Iowa Gives a Lesson in Budget-Balancing

Published Nov 18, 2011. By Rox Lairdroxlaird.


As Americans prepare to gather with friends and relatives for Thanksgiving, a 12-member committee of U.S. senators and representatives is scheduled to deliver legislation on Wednesday that will cut somewhere between $1.2 trillion and $1.5 trillion from the federal deficit over the next decade.

As of late last week, however, it appeared the six House members and six senators were far from an agreement.

They should have been at Drake University in Des Moines last Monday night, where about 180 Iowans gathered for two hours to wrestle with the deficit in an exercise created by the Arlington, Va.-based Concord Coalition. Working in groups of seven at 25 tables, these Iowans worked through a list of more than two dozen spending and taxation options and voted on things like reducing Amtrak subsidies (deficit impact: $45 billion over 10 years) or broadening the income-tax base (raises $1.3 trillion over a decade).

These Iowans did not become deadlocked by party label or ideology. They took the task seriously and fulfilled their assignment. At the end of the exercise, each table toted up the results. With one exception, the net deficit reduction at the two-dozen tables far exceeded the minimum goal of $1.2 trillion set for the so-called super committee. The average deficit reduction exceeded $3.4 trillion.

This was not a scientific sample of Iowans, but a self-selected group of people who were willing to come out on a weeknight to talk about budget deficits. It was skewed toward well-educated retirees along with a good turnout of Drake students. They were well versed on the issues and came prepared to make some hard decisions about the nation’s future.

Nothing was off limits. Most groups were willing to consider revenue increases as well as spending reductions.

The vast majority agreed to reduce future spending on Medicare and Social Security by raising the age of eligibility over time and by raising the cap on individual payroll taxes paid to Social Security. Nearly half of the groups voted for increasing revenue through tax reform, and four in 10 groups agreed with a surtax on millionaires.

As for budget cuts, more than eight in 10 groups would eliminate farm commodity subsidies (saving $55 billion over 10 years), and seven in 10 would cancel the Missile Defense System (saving $13 billion). Yet, only three groups would repeal Obama’s health care reform law. And, a solid majority supported spending more on infrastructure.

The Concord Coalition has been running this budget deficit exercise all over the country for nearly 20 years with the goal of educating Americans on the importance of bringing down the federal deficit, not just in the next decade but longer range when the full impact of baby boom generation retirements hits Social Security and Medicare.

That will make today’s deficits look like a pittance. At the current rate of spending and taxation, the total debt held by the public will grow to three times the gross domestic product by 2040. As Concord Coalition Executive Director Robert Bixby said, those projected deficits are unsustainable. No other country would willingly lend the United States that sort of money.

Concord’s exercise gives participants real options based on Congressional Budget Office numbers to see what it actually takes to balance the budget. They find out quickly that the real savings will not be found in such things as international affairs, which at $46 billion a year amounts to a tiny fraction of annual spending. They learn that future entitlement spending can be brought down by raising the retirement age over time and raising the cap on Social Security contributions. And they learn that keeping the Bush-era tax cuts in place beyond 2012 would add nearly $4 trillion to the national debt over the next decade.

At the end of the exercise, one man, addressing the group, had harsh words for Congress’ failure to deal seriously with this issue.

“I was disappointed. There is nothing in here about cutting the Congress,” he said to laughter and applause. “Something has to change on how they do business for us. And the only way to do that is to change who goes there, and they have to have a commitment to change the Congress. Yeah, we can cut here, cut there, cut there, but they don’t work for us any more. They work for them.”

A majority of members of Congress face re-election next year. Iowans who share this man’s sentiment should tell the candidates how they would reduce federal spending or increase revenues. As this group of Iowans demonstrated last week, it is possible for Americans to reach a consensus on these hard questions. Congress should do the same.