This editorial will appear in tomorrow’s print edition.
The United States is following Greece down the path of fiscal ruin.
Blame Democrats who won’t touch social spending. Blame Republicans who categorically oppose tax increases. The hard reality is that neither low tax rates nor generous entitlements will count for much if crushing debt bankrupts America and leaves it at the mercy of the likes of China.
Americans must get past the hardened partisanship that has paralyzed its ability to get its financial house in order.
President Obama made a good down payment on fiscal responsibility last week when he proposed a two-year wage freeze for civilian federal workers. That’s not something liberal Democrats are supposed to do, but he did it.
America might get all the way to sustainable spending under the 10-year austerity plan outlined Wednesday by Obama’s deficit reduction panel. Chaired by former Sen. Alan Simpson, a Wyoming Republican, and Erskine Bowles, former Clinton chief of staff, the panel has impeccable bipartisan credentials.
It proposes to spread the pain far and wide. For example, the plan would:
• End popular tax breaks – including deductions for mortgage interest and employer health plans – to pay for a simpler tax code with lower across-the-board rates.
• Raise payroll taxes for high-earners.
• Nudge back the retirement ages for Social Security – to 68 by 2050 – with an exemption for physical laborers.
• Cap spending on nearly all federal programs, freeze pay for civilian federal employees and whittle down the size of the government work force by 10 percent.
Combined, the economies and tax increases would carve roughly $4 trillion out of the country’s deficits by 2010. There are other ways to do it, parceling out the pain differently, but the pain must be parceled.
You cannot get to $4 trillion by just cutting spending or by just raising taxes, not in the real world. Congress must do both. It must start doing it soon; last year alone, it overspent its revenues by $1.3 trillion.
Keep this up, and America won’t be able to make its interest payments eventually; the world’s most prosperous country will wind up as a beggar nation with a busted economy, broken safety net and weak military.
The deficit commission’s plan has been attacked by anti-tax absolutists and the don’t-touch-entitlements folks. Seven of the commission’s 18 members refused Friday to support the plan.
We’d like to see the opponents offer their own $4 trillion plans. In the meantime, let’s hold the old partisan talking points until the country can afford them again.