-- Discretionary spending reductions: House Republicans have already pledged to roll back overall discretionary spending to fiscal 2009 levels. That's a start. But reducing spending is going to require cutting the size of government and that means ending programs and agencies and entire departments. Privatize home mortgage giants Fannie and Freddie and other money-losing agencies like Amtrak; end farm subsidies, Legal Services, public radio and television financial support, the Ex-Im Bank and dozens of other needless programs, and consolidate departments like Labor, Commerce, and Interior and USDA.
-- Raising the economic growth rate to 4 percent or more is the critical second leg of putting the deficit on a downward trajectory. That means closing tax loopholes and cutting income tax rates, as Bowles and Simpson's plan will set into motion.
Ending the home mortgage deduction or enacting a national sales tax isn't going to happen. But we can eliminate hundreds of billions of dollars in corporate welfare and lower the top tax rate to 28 percent. President Reagan did it in 1986, with bipartisan support, and it put the economy on a growth path for more than a quarter of a century and boosted tax revenues to boot.
-- Entitlements: Slowly raising early and standard retirement ages, and implementing a lower cost-of-living measurement, would help strengthen Social Security, but slashing benefits is a nonstarter.
Raising future benefits for younger workers by letting them put a small portion of their payroll taxes into a diversified bond and stock fund, just as federal employees do now under their pension system, is the best way to save Social Security and boost long-term benefits. Medicare and Medicaid similarly need to be reformed with market mechanisms to slow or even reduce the growth in health-care costs.
That's the voluntary plan the late Sen. Daniel Patrick Moynihan, Democrat of New York, crafted as head of a commission to save the system from bankruptcy. These are not all reforms that can be made in a year or in several years, but over time. The first goal is to immediately put spending on a downward curve and maintain a strong economic growth rate that will boost tax revenues. But do we have the political will to support such long-term, sweeping reforms, and will they come in time?