February 23, 2011
Why Hold American
by Mike McManus
There is modest movement on the budget deficit from House
Republicans who passed a bill cutting $61 billion from the current budget –
an unprecedented step to avoid having to raise the debt ceiling. PBS and
Planned Parenthood, America’s top abortion provider, ended up on the floor
along with a $450 million a year contract to build an alternate engine for
the F-35, built in Speaker Boehner’s district. Those steps make sense.
Some cuts seem foolish, such as reducing IRS enforcement by $285
million when it already fails to collect about $300 billion a year. The
Senate will restore some cuts.
Obama claims to reduce the deficit by $1.1 trillion over the
next decade. He is not credible. First, he is adding $7.2 trillion in new
debt to a government that only owed $500 billion when President Ford took
Second, he is predicting more growth than private economists and
the Congressional Budget Office think is reasonable. The Federal Reserve
said joblessness will remain at 9 percent this year. CBO’s numbers erase
$1.7 trillion of revenue Obama predicts!
Third, how does he trim $1.1 trillion from the deficit? Severe
cuts like wiping out PBS? Nope. He’s included $1.6 trillion of new tax
hikes, but they are offset by nearly $1 trillion in new spending, er,
However, neither the President nor deficit-cutting Republicans
have proposed any significant changes to the big items driving up the
deficit: Medicare, Medicaid, Defense, Social Security, or so-called “tax
expenditures,” such as deductions for state taxes and mortgages.
The reason is clear. These items hit too many people. Any cuts
will be intensely resisted. Neither Obama nor the Republicans want to be the
first to suggest specifics, opening themselves to charges of throwing granny
into the snow.
The President appointed a Fiscal Responsibility Commission which
issued a report in November that called for $4 trillion of truly major
changes. Then Obama ignored its proposals.
What’s needed is what I call a series of American Town Meetings
in which the big choices are made the subject of a national debate, in which
citizens are given a voice, after they learn about the pains and benefits of
various options. My dream is that NBC and CNN, for example, would cooperate
with TIME and AP to create the American Town Meetings to raise the same
choices for debate in the same week. Each media partner would do its own
research and provide the pros and cons of the major alternatives, and give
people a way to ballot informally on such questions as these:
Should mortgage deductions be eliminated for
second homes and mortgages over $500,000? Should federal workers and
military contribute half the cost of retirement, not 1/14th
saving $73 billion over a decade?
Should all fee-for-service medicine be
replaced by Health Maintenance Organizations who provide total care for a
fixed monthly fee giving doctors an incentive to hold down costs? I’ve
belonged to an HMO for 25 years and am impressed with its quality. However,
it would not easy to organize HMOs for every American.
Should the age at which Medicare is given be
raised from 65 to 67, since people are healthier and living longer, pushing
up costs? In 1980, a baby born that year was expected to live 73.7 years,
but one born in 2007 is expected to live 77.9 years – four more years!
Yet the age for Medicare benefits has not changed at all, though
Social Security rose to 66.
This is a debate that needs to be held
between teenagers who will be paying in for 50 years, their parents who may
have 25 years before getting benefits, and grandparents. A second related
issue is over how much time should any increase in benefits be phased in:
immediately; over 5 years; 10 years; 20 years?
Also, should Social Security and Medicare
benefits for upper income people be trimmed? If so, at what income should
the payments be tapered off? Over how much time?
These are not technical questions that should
be left up to the experts, but value judgment questions on which reasonable
people will disagree, and need to be heard.
Another factor must be considered. If there
are not major cuts, the interest on the national debt, which is now $14,3
trillion – will be $1 trillion a year by 2020. That assumes the Chinese are
still willing to buy our debt at very low interest rates. A genuine
American Town Meetings would give the news
media a critical role of helping citizens understand the tradeoffs, and be
offered an opportunity to register their opinions on options.
That public service would make the political decisions easier, and supported
by the public who better understood the tradeoffs.