February 23, 2024

Economix: Getting from A to B on Deficit Reduction

Many have praised Representative Paul Ryan’s deficit reduction plan for being bold and dangerous. But in some areas — like, well, details — it might be a little meek.

Perhaps in acknowledgment of the political difficulties surrounding specific budget cuts, much of Mr. Ryan’s plan relies on budget caps rather than instructions for what to cut to actually achieve those budget caps.

I’m not talking about obscure, nitty-gritty regulations, but rather pretty basic decisions, like how to go about enacting “real reform” for Social Security, as Mr. Ryan declares Congress should do on p. 13. Does that mean raising the retirement age? Increasing payroll taxes? Cutting Social Security benefits? The report doesn’t say. When asked about the lack of details in his news conference on Tuesday, he said the goal was just to “set the table, require the president to send a plan to the Congress, require the Senate and the House to submit plans so we can actually get on to the idea for saving Social Security on a bipartisan basis.” So…it’s a plan for a plan.

Likewise, the report vows to eliminate universally vilified “tax loopholes” so that the statutory tax rate can be lowered — but then neglects to specify which of those many cherished, heavily lobbied-for loopholes should actually go. And the proposal also promises big cuts in mandatory spending, a ”category [that] includes food stamps, unemployment benefits, and farm subsidies” (p. 12), but doesn’t say what individual programs should be cut, or by how much.

The report may be titled “The Path to Prosperity.” But — like so many other deficit-reduction proposals that originate with politicians — it has trouble detailing the intermediary steps from Point A to Point B on this path. (Similarly, Mr. Ryan’s economic projections on p. 4 inexplicably “bring the unemployment rate down to 4 percent in 2015″ without explaining the mechanism through which that miracle occurs.) And getting from Point A to Point B is the tough stuff, or at least the politically unpopular stuff. Americans may say they want a smaller government and less federal debt, but they always bristle at the specific spending cuts, and/or tax increases, needed to reach that desired fiscal destination.

As John Irons at the liberal Economic Policy Institute once put it, “Their cure for this cancer seems to be just, ‘less cancer.’”

Article source: http://feeds.nytimes.com/click.phdo?i=b2f4a2eada04b5adb9fb1cbf84922a74

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