The Congressional Budget Office recently forecast that the federal budget deficit would once again top $1 trillion. While that is an improvement over recent deficits that reached $1.4 trillion — and the smallest deficit since 2009 — the widening pool of red ink threatens to engulf the United States in fiscal ruin.
The national debt now stands at $15.2 trillion. Republican leaders continue to assert that any increase in tax revenue must be offset by decreases in spending, resulting in no net gain in revenue. The Obama administration seems far too focused on enormous tax hikes aimed at the wealthy, and many Democrats still oppose substantive entitlement reform.
Absurdly, Congress’ inability to reach a compromise with the administration last year took our nation to the brink of default and an actual downgrading of U.S. debt.
No meaningful compromise seems possible, especially as we are just nine months away from a presidential election.
But there are signs of hope. U.S. Rep. Paul Ryan, R-Wisconsin, chairman of the House Budget Committee, said the “CBO’s latest alarm bell could not be more ominous,” seemingly urging Republicans and Democrats to find a middle ground. Others in both parties have been voices of reason, including Colorado’s two senators, Mark Udall and Michael Bennet.
The CBO warned that decisions made this year on taxes and spending will decide whether the nation continues its fiscal insanity (my words, not theirs).
Certain members of both parties realize the gravity of the situation, as European leaders grapple with possible defaults in Greece, Italy and elsewhere. Greece could be but a whisper of the calamity that would befall the world if the United States goes down the same path.
Finding a middle ground between Congressional Republicans opposed to any tax increases and Democrats in the administration and Congress focused on tax hikes for the rich and opposed to entitlement reform probably won’t happen. Perhaps 2012 won’t be a year in which both sides reach a grand bargain that will eliminate the deficit some years down the road.
But nothing is impossible. Both sides must realize that failure to act, even in an election year, makes the task that much more difficult in 2013, 2014 and beyond.
Let’s bring back some of those proposals floated by the erstwhile deficit commission. Let’s revisit some of Ryan’s ideas, as well as those agreed to by House Speaker John Boehner and President Obama. Bring back some of the suggestions floated in Vice President Joe Biden’s efforts.
Everyone knows how to address this problem: Cut spending and raise revenue, with an emphasis on the former but a willingness to bring in the latter. (Allowing the Bush-era tax cuts to expire would be a good idea.)
Most importantly, it’s time to marginalize those in both parties who cling to rigid positions that do nothing to address the problem.
As the CBO notes, addressing the deficit likely will mean a spike in unemployment. But failure to do so will present consequences that are far more grave.
Can this be done in an election year? I doubt it. But a man can dream.
Wood is the publisher of the Boulder County Business Report, a sister publication. He can be reached at 303-440-4950 or via email at email@example.com.