Pressure building to cut US deficit

The public pressure for reducing the country's ballooning deficit is rising, but will policy makers listen?

David R. Francis

You won't get much debate in Washington or elsewhere if you say the United States must at some point seriously reduce its ballooning budget deficit. Perhaps after the economy has recovered further.

Other developed nations are already cutting back. President Obama, having appointed a commission to make deficit-reducing suggestions, is requesting further authority to cut specific items from spending bills. Republicans are hammering on the deficit issue.

One popular view is that all the US has to do to stabilize its debt is to cut out waste, fraud, and abuse. Unfortunately, "we will need a lot more than that," says Maya MacGuineas of the Committee for a Responsible Federal Budget (CRFB).

Here's the problem: In April, Washington advocacy group Citizens Against Government Waste (CAGW) issued its 20th exposé of pork-barrel spending. It found 9,129 earmarks – typically, projects members of Congress like to bring to their districts – worth $16.5 billion.

But in a federal deficit forecast to exceed $1 trillion this year, eliminating $16.5 billion of earmarks wouldn't make much of a dent. So Tom Schatz, president of CAGW, adds in other "waste," such as an alternate engine for the Joint Strike Fighter ($485 million in fiscal 2011) and $760 million in sugar subsidies over 10 years. CAGW offers a list of "prime cuts" that adds up to $2 trillion over five years.

That's serious money.

Of course, one man's waste is another's top priority. Members of Congress are elected to resolve those differences, primarily through a budget that spells out national priorities.

Republicans note that the Democratic leadership so far has not presented a budget resolution for fiscal year 2011. Democrats don't want to do that so close to the November elections because it would highlight future deficits and debts and spell out politically risky budget measures.

In some ways, Americans are ahead of their politicians. When the CRFB put up a budget simulator on its website in May, some 40,000 people in the first week alone made simulator choices to bring down the deficit sufficiently that federal debt would stabilize at a safe 60 percent of gross domestic product, the nation's output of goods and services, by 2018.

Ms. MacGuineas has her own suggestions:

•Raise the age for receiving full Social Security and Medicare benefits. Create incentives for seniors to stay longer in the workforce.

•Put a freeze on discretionary federal spending, including military and other security spending, to force agencies and departments to look for greater efficiency and productivity.

•Extend and broaden the tax base by capping or eliminating some of the $1 trillion in special tax breaks, such as the income-tax deduction for interest on home mortgages and for employer-provided health-care plans.

•Replace the estate tax (returning next year under present law) with a tax on inherited income. MacGuineas fails to see why inherited income (say, from a great-aunt) should be taxed any less than income from "hard work." She admits this may be a political "nonstarter" since so many people value highly the prospect of an inheritance.

The public pressure for action is building. Beside the CRFB and CAGW, the Concord Coalition and the Heritage Foundation are sounding the deficit alarm. In years ahead, MacGuineas expects to see "hundreds of groups" pushing for deficit reduction.