Sup­port­ers say all three would have to be ap­proved be­fore they would vote to raise the debt limit. But the plan’s chances of pass­ing the Demo­crat-run Se­nate are zero. And even if it did, Mr. Obama said that he will veto it.

There are those in the House who say that no mat­ter what is brought be­fore them to cut the deficit, they will not vote to raise the debt limit un­der any cir­cum­stances. There have been weeks of bit­ter de­bate about the con­se­quences of this ac­tion, with op­po­nents say­ing it would lead to an un­prece­dented de­fault on our debts and plunge the econ­omy into an­other re­ces­sion, and pro­po­nents in­sist­ing that it would do no such thing.

But af­ter writ­ing checks for in­ter­est pay­ments on the fed­eral debt and pay­ing for en­ti­tle­ments, de­fense and other crit­i­cal pro­grams, we still would have to forgo fund­ing for pro­grams from vet­er­ans to home­land se­cu­rity to cancer re­search to food and drug safety. It’s un­likely Congress will want to do that.

Then there’s the 600-page bill of­fered by Sen. Tom Coburn, Ok­la­homa Repub­li­can, who made a name for him­self as “Dr. No” by block­ing hun­dreds of pork-bar­rel spend­ing ear­marks. His plan would yield $9 tril­lion in sav­ings in 10 years through spend­ing cuts, deep en­ti­tle­ment re­forms and elim­i­na­tion of a laun­dry list of tax breaks.

This is prob­a­bly the most am­bi­tious plan be­fore Congress but it has flaws. Get­ting rid of tax loop­holes is cer­tainly a wor­thy goal, but only if you use those rev­enue in­creases to cor­re­spond­ingly lower cor­po­rate and in­di­vid­ual tax rates to get the U.S. econ­omy grow­ing again.

The big­gest part of the gov­ern­ment’s deficit trou­bles, next to the ex­plo­sion in So­cial Se­cu­rity and Medi­care costs, is weak eco­nomic growth, which has flat­tened rev­enues and bal­looned the deficits. We have a huge spend­ing prob­lem that needs to be cur­tailed, but we also have an ane­mic growth rate that is limp­ing along at less than 2 per­cent when it should be grow­ing at more than 5 per­cent. Both have fed the debt mon­ster.

Then there is the com­pro­mise plan cooked up in the Se­nate by Repub­li­can Leader Mitch McCon­nell to al­low Mr. Obama to in­crease the debt ceil­ing in three in­stall­ments for a to­tal of $2.5 tril­lion. Congress would vote on a res­o­lu­tion of dis­ap­proval, but even if both houses dis­ap­proved of his ac­tions, he would ex­er­cise his veto.

Mr. McCon­nell’s plan would cut $1.5 tril­lion over 10 years and cre­ate a 12-mem­ber com­mit­tee to pro­duce a pack­age of re­forms by year’s end that would cut tril­lions from en­ti­tle­ments.

The Repub­li­cans would be able to blame Mr. Obama for wors­en­ing the debt (it’s risen $3 tril­lion un­der his pres­i­dency), Amer­ica would keep its AAA credit rat­ing and the gov­ern­ment would pay its bills.

It, too, has its flaws. First, $1.5 tril­lion isn’t go­ing to make much of a dent in ex­ces­sive dis­cre­tionary spend­ing. Sec­ond, does any­one se­ri­ously ex­pect Congress to cut So­cial Se­cu­rity and Medi­care ben­e­fits in an elec­tion year? Don’t hold your breath.

Some­where in these pro­pos­als there is a com­bi­na­tion of ideas that could sig­nif­i­cantly curb spend­ing, but they haven’t been put to­gether yet.

The deficit mon­ster can­not be slain with­out deep, per­ma­nent spend­ing cuts and strong eco­nomic growth that pounds un­em­ploy­ment down to less than 6 per­cent, which isn’t on the hori­zon un­der this pres­i­dent.

Sad to say, but the deficit mon­ster likely will sur­vive this year’s bud­get battle and per­sist un­til Amer­ica votes to change the coun­try’s direc­tion in the 2012 elec­tion.

Don­ald Lam­bro is a syn­di­cated colum­nist and for­mer chief po­lit­i­cal cor­re­spon­dent for The Wash­ing­ton Times.

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