Sunday, August 07, 2011

A Proposed Approach to the Long-Run Budget

While any immediate attempt to cut deficits would be disasterous, there is no question that we have a serious long-term problem as more and more people start using Social Security and Medicare that has to be addressed. Nor is there any doubt to my mind that entitlements will have to be "reformed," i.e., cut. Nor do I doubt that the cuts necessary to bring our long-term budget into balance will be unacceptable, and that taxes will have to be increased. So here is my proposal.

(1) Explain why immediate plans to balance the budget would be disasterous. (Hint: Explain that putting people back to work will cut the deficit in half, and discuss the pain of very specific cuts in time of recession).

(2) Assure people that onee the economy reaches a certain level of recovery (I will leave to experts to determine what that level is), serious steps to address the deficit will be needed.

(3) Propose yet another bipartisan commission (groan!). Set the rules that until the economy reaches the appropriate degree of recovery, no spending cuts or tax increases will take effect, but that once it does, the commission must balance the budget within 10 years. Use CBO figures. Sit the proposal for fast track -- no amendments and no filibusters.

(4) Here is the twist. Don't have it come up with a single plan. Have it offer four plans. One will balance but budget by spending cuts only. One will have three dollars of spending cuts for every dollar of tax increases. One will adopt a 2:1 ratio. One will go 50-50. (And for Republicans on the commission, you may propose revenue neutral tax reforms that you think will benefit the economy, but no tax cuts until the budget actually balances). Of course, this will mean not requiring a super-majority to pass the proposal. Any proposal should require approval of only half the members.

(5) Make the next election a referendum on which plan to adopt. Republicans, of course, will choose the cuts only plan. Democrats can choose whichever plan seems most palatable. Whichever party wins can pass its plan in the next Congress.

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