David Leonhardt has an excellent column on the deficit. In it, he suggests that if Congress simply did nothing we would be on a firmer fiscal footing than if we adopted the Ryan budget. With an economic recovery underway, he argues, Obama should refuse to extend the Bush tax cuts when they expire at the end of 2012. If Republicans stick to their all-or-nothing guns and refuse to extend the cuts only for those making $250,000 or less, all the cuts would expire going into 2013.
This change, by itself, would solve about 75 percent of the deficit problem over the next five years. The rest could come from spending cuts, both for social programs and the military.
Over the longer term — 20 years — letting all of the Bush cuts lapse would close only about 40 percent of the budget gap. But 40 percent is a great start. No one is seriously suggesting that all deficit reduction should come from higher taxes. Much of it will have to come from slowing the growth rate of medical spending, which is the main cause of the long-term deficit.
Leonhardt admits there are better ways to raise taxes and reform the tax code, and I agree, but closing popular loopholes is politically difficult. We should also consider making the income tax more progressive by increasing brackets at the top, and making corporate and capital gains taxes progressive. Eventually, in order to make our revenue more recession-proof, we should also consider something along the lines of a national sales tax or a VAT.
But again, 75% of the current deficit problem is solved simply by ending the Bush tax cuts. Bringing down defense spending to pre-Bush levels solves most of the remaining 25%. The ACA begins to address the fundamental flaws in healthcare spending (though by no means does it go all the way…yet.) Why isn’t this considered a Very Serious proposal?
I think it’s because pundits and politicians like drama. Ryan’s plan is dramatic. It’s also horrible and cruel. But it’s just so easy to replace words like “cruel” with words like “bold” when you are insulated from the cruelty.