June 30, 2010

Column #1,505

America Speaks on Cutting Budget Deficit

By Mike McManus

                PHILADELPHIA – Last Saturday I was one of 3,500 citizens meeting in 50 cities across the country to consider how to cut the deficit in 2025 by $1.2 trillion.  

                America Speaks, the organizer, had a remarkably broad cross-section of people participating, close to the actual population by race, sex and income – even at each of our tables.

We were given a 50 page “Options Workbook,” which took the complex federal budget, and framed 42 choices average citizens could understand, and debate.  Our goal was to reduce America’s projected deficit in 2025 by $1.2 trillion - an immense sum, but only half of the expected deficit in 15 years.

Over six hours, we summarized our deepest values, and then discussed each option, to see if we could agree on priority strategies to cut spending first, and then how to increase tax revenues. Our table often didn’t agree, but the discussion was always civil and candid.

Glenda, with a lower income, said she hoped to “send fewer people and dollars abroad.”  Kathy wished America “would not be as insecure and divided.”  Brian, a businessman, wanted to “give a future generation a caring, sharing culture with assured security and employment opportunity.” Rose, an older woman, said her main concern was that Social Security not be touched. Rev. Lanier, a black pastor, hoped to look “back at the foundation of our country and re-understand what it means to secure liberty for ourselves and our children.”

 A facilitator kept the discussion moving and took notes with a computer. Carolyn Lukensmeyer, President of America Speaks, urged us to “speak up and speak clearly, recognizing that every idea has merit. There are no right or wrong answers.”

In discussing the economy, Rose was concerned that “We will not be so dependent on others.” Sharon wondered “Should people who are working be collecting Social Security?” That hit two of us personally. We were told America’s total debt had jumped from 40 to 60 percent of the economy in this recession and would hit 100 percent in ten years, redoubling a few years later if nothing is done. This is unsustainable, as Greece has discovered 

We were given key pads to register our opinions on a seven point scale between concern for this generation vs. future generations; two-fifths of 3,500 participants were equally concerned about both. First, we discussed Medicare and Medicaid which cover 100 million Americans, and a fifth of the U.S. budget.  Only 27% favored a 5% cut, a third supported cutting it by 10 to 15 percent and 36% wanted no change.

Half supported raising Social Security retirement age for those getting full benefits to 69, which only saved $37 billion in 2025.  A third backed lower starting benefits and a reduced adjustment for inflation. A quarter supported a 1% increase in payroll tax that could raise $100 billion, and 42% favored a 2 point jump! A big 85% backed raising the cap to 90 percent of earnings, plucking $67 billion more from those earning over $107,000. 

Two-thirds favored cuts of 5% to 15% of all other non-Defense spending, such as law enforcement, agriculture, education, housing, energy, research, welfare, food stamps, etc.

Half waned to cut Defense spending by 15% and a third favored cuts of 5% to 10%. A sizable number wrote in a request for more than a 15% cut.

Is that realistic? Yes.

Last month a “Sustainable Defense Task Force” proposed cutting $1.1 trillion of a projected $7 trillion cost over a decade. How? Reduce the number of nuclear weapons in half to 1,000, saving $113 billion. Reduce conventional forces by 200,000 saving $395 billion and pare the number of ships from 287 to 230, saving $177 billion.

Only a quarter favored an income tax hike of 10% to 20% to raise up to $381 billion in 2025. Half supported a 20% jump for the rich, yielding $174 billion, and two-thirds back an extra 5% for those earning over $1 million. That would pull in $34 billion with another $20 billion by raising capital gains - if these folk don’t move to the Bahamas.

 Nearly half supported limiting itemized deductions to 28% of income, though couples earning over $210,000 deduct 33% to 35%.  Half support reforming the entire tax code, to reduce rates and earmark 10% to 30% for deficit reduction.

To summarize, half of participants agreed on how to cut $1.2 trillion; another 18% agreed on paring $1 trillion.

“You have restored my confidence in the ability of citizens to challenge the politicians,” said Alice Rivlin, Co-Chair of a Bi-partisan Debt Reduction Task Force.