Cutting deficits can be a win-win, even in Washington(Read article summary)
Compromise on the budget deficit shouldn't be a dirty word. Here are four examples where cutting the deficit would forward Democratic and Republican goals.
[Editor's note: This column, which originally ran in the Monitor's print edition, was changed slightly to clarify certain points.]
"Compromise" on the issue of deficit reduction has become a dirty word in Washington.
Politicians assume that fiscal responsibility is a zero-sum game – that if they agree to any policies that are consistent with the priorities of the other side, they give up their own priorities. If the other side wins, it must mean they have lost. But that's all wrong.
The best ideas for the most effective ways to reduce the federal budget deficit happen to be win-win ideas, "bipartisan" in that the goals and priorities of both Democrats and Republicans are promoted rather than sacrificed. It's time we emphasized what both sides (and the rest of us) have to gain from such compromise.
Here are four examples:
1. Reducing the deficit means steering resources toward their most productive uses.The more we reduce the deficit, the less we will have to pay on future interest on the debt. That means more will be available for consumption needs and investment wants and the stronger will be the growth in our overall economy – goals Democrats and Republicans share.
2. Deficit-cutting entails greater responsibility for paying our own bills. Increased financial responsibility is not a red-state/blue-state issue. It's something that all Americans expect from their government and aspire to themselves.
None of this means that reducing the deficit is cost-free. In all likelihood, most of us will have to bear an increased burden just as we step up to pay our mortgages and our other bills even when times get tight.
Doing better at paying for our own current consumption – whether public or private – means we won't have to stick our kids with the bills, and a brighter outlook for future generations. That's a priority for all parents, no matter what our political persuasion.
3. Reform Social Security and Medicare/Medicaid. Nobody – Democrat or Republican – believes that the current system is sustainable. Continue with the status quo and these entitlements run out of money and pile up more US debt – a lose-lose for both parties. Here's a win-win: Trim the net benefits going to higher-income households (through adjustments to their payroll taxes and/or benefits) while making the safety net stronger for lower-income Americans who need it most (a priority of Democrats), without relying on other tax increases to pay for it (a GOP concern).
4. Reform the federal tax system by trimming "tax breaks." That's right. Eliminate many of all those special exemptions, deductions, and credits that subsidize certain sources and uses of income over others, and you raise government revenue. For Republicans, that avoids a "soak the rich only" increase in the top tax rates, and for Democrats means far fewer cuts to direct spending programs, most of which benefit lower-income households far more than tax breaks do.
The sooner our political leaders realize that deficit reduction and bipartisan ideas for achieving it are win-win propositions, the sooner we move away from framing the debate as "sacrifice" and the sooner bipartisan "compromise" will be perceived as a good thing to pursue. After all, we don't owe our creditors as Democrats or Republicans. We owe them as Americans. And it's time that we – and our representatives in Washington – begin to act that way.
Surprising as it may sound, we can all be winners if we can come together to get our deficits under control.
– Diane Lim Rogers, chief economist at the Concord Coalition, blogs at EconomistMom.com.