The same week that the nonpartisan Congressional Budget Office released its latest estimate on the federal deficit — and it was not good news — the Republican presidential candidates were in Florida talking about former Massachusetts Gov. Mitt Romney’s wealth and former House Speaker Newt Gingrich’s consulting fees from Freddie Mac and Fannie Mae.
In the two presidential debates in Florida, none of the four Republican candidates was asked about how they would deal with the deficit. And only former Pennsylvania Sen. Rick Santorum spoke extensively about the growing federal debt when in a reference to Gingrich’s idea to build a colony on the moon, he replied: “We’re going to spend less money every year . . . until we get a balanced budget. And you can't do that by grand schemes.”
The deficit has become something of a forgotten issue of this campaign. President Barack Obama gave it an “oh, by the way,” mention in his State of the Union message last month. But jobs, taxes and economic inequality are dominating the debate.
Nobody wants to talk much about the deficit, perhaps because every solution will infuriate so many people. Try higher taxes. That’ll go over well with voters. Or curbing spending on the popular entitlement programs of Social Security, Medicare and Medicaid? Now that’s an election platform everyone wants to run on.
So when the CBO unveiled its latest budget projections, it quickly got the attention of those in Washington who worry about the massive federal debt.
Robert Bixby, executive director of the Concord Coalition, a Washington organization that pushes for balanced budgets, issued a statement saying the CBO report “should be required reading” for candidates. He warned of “unrealistic campaign promises that fail to take into account the harsh realities reflected in this report. And sooner rather than later, the heated rhetoric of the campaign will run into the cold reality of these numbers.”
How grim are the CBO’s projections? Well, try this:
The CBO assumes Congress will allow the 2001 and 2003 tax cuts for all Americans to expire at the end of this year. The CBO also assumes that Congress will not restore $316 billion in proposed Medicare reductions. And the CBO assumes that Congress will not attempt to wiggle its way out of nearly $1 trillion in automatic spending reductions required by last year’s budget deal between Congress and the White House.
Then, and only then, the government will still add $3 trillion during the next decade to the nation’s publicly held debt.
But budget office officials know there is little chance that Congress will raise everyone’s taxes and cut Medicare.
So the CBO put out a second — and more realistic — scenario, based on the assumption that Congress extends the 2001 and 2003 tax cuts and refuses to go through with tough spending cuts. Under that scenario, the government will add $11 trillion to the publicly held debt by 2022.
So, let’s have Congress get tough and not extend the tax cuts and start making steep cuts in federal spending. The problem with that, as Federal Reserve Chairman Ben Bernanke told a House committee Thursday, is that “even as fiscal policymakers address the urgent need of fiscal sustainability, they should take care not to unnecessarily impede the current economic recovery.”
Translation: Cut spending and raise taxes too quickly, and the economy is likely to fall off a cliff. Instead, Bernanke called for Congress to adopt “a plan that clearly and credibly puts fiscal policy on a path to sustainability,” which could spark the economy and keep long-term interest rates low.
Budget analysts see no simple answers for cutting the budget. Cutting waste, fraud and abuse won’t do it. Ending earmarks barely will make a dent. And food stamps? Sorry, folks, that amounts to only about $70 billion a year. Nope, it’s time to realize that the cuts needed to balance the budget will hurt everyone.