Progressives on the Deficit
An interesting exchange was recently published on progressive ways to think about deficit reduction, especially when it comes to the “big three entitlement programs”. Isabel Sawhill and Greg Anrig debated on how to go about medium- and long-term debt reduction in a manner that would be amenable to many progressives.
Anrig emphasized deficit reduction not taking place until after the economic recovery. Beyond that, he went through a plan that would hit a large swath of government programs and revenue sources, but would leave much of the big three untouched. He proposed a public option for the health insurance exchange as the "next round" of health care reforms (which he claims are crucial to the nation's fiscal future), and suggested looking deeply at the defense budget. On the tax side, he suggested a broad overhaul of the tax system, along the lines of the 1986 Tax Reform Act. He -- like many others -- also wants to go after tax expenditures, specifically mentioning the preferential rates for capital gains.
Sawhill argued that savings must be found within the big three; otherwise, the government would risk losing the people’s trust as deficits and debt exploded. On health care, she suggested setting a per-capita spending limit on Medicare while reforming provider payments to reward quality and not quantity. With regard to Social Security, she proposed slowing the growth of benefits for the more affluent -- presumably along the lines of progressive price indexing -- and raising the retirement age. She agreed with Anrig on the need for tax reform, citing tax expenditures like the mortgage interest deduction and the exclusion of fringe benefits from taxable income as items that should be addressed.
CRFB is always glad to hear about people presenting specific ways to bring down future deficits and debt. Check out the full debate here, and as always feel free to submit your own ideas for reducing the debt using either our Contact page or by submitting your choices on our Stabilize the Debt budget simulator.