Is there any chance we can come to grips with our short-term and long-term fiscal problems -- the huge current federal budget deficit and the huge looming increases in entitlement spending?
Maybe so. Or at least the chances seem a little better after the release of two sets of proposals in the weeks after the election.
One came from Clinton White House chief of staff Erskine Bowles and former Sen. Alan Simpson, chairmen of the bipartisan commission Barack Obama set up in February to address the subject. Rather than wait for a consensus from their 18-member commission, the two presented their own array of proposals to stabilize the national debt at 60 percent of gross domestic product and cut the budget deficit to 2 percent of GDP by 2015.
Another came from an initiative from Clinton budget director Alice Rivlin and former longtime Senate Budget Committee Chairman Pete Domenici that would similarly stabilize the national debt and would cut the budget deficit to 1 percent.
These recommendations are not likely to be adopted in full, but they do show that it is within the realm of possibility to hold the national debt below the 90 percent level to which it is headed -- and that has been identified by economists Carmen Reinhart and Kenneth Rogoff as the point at which governments tend to face a financial crash.
Unfortunately, the prospects for entitlement reform still seem poor.
Incoming House Minority Leader Nancy Pelosi said the Bowles-Simpson plan was "simply unacceptable," and other Democrats indicate no more interest in making even minor modifications in Social Security -- a slow increase in the retirement age, reduced benefits for high earners as the years go on -- than they did when George W. Bush pushed for Social Security reform in 2005.
Those changes would actually make the program more progressive, concentrating benefits among those most in need. But Democrats evidently prefer holding onto the Social Security card in the hope it will be trump in future elections.
As for Medicare and Medicaid, they will be in play as Republicans on Capitol Hill and in state capitals try to throw sand in the gears of Obamacare. Bipartisan agreement on these issues seems far, far away.
Taxes may be another matter. Bowles-Simpson threw out a bold proposal to eliminate tax preferences -- including the hitherto sacred deductions for home mortgage interest and state and local taxes -- and to cut rates significantly below where they have been since World War II.
The top rate would be only 23 percent. The corporate income tax would be cut from the current almost-highest-in-the-world 35 percent to 26 percent.
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