Slash military spending? Shred the social safety net? Reduce taxes? Raise taxes? Appoint another blue ribbon commission?
A $418 billion federal budget deficit projected for 2015 isn't small potatoes. Politicians, pundits,
TV talking heads and ordinary citizens are talking about deficits and
their opinions that are often adamant and emotional. "O.K., You Fix the Budget," an interactive online puzzle created by the New York Times, is a terrific challenge for all of us to come up with new plans to repair the nation's finances. New York Times economic writer David Leonhardt describes how the exercise came about, and how it was designed with the aid of policy analysts and economists with conservative, centrist and liberal views.
Economist William Gale of
the Brookings Institution points out in Leonhardt's story that voters
have tended to reward politicians who say they worry about the budget
much more than politicians who are actually willing to cut specific
programs or raise taxes. In fact, Politico.com recently
reported that the House Appropriations Committee, which has control
over spending and used to be a plum assignment, scares a lot of
politicians these days: several would-be budget cutters have declines an
opportunity to serve.
Of course, not everyone thinks deficits are deadly. Several prominent economists,
all considered progressive, challenge the whole premise that our
current deficits are an evil that will burden future generations and
ferment national decline. Paul Krugman, a Pulitzer prize wining economist and Times columnist, wrote in February that
"fear-mongering on the deficit may end up doing as much harm as the
fear-mongering on weapons of mass destruction." He says running big
deficits during a recession is the right things to do, and the deficits
should actually be bigger because we ought to be doing more to create
jobs. But of course, no one thinks the present system is perfect.
Back to the challenge at hand. All
economists agree that short term and long term deficits are different.
So you are challenged to cut $1.345 trillion from the 2030 budget. By
that year, many retired baby boomers will be depending on Social
Security and Medicare, and health care costs are escalating every year. The Times offers
options for cutting spending in domestic programs, foreign aid, health
care, the military and social security, and 15 revenue options through
changes in taxation. Confused about all those decisions? You can access opinions of experts and scholars.
Princeton Economics Professor Uwe Reinhardt says that
Americans pay less in taxes than people in the rest of the
industrialized worlds, and that we tend to want services we don't want
to pay for. He suggests a deficit reduction framework with 38 per cent in spending cuts and 62 percent in tax increases. Your
own social and political views will influence how you break it down,
but you can't reasonably fix the budget with spending cuts or tax hikes
alone. Take the budget challenge here. You can even share your plan on line.