The Deficit, Euphemisms, and Hard Choices

By :: March 31st, 2011

If we are going to make real progress on deficit reduction, politicians will, sooner or later, have to stop talking in code. The “adult conversation” they pine for will have to be candid and explicit.  So far, it is not.

Two weeks ago, a bipartisan group of 64 senators signed a letter urging President Obama to “engage in a broader discussion about a comprehensive deficit reduction package.”  This conversation, said the lawmakers, should include “discretionary spending cuts, entitlement changes, and tax reform.”

No it shouldn’t. It should include discretionary spending cuts, reductions in the growth of social insurance programs, and tax increases coupled with broad-based reform.

At the same time, House Ways & Means Committee Chairman Dave Camp (R-MI) told the Wall Street Journal that he wants to lower the top tax rate for individuals and corporations to 25 percent. Well, don’t we all. What he didn’t say was in order to get there without adding to the deficit , we are going to have to slash cherished tax deductions, credits, and exclusions by about $2 trillion over a decade. And even that wouldn’t move the country a millimeter down the road of fiscal balance.  It would only leave us no worse off than today.

Today, a bipartisan group of 68 respected economists and policy experts (including my Tax Policy Center colleagues Donald Marron, Rudy Penner, Gene Steuerle, and Bill Gale)  signed a letter calling for fiscal consensus based upon “the recommendations of [President Obama’s] Fiscal Commission.” But they carefully added, lifting the words of the senators’ letter, “we may not agree with every aspect of the Commission's recommendations.”

Don’t get me wrong. It is a good thing that 64 senators of both parties are willing to engage, however hesitantly, in deficit reduction talk. And it may even be helpful when 68 policy experts urge them to keep it up. It certainly beats the alternative. But at some point, Obama and Congress are going to have to, as an old football coach used to say, quit tippy-toein’ through the tulips. Sooner or later, they will have to move beyond the indulgence of obfuscation.

In private, politicians and policy wonks shake their heads at an America that believes the deficit can be fixed by eliminating waste, fraud, and abuse and cutting foreign aid. But why wouldn’t people believe this? After all, this sort of magical thinking is comforting, and their political leaders won't tell them the sad truth.

Instead of euphemistic mush, imagine instead a letter that says the following:

“Our long-term deficits are not sustainable. They threaten our standard of living and that of our children. To control these deficits, we are going to have to work together to reduce the growth of all government spending. We are going to have to find ways to spend less on health care through Medicare, Medicaid, and other government insurance programs. We are going to have to raise payroll taxes and slow promised increases in Social Security benefits while improving the program for those who most need it. And we are going to have to reform the tax system so it can produce more revenue to support the needs of a rapidly aging population even as we make it fairer, simpler, and more efficient.”

The good news is we still have time. The bond vigilantes have not yet targeted the U.S., as they have Greece, Ireland, and Spain.  But pols (and economists) must use that time to educate the public about the deficit and its solutions in plain language, and not in Inside-the-Beltway code. If not, time will run out and Americans will still be trying to figure out what the heck their leaders were trying to tell them.

7Comments

  1. Michael Bindner  ::  4:56 pm on March 31st, 2011:

    Not so much. We need drastic cuts to defense and comprehensive tax reform that requires that the wealthy pay the burden for paying back the debt and deploying the military (instead of lending us money to do so) while consumers and businesses support both discretionary spending (through a VAT) and income support/health care (through a business receipts tax) with no going back on the promise of decent health care for the elderly and the poor. Such cuts only send people to the Emergency Room and are counter productive.

    Until TPC starts championing health savings accounts (combined with flexible spending accounts to be accessed while HSAs build up) and high deductible policies – and tax penalties for better plans – there is really no alternative out there that bends the cost curve. Provider limits won’t – but the market will – except for sick people. Since “market reforms” don’t stop them from getting care, the only alternative is a broad based tax increase.

  2. lasvegasaccountant  ::  9:29 pm on March 31st, 2011:

    Unfortunately, politicians usually do nothing until there’s a crisis. John Mauldin refers to politicians as acting like teens. That is, the choices they make are ones that get them the most pleasure or the least amount of immediate pain.

    Anything long-term gets put off for future administrations to deal with. This makes the problems far worse than they have to be. Politicians are talking tough by arguing over whether the budget should be cut by $30 Billion or $60 Billion. This all sounds good. The problem is that our deficit is so huge that this amount is only a drop in the bucket. They are well aware that the public has a poor perception of such large numbers. This is why it’s unlikely these problems will be solved anytime soon.

  3. Sid F  ::  9:17 am on April 1st, 2011:

    The Post is absolutely correct, but there is one problem.

    Question: What do you call a Senator or Member of the House who states

    “We are going to have to find ways to spend less on health care through Medicare, Medicaid, and other government insurance programs. We are going to have to raise payroll taxes and slow promised increases in Social Security benefits while improving the program for those who most need it. And we are going to have to reform the tax system so it can produce more revenue . . .”

    ???

    Answer: Former Member of Congress

  4. JohnR22  ::  11:56 am on April 1st, 2011:

    They say an alcoholic has to reach absolute rock bottom before they’ll accept the reality that they’re a drunk. This is an essential first step on the road to recovery.

    Sad to say, voters have not yet reached rock bottom. I’m afraid we’ll need some cataclysmic event that shocks us into reality; perhaps a complete fiscal meltdown with a stock markter crash, 25% unemployment and 10% inflation. Even then the ideologues on Left and Right will try to stymie any effort at real reform.

  5. John D. Froelich  ::  12:36 pm on April 1st, 2011:

    And then there are obvious ratholes,like subsidizing the Chevy Volt!

  6. One Man’s Interpretation of the Euphemisms  ::  12:02 am on April 3rd, 2011:

    […] a comment As my TPC colleague Howard Gleckman noted, there’s a lot of euphemizing in the bevy of recent letters calling on our elected leaders to […]

  7. ロレックス カタログ  ::  1:52 am on October 16th, 2013:

    ロレックス 腕時計 メンズ