Deficit Reduction...Seriously

The new American obsession is with deficit reduction; everybody is talking about it, wringing their hands with concern for debt levels. Many commentators are declaring that the near future will go down in the history books as the Age of Austerity.

Before I critique these campaigns, let me state clearly: I am not debating the validity of this issue. Too many smart folks are crying out about this, claiming that this is the road to national ruin. I am in no position to dispute that prognosis, nor am I doing it here.

My observation instead, is simply: don't expect anything substantial to be done about this in the near future. Neither party has the backbone nor the honesty to legislate the sacrifices required. Plus, the American people are conflicted, and not supportive of anything that diminishes their own sacred cows, as opposed to the other fellow's.

So let's look at a partial list of some of the moves that might seriously reduce the deficit. For reasons of brevity, I'm exempting plans that cause a lot of noise and do little to adjust the bottom line. Cutting out the poet laureate might whet some people's juices, but won't do a thing to seriously reduce this massive problem.

End the tax deduction for mortgage payments, munching a substantial bite from the deficit, as advocated by the recent commission. Not even worth talking about. When I worked for the Chicago Urban League in the 1980s, they opposed most of Reagan's fiddling with the tax code, favoring hitting the wealthy. But any attempt to cut back on this deduction brought howls from them, even when it was set up to only affect the rich. The message was clear: do not tamper with this bulwark of the middle class, in any way. Ever. Owning a house is the American dream.

Eliminate the tax cuts for those making over $250,000. The Republicans oppose this, because it would affect their constituency. But it would cut the deficit down substantially.

Cut Social Security benefits:
- advance the age when benefits accrue
- make the SS tax applicable to higher incomes

Fuhgeddaboutit. Neither party would touch this third rail in any serious cutback. Yet it would make the biggest dent in our bottom line.

Medicare: see above.

Cut military bases and weapons systems. A little of this is being done, but not enough. Every base has a local constituency, every program its lobbyists. There are no orphans here. Legislators from every party will fight to protect their constituents, and, especially, their contributors.

Enact a flat tax with no deductions whatsoever. For giving to charities? To the church? Eliminate tax breaks to Mother Theresa? To disabled children? The reality would be a flat tax with a few -- just a few -- select deductions. Some of these would be honorable, some sops to entrenched interests to get their congresspersons on board. It wouldn't matter.

After we had opened that door, we'd get the creeping revisions. Every year a few more "justifiable" tax deductions would be added. Soon, we'd have a low tax rate, lots of exemptions even from that level, very little government income, and a deficit growing by enormous swaths. No matter the merits of this idea, its application in the real world will blossom the deficit more than Social Security.

Get out of both Afghanistan and Iraq. Now. Completely. This one would actually cause a sizable dip in the short-term figures. But war is a national security issue; tread carefully. Besides, no one cares. Notice how many outspoken politicians didn't speak of this in 2010? Didn't mention it at all? Everyone figures it's winding down at its own pace. Not worth dabbling with.

Raise the tax on gas. And hurt the middle class. What about the folks unemployed, who have to drive for interviews? Remember, everybody has a car. DOA.

End some of the farm subsidies. How much do we pay to support tobacco growers? How much do tobacco companies contribute to politicians?

Massively cutting social programs. Right. Small programs for the poor will be cut; they already are. And make some folks cheer, but are like pennies to Goldman Sachs. I'm talking about the big programs. You know, the ones that affect millions of Americans. All of whom vote. Or will, after their benefits are eliminated.

End earmarks. Fully, definitively. Great idea. Only, it would have to be passed by politicians of all parties. The same folks who make hay from these measures. About as likely as a missile reaching Saturn next year.

Restore part of the estate tax. Bring it back up, and exempt everything below $3.5 million in inheritance. But after that Horatio Alger rules. This country blooms when people strive to get ahead, using their brains and their gumption. Not when daddy provides a free ride for life. Raise taxes? Are you crazy?

Institute a national sales tax. Taxes are off the table. Haven't you heard?

My first point is this: neither party has the guts to actually tackle this problem in a serious, substantial way that really drops the deficit, rather than dosing us with verbiage.

My next point is even more important: neither party has the integrity to apply hardship in a fair manner, the only way this will work. Both sides want to hit the other side, but exempt their supporters. That won't pass muster; any plan that doesn't include every possible measure -- both cuts and taxes -- flat out isn't serious; the problem is that big. The only chance for success would be for a program that called for mutual sacrifice, and then delivered it. And a mechanism, as well, that threw lobbyists of all kinds out the window. Obscene money cannot rule here. Patriotism, shared hardship, must.

Finally, none of this is in the slightest sense realistic until we develop a national consensus on the issue. Exit polls from November's elections showed almost exactly the same percentage chose, as their top political priority, spending on the unemployed, as on reducing the deficit. These concepts are as far apart as is conceivable. The number of Americans solidly behind deficit reduction is not even close to the powerful majority that would be required. As an article in the New York Times put it, voters "have rewarded politicians who say they are worried about the budget much more than politicians willing to make specific benefit cuts and tax increases." The piece quotes William Gale of the Brookings Institution, that, "whatever the eventual solution will probably be something that is not politically feasible now."

Thus, what is needed first is to build a new constituency. Politicians may be venal, but they're not stupid. Until they have that kind of support, backing these ideas would be like slitting one's wrists. Not something many people choose to do. After that, make both--the cuts and the tax measures--fair and across the board, and we might have a chance at really achieving something.

Till these things change, expect small, loud measures rich in symbolism, but meager in their actual impact. Be prepared for lots of talk. And lots of deficits.