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The New Economy

Cut the deficit? A job for kindergartners.

All that congressional budget-cutters need to know, they learned in kindergarten.

By Contributor / March 22, 2011

Sen. Jim DeMint (R) of South Carolina (left) listens to Sen. Rand Paul (R) of Kentucky speak at a news conference on the budget on Capitol Hill in Washington March 17, 2011. Here are five kindergarten lessons for how Congress can cut the deficit.

Harry Hamburg/AP

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Americans are angry about the dramatic growth in the public debt and frustrated with the apparent inability of government to do anything about it. The president and members of Congress claim they are on the case, but are they really ready for a mature discussion?

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This isn't rocket science. Everything deficit-cutters need to know, they learned in kindergarten:

Tantrums achieve nothing. The recent headline debate over who is more fiscally responsible is silly. Democrats and Republicans are arguing over nondefense discretionary spending – about 12 percent of federal spending – which will have little impact on the nation's longer-term fiscal outlook. Only tough choices on entitlements and taxes will bring the debt down to sustainable levels.

Fairy tales don't come true. For too long, Washington fantasy suggested that deficit financing was free as long as tax cuts created so much economic growth that they paid for themselves (the GOP version) or that spending promoted "investment" that would do the same thing (the Democratic version). The tea party goal of reducing the tax burden and the deficit by cutting only wasteful or otherwise unwanted spending is more make-believe. A mature debate would acknowledge that the deficit is not a problem that occurs just on the direct spending side of the budget. The federal government effectively "spends" as much via special preferences in the tax code as on all of discretionary spending combined (about $1 trillion per year).

You're responsible for your actions. The Obama administration keeps blaming the Bush tax cuts for the fiscal mess it inherited, yet it agreed to extend all of them for two years and still wants most of them extended permanently. These so-called "middle-class" tax cuts championed by President Obama remain the single most expensive policy item in his budget, costing some $2 trillion over 10 years. Accountable adults admit their mistakes – even if they're campaign promises – and change course.

Compromise is good. Reducing the deficit will require mutual sacrifice. The Obama-GOP deal in December was not really a compromise. All it did was allow Democrats to keep their favorite low-income tax breaks while Republicans maintained their favorite high-income ones – all financed by deficit spending that makes the problem worse.

Respect your elders. President Obama doesn't seem to be taking the advice of his own bipartisan fiscal commission (chaired by Alan Simpson and Erskine Bowles). That group – and several others focused on deficit reduction – have made it clear that achieving fiscal sustainability will require fundamental reforms to the major entitlement programs (Social Security, Medicare, and Medicaid) and to the tax system.

Politics can often seem childish. But there are promising areas where Republicans and Democrats can begin to address these problems in an adult fashion.

For example, they could commit to reformsthat over the next few decades would strengthen Social Security's finances and its safety net by boosting benefits for low-income households and trimming benefits or raising taxes on high-income ones.

They could also reform the federal tax system to raise more revenue in a progressive and efficient way by reducing tax breaks that disproportionately benefit higher-income households.

It's time for us to grow up about the deficit.

Diane Lim Rogers, chief economist at the Con­cord Coalition, blogs at EconomistMom.com.