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Hard choices needed to solve the federal budget

Posted: December 11, 2011 - 1:17am

As the end of 2011 approaches, Americans across the country are watching our elected leaders in the nation’s capital and wondering what the future holds. As any Alaskan who pays any attention at all surely knows, things are not exactly functioning as they should in Washington. We face historically high annual deficits, and a cumulative level of national debt unprecedented in our nation’s history. The unsustainable debt places our country on a path to perdition, down which the rest of the world thereby becomes increasingly likely to follow.

Earlier this year, this dire situation led to a crisis in governance, with Congress and the President only just narrowly agreeing at the last moment to terms upon which the so-called debt ceiling might be raised. This is the level of public borrowing through the sale of government bonds that Congress sets as the absolute maximum (at least until it raises it again). Because of the showdown, and the fact that an agreement (ephemeral at that) wasn’t reached until the last minute, the credit rating of the United States of America was downgraded, an historical embarrassment that didn’t need to happen and which needs to be undone.

Serving as co-chairman of the Capital City Republicans, and supporting my party’s main approach to fiscal and monetary policy, I still can’t lay all blame for the undesirable status quo on the other side of the aisle. The problem has simply become too big for it to be allowed to fester and remain unsolved on partisan lines.

The temporary solution to the debt-ceiling crisis was the formation of the Joint Select Committee on Deficit Reduction, which was quickly nicknamed the Supercommittee. In the end this panel ended up being anything but super. Its deliberations, such as they were, appear to have consisted of Republicans refusing even to consider any increases in any marginal tax rates while Democrats shut their eyes, ears, and minds to any reductions in the lion’s share of federal spending: entitlement programs including Social Security and Medicare. It’s little surprise this group failed to arrive at even a short-term compromise by the appointed deadline of the 23rd of November.

Tough times call for tough choices. Spending on things other than national defense and entitlements is generally referred to as discretionary. There are clearly a great number of places where money is wasted in our federal government’s day-to-day operations, including defense. These range from shoddy if not corrupt procurement practices to unnecessary and redundant personnel whose jobs could be eliminated with no diminution in the quality of life for American taxpayers. Obviously such cuts will have most draconian effect on those individuals whose positions are cut, but we can’t base our collective federal spending decisions on individual personal employment situations.

There has been talk of eliminating whole federal departments as a silver bullet to slay the deficit and debt monster. This is an oversimplified approach to achieving the meritorious goal of finding savings in discretionary spending. The far better although more difficult course of action is for the president to direct his cabinet members to look at their departments and to come back with honest assessments of what valuable services they provide and what can go away. Things that can be left to the states through block grants that leverage federal matching money ought to be prioritized because services are almost always delivered better at the state and local level. But even were this process of self-sacrifice to go forward, it wouldn’t close the gap, because so much federal spending is dictated in automatic terms to entitlement beneficiaries.

There is no way the federal budget crisis is going to be solved until the retirement age is raised and some level of means-testing is applied to entitlement benefits. That means people will have to work longer before retiring and becoming eligible for benefits, and it means that well-off retirees will forego some or all benefits and allow those who earn less to receive them instead. If Ds can accept this bitter pill as part of a long-term compromise, then Rs will have to admit that meaningful tax reform must be pursued.

Many Republicans have already conceded that numerous loopholes and silly deductions could go away, but that won’t be enough to solve the problem on the revenue side.

It is not as if God Almighty has commanded that the top marginal tax on income never exceed 35 percent. The top rate in the United Kingdom is 50 percent, and it was once 90 percent after the Second World War (under a Labour government of course). An open discussion about how some significantly wealthier Americans might pay more could take place, but threatening millionaires’ taxes won’t get us there.

Between the Tea Party and the Occupy [Name of Place] movements, there is abundant passion and energy to notify Washington that things need to be fixed. But we can’t just hold our collective partisan breath and turn blue or red in the face, and expect that to substitute for dialogue and devising real solutions. America’s too wonderful a place to take the path of least resistance.

• Brown is an attorney who lives in Juneau.

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