July 30, 2010
Maya MacGuineas: Today’s Ross Perot
“The problem with fiscal responsibility
is that it is much less fun than fiscal irresponsibility,” said Maya
MacGuineas, President of the Committee for a Responsible Federal Budget. She
was speaking to the National Commission on Fiscal Responsibility and Reform,
which held a meeting open to the public on Wednesday.
She testified, “If we don’t make
changes to our fiscal future, we – and future generations – will pay the
price through a weaker economy, a lower standard of living, less growth
potential, a less flexible budget and a loss of leadership in the world.”
President George W. Bush began his term
with the first budget surplus of a generation, thanks to a Republican
Congress and a moderate Democrat as President, Bill Clinton. They were
responding to pressure by Ross Perot’s call for a balanced budget that
resonated with the public.
Bush squandered the surplus with tax
cuts in 2001 and 2003 which he claimed would stimulate economic growth that
never really happened. At the end of his term, family income actually
declined. His unnecessary war in Iraq wasted a trillion dollars and more
lost American lives than in the 9/11 attacks.
Bush’s term ended with half trillion
dollar deficits and a Great Recession that has lost 8 million jobs. Obama
championed a $1 trillion recovery plan that saved banks, but created few
jobs. We are now in the second year of a $1.5 trillion dollar deficit.
Where is Ross Perot to call America to
account? Maya MacGuineas, comes closest to this generation’s Ross Perot.
She speaks refreshing but tough economic truth.
In a June CNN commentary, she
proposed paying for extending jobless benefits “by instituting a short-term
freeze on federal pay – something that would be reasonable given that as
wages have fallen in most of the economy, federal workers have continued to
see their salaries rise faster than inflation.”
Her testimony this week contained
similar nuggets of wisdom about “America’s dangerous debt spiral” that is
projected to grow from 60 percent of the Gross Domestic Product to an
unsustainable 90 percent in a decade. She called for many ways to “reassure
credit markets and keep interest rates low,” producing these savings in
weapons and troop levels and reform procurement, saving $70 billion.
Social Security retirement age to 68 and slow the growth of SS benefits for
middle and upper earners, saving $60 billion.
retirement age for Medicare to 67, increase Medicare premiums, reform
malpractice policies and reduce Medicaid funding to states to save $120
Eliminate agricultural subsidies, freeze government salaries for two years,
and cut other mandatory spending, saving $60 billion.
Gradually tax health care benefits as income, phase down home mortgage
deduction from $1 million to $500,000, eliminate state and local tax
deductions, implement a carbon tax, and extend the 2001/2003 tax cuts for
two years at most until a debt reduction package is in place – painful
changes to save $300 billion in 2018.
Ms. MacGuineas says these
changes would “balance the budget, excluding interest payments on the debt,
by 2015,” and stabilize the debt at 60 percent of GDP.
Half of her budget balancing
comes from cutting spending, and up to 75 percent over the long term, noting
that “the most successful turnarounds in other countries have emphasized
spending cuts over tax increases.” For example, pushing up the age for
Medicare and Social Security “reflects growing life expectancies and the
fiscal reality that we cannot afford to provide such generous benefits for
those who do not need them,” she stated.
However, “taxes will have to
go up.” If the Bush tax cuts remain in place for most people, the cost is
$2.3 trillion over a decade. “Pledges to not raise taxes or not to raise
taxes for families making less than $250,000 are unrealistic and should not
be made by anyone unwilling to show specifically how they would achieve the
goal of getting the budget under control without additional revenues,” she
How were her comments received
by the bi-partisan National Commission? Surprisingly, no one made a
substantive criticism. And Co-Chair Alan Simpson, a retired Republican
Senator, kissed her on the cheek and called her a “treasure.”
How would YOU balance the
budget? Maya MacGuineas has created an online simulation for you to
consider various ways to cut spending or raise taxes. I did so, reducing the
debt to 48 percent of GDP by 2018!
Go to this link, and become a