April 7, 2012 – 12:36 p.m.
Political Economy: Numbers Game
By John Cranford, CQ Columnist
Anyone who thinks he can play this game of deficit cutting and win has another think coming. Oh sure, no matter your ideological persuasion, with work you can find enough savings to stop the growth of the federal debt and stabilize the budget so that federal borrowing doesn’t grow any faster than the economy as a whole.
But here’s betting that very few people of any stripe can accomplish that goal without making sacrifices they would find unacceptable. Simply put, it’s a game of very hard choices. And there really are no clear winners.
“Hard choices,” in fact, has long been the name of a particular exercise in meeting the increasingly difficult challenge of keeping federal spending and revenue in line. Pioneered a generation ago by the Committee for a Responsible Federal Budget — the original roost for deficit hawks in Washington — the hard choices exercise is so antediluvian that it once was passed around town on floppy disks. In that form, it was a parlor game that appealed mostly to the wonky denizens of Capitol Hill and K Street.
For the past two years, the hard choices exercise has a more accessible home on the Internet, and it was updated recently with current numbers.
It is focused on the specific charge that currently bedevils lawmakers and administration officials: What mix of spending cuts and tax increases will stabilize the federal debt as a reasonable share of gross domestic product?
The answer is that adherence to ideological purity is a surefire way to fail. Republicans and Democrats alike will find that using the rubric established by CRFB, they really cannot accomplish that goal without diverging in a considerable way from party orthodoxy.
If you’re a liberal Democrat and you want to bring the debt under control by raising taxes on the rich and cutting deeply into the military, all the while protecting the safety net and boosting spending on education and mass transit, you won’t make it.
Even if you forget proposals to expand the safety net, and ignore protests that government spending on science and infrastructure is too low, you won’t be able to save enough. In fact, you’ll be a couple trillion dollars short after 10 years.
No, to do this you’re going to have to kill a few sacred cows. Raising the retirement age for Social Security and the age of eligibility for Medicare might get you there, but only if you make a few other uncomfortable compromises on the side.
And if you are a conservative Republican, can you solve this debt dilemma solely by cutting spending? It should be no surprise that if you cut back on almost everything — short of getting the government completely out of much of what it does — you still can’t stabilize the debt.
That means that reducing aid to public schools, food stamps, welfare, foreign aid, farm subsidies, and the National Commissions on the Arts and Humanities wouldn’t be nearly enough. Adding in repeal of the health care overhaul (while keeping the already enacted Medicare cuts), coupled with further Medicare savings and conversion of Medicaid into a block grant, won’t get you there, either. In fact, those spendthrift Democrats with their tax increases would probably get closer — by a few trillion dollars.
In broad terms, none of this should be new to those who have lived through the recent budget wars. But what’s best about the CRFB debt simulator is how clearly it shows the enormous difficulty — political and economic — that confronts anyone who wants to untie this Gordian knot.
Political Economy: Numbers Game
You’ll need tax increases — lots of them. You’ll need to reconfigure the big entitlements: Medicare, Medicaid and, yes, probably even Social Security. You’ll need to sacrifice some favored spending programs even while giving others a boost. Whoever solves this will need to be smart, creative, diplomatic and dispassionate.
Not everyone agrees with the fundamental need for such bloodletting, of course. And this exercise is not for them. And the CRFB’s simulator is only one model. It won’t let you eliminate three government departments a la
Importantly, the CRFB debt simulator won’t let you get away with gimmickry. It measures your ideas against both current law and current policy — meaning you can’t have your tax cuts and savings, too. Nor does it engage in fancy accounting — the dynamic scoring that some Republicans are fond of using to claim that economic growth from lower taxes will save federal finances from ruin comes to mind. No, it’s straightforward and understandable.
It’s just hard, very, very hard.