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September 3, 2015
Column #1,775 (First of two parts)
How To Reduce the Federal Deficit
by Mike McManus

In the 7th year of a supposed economic recovery, America's federal deficit is $474 billion. The only good news is that it is down from $1.3 trillion of Obama's first year.

Yet the total federal debt is a staggering $18.1 Trillion – or $55,600 per person. The current pattern of deficits will lead to a Greece-like disaster, unless there are major changes.

A harbinger of what's ahead may be seen in the bankruptcy of the Social Security Disability Insurance (SSDI) Trust Fund which will run dry next year. After six consecutive years of deficits, benefits to 54 million people will be cut by almost 20 percent. This would mean a $218 reduction in monthly benefits--from $1,146 to $928--for the average beneficiary, lowering the average benefit below the federal poverty level.

What can be done about America's deficit and debt?

First, let's look at what the various Presidential candidates are saying. Most are doing little more than calling for a "Balanced Budget Amendment." That takes no courage. Many of Members of Congress were elected on that platform, yet it never is voted upon.

By contrast, Gov. Chris Christi has made the boldest proposal, to gradually raise the retirement age for Social Security and the Medicare eligibility age to 69. He would also "means test" the premiums for Medicare, or raise its payroll deductions for wealthier Americans. He would also reform the Social Security Disability Insurance program so it does not go bankrupt.

"Here is the truth that no one is talking about. You're going to have to raise the retirement age for Social Security," Christi declared in 2011. "Oh, I just said it and I'm still standing here! We have to reform Medicare because it costs too much and it is going to bankrupt us. Once again, lightening did not come through the windows and strike me dead."

True, but only 3% of Republicans support his candidacy.

Sen. Lindsay Graham would make similar changes and is the only candidate who endorses the recommendations of the Simpson-Bowles presidential deficit commission that would cut spending and raise taxes to eliminate the deficit.
Graham argues, "We know what to do, but we're afraid to do it. And we're reluctant to tell the left and the right something they don't want to hear. And when you try to bring us together and do a deal in Washington, there's so many people telling you no. Somebody has got to break through and get to yes."

However, Graham scores ZERO in the polls. No wonder other candidates are ducking the issue.

For example, Trump says the debt is an important issue, but he has no specifics, except to say he would not favor cuts to Medicare and Social Security, the two biggest federal programs. Similarly, Hillary Clinton has yet to address the issue, though she wants prescription drugs to be "more affordable" – another new program.

By contrast, Ohio Gov. John Kasich was Chairman of the U.S. House Budget Committee that passed the Balanced Budget Act of 1997. Kasich was at President Clinton's side when the bill was signed into law. House Speaker Newt Gingrich said of Kasich, "More than any single man, he is responsible for balancing the budget." He also took Ohio's $8 billion deficit, and turned it into a $2 billion surplus. He says with his practical experience, he can balance the budget. Perhaps, but he offers no detailed proposals.

Jeb Bush's biggest answer is to get the economy to grow at 4% a year – double that of today. He doesn't say how. He's open to raising the retirement age to 68 to 70, and supports tapering Social Security benefits off for upper income people.

Ben Carson says getting the debt under control is a top priority. How? A Balanced Budget Amendment which is also supported by Ted Cruz, Rand Paul, Rick Perry, Huckabee, etc.

No viable Presidential candidate is facing America's impending fiscal disaster.

In Bermuda recently, I read that island is facing a similar crisis. The Royal Gazette published a letter to the editor proposing that the two political parties "come together to reach bipartisan solutions that all of us will accept…with very clear arithmetic." First, reduce the deficit to zero and then "begin reducing the debt."

What's needed are "solutions that both sides of the political divide can sell in good faith to their supporters."

Next week's column will outline how Democrats and Republicans might do the same here.

The Presidential candidates have no answers.
 

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