NOW THAT Congress has approved tax increases, the focus in Washington needs to be on runaway spending, deficits and the massive accumulation of national debt.
But some in Congress just can’t stop eyeing the paychecks and wealth of Americans. Only days after passing a tax compromise that raised rates on the wealthiest wage earners, taking in an estimated $600 billion over 10 years, congressional leaders are eyeing another $1 trillion in new revenue. Many in Congress — and evidently, the man in the White House — don’t get it. It’s the spending side of the ledger, not the revenue entries, that is driving the nation toward a real fiscal cliff.
The nation is more than $16 trillion in debt and is fast approaching another borrowing limit that will require congressional approval to increase. The debt situation is so bad, even plans by Republicans labeled as “extreme” by Democrats don’t balance the budget for decades.
The truth is, it will probably take many years to balance the budget even with what most in Congress consider aggressive spending cuts.
But the federal budget will never be balanced — and $1 trillion annual deficits will continue — unless Congress and the White House put the brakes on entitlement spending.
But the major driver of the annual deficits is spending, especially on entitlements. Writing for The Wall Street Journal last month, U.S. Sen. Rob Portman, R-Ohio, said if entitlements continue to rise, federal spending will hit 40 percent of gross domestic product. It stands at 24 percent now.
Most disturbingly, Portman noted that there won’t be enough tax revenue to cover new obligations.
To avoid this dystopian debt future, Congress and the White House must agree on a “grand bargain” that reforms the big entitlements — Medicare and Social Security — perhaps by raising the eligibility age and extracting a bit more from wealthier seniors. Leaders must also slow the spending on smaller but ballooning entitlement programs such as Medicaid, food stamps and more.
Cuts to the defense budget should also be weighed, but must not run as high as 2011’s hastily agreed-upon number of $500 billion over 10 years.
And last but not least, the U.S. Senate must do its job and pass a formal budget. It has not done so for more than three years, allowing automatic spending to increase at a much faster rate.
Congress and the White House must pull up their sleeves and hash all this out as they work on deals to raise the debt limit and continue government operations in the next few months.
The job now is to cause a little pain to avoid massive pain — and possible default — in the nation’s future