Budget math: Is too much 'off the table' to really fix US deficit?
With Republicans and Democrats taking tax hikes and half of US spending off the table, what's left is big whacks from defense and other discretionary items in the US budget. It's as if a family needs to stop deficit spending, but won't adjust its income, mortgage, or health care and retirement plans.
Picture a family that gets in over its head in debt. The two heads of the household decide the problem needs urgent attention, but that they won't consider any solutions that involve changes to their income, their mortgage and housing costs, their health care, or their retirement plans.Skip to next paragraph
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Now picture that family being the United States, as represented by its elected officials.
That's essentially what's happening now in Washington, as Democrats and Republicans agree on a major problem but not on how to fix it. On Thursday, bipartisan talks led by Vice President Joe Biden continue. After the group met Wednesday, lawmakers expressed optimism about reaching a fiscal deal, even though some key pieces of the nation's finances are currently viewed as "off the table."
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Republicans generally don't want to consider raising taxes as part of a plan to reduce federal deficits. And the rift between the two parties over how to fix Medicare and Social Security has pushed those entitlement programs to the sidelines.
So the two parties are focused on other parts of the federal budget – such discretionary spending and where to cut it – as they rush to put a fiscal deal in place before Aug. 2. Both sides agree that it's a good idea to act by early August, ideally a bit ahead of that Treasury-announced deadline, to avoid a serious funding challenge for the nation. After that, the government won't be able to borrow, by issuing new bonds, unless Congress has raised the debt limit.
The limited scope of the bipartisan talks doesn't mean they are fruitless.
In fact, as lawmakers left Wednesday's meeting members of both parties struck an optimistic tone about the progress being made. The group is meeting at a stepped-up pace (it will gather again Thursday, for its third meeting of the week) with the goal of setting a framework for legislation by July 4.
Still, because some key elements of the budget aren't in play, it appears likely that the resulting legislation will be a partial solution to fiscal troubles. To truly put the national debt on a track of stabilization or decline, those "off the table" elements will almost certainly need to be part of the solution.
Here's a glimpse of the math: Social Security, Medicare, Medicaid, and interest on the national debt currently account for nearly half of all federal spending –and that total is poised to grow substantially if no changes are made. They are comparable to the role that housing, health care, and retirement plans play in the typical family budget.
President Obama's bipartisan fiscal commission proposed last year that the government should aim to cut projected federal deficits by about $4 trillion over the next decade. Independent advocates of fiscal responsibility have embraced that goal as roughly the amount needed to halt the rapid growth of public debt and maintain investor confidence in the US economy.