Each deficit-reduction proposal is full of serious ideas, and each is greeted by immediate and deadly sniper fire from both sides of the aisle. Postponing action is irresistible because the political blowback from doing anything meaningful is scorching. Every interest group is passionately committed to defending its own sacred cow, trampling the concept of sharing the pain for the common good. Washington, it appears, still isn't ready to grow up.
Those ringing the deficit alarm tend to be old and indignant. Peter G. Peterson, the 84-year-old retired banker, invested $1 billion in a foundation focused on fixing budget deficits, foreign debt, and entitlement spending. He ruminates about the morality of a society that leaves a legacy of debt. "I have nine grandchildren," Peterson says. "I think a lot about them." Alan K. Simpson is 79. The former Republican senator from Wyoming, who is co-chairman of President Obama's bipartisan National Commission on Fiscal Responsibility and Reform, says that he was too old to play budgetary politics anymore. "We're not going to sign our names at this stage of life to a bunch of pap," Simpson says he told his co-chairman, Democrat Erskine Bowles, 65, the North Carolina businessman who served as White House Chief of Staff for Bill Clinton. Says Simpson: "We call it the cruelty of making promises you can't keep."
Simpson and Bowles issued the first deficit-reduction proposal on Nov. 10, one week before former White House budget director Alice M. Rivlin, a 79-year-old Democrat, and Pete V. Domenici, 78, the former Republican senator from New Mexico, unveiled the recommendations of the Bipartisan Policy Center commission that they co-chair. Letting deficits continue to run out of control, they warn, would "make us increasingly vulnerable to the dictates of our creditors, including nations whose interests may differ from ours."
There are a lot of ways for government to be cut. True, but how deeply? "If you want to do it all on the spending side under current law you'd have to constrain spending so it doesn't grow at all for the entire decade," says Gene Steuerle, a senior fellow at the Urban Institute in Washington.
Yet, politicians are unrealistic in attempting to shield completely the entitlement programs such as Medicare, Medicaid, and Social Security that represent about 40 percent of federal spending. The task quickly becomes impossible as the Baby Boomer Generation retires.
Balancing the budget isn't just an accounting exercise. It's about setting national priorities, weighing competing concepts of fairness, and creating incentives to promote growth. Cutting the budget in a way that simply off-loads costs onto states, localities, businesses, or families doesn't do Americans as a group any good. It's taking money out of one pocket and putting it in another. The benefits come when spending and taxation policies induce greater efficiency, and when they stimulate investment for future prosperity as opposed to consumption.
The road block seems to be Washington won't grow up until America's Boomers do.
Source: Bloomberg BusinessWeek, November 22, 2010