By Bret Baier
We're always hearing from politicians about the urgency of the
nation's fiscal situation. The debt is over $16 trillion. Deficits --
the annual shortfall -- are persistently north of $1 trillion.
Those figures are constantly in the background, reminding both
parties that whatever the solutions, they need to find and act on them
quickly. And the solutions will have to be big -- because the problem is
massive.
Experts agree that drastic changes are needed to return America to a
fiscally sustainable path. But it's a long road to get there -- in the
face of $1 trillion deficits, closing the gap will be done one million,
one billion, at a time.
Here are a few ideas:
- Shutting down the post office on Saturdays would help save about $3 billion.
- Changing Medicare eligibility from 65 to 67 would bring back $6 billion, according to one estimate.
- A plan proposed by Sen. Tom Coburn that cuts non-essential defense programs would save $7 billion.
- Capping tax deductions at $25,000 would retain $68 billion.
- And proposed additional taxes on the top 2 percent of earners would bring in $82 billion.
Hypothetically, if all these proposed solutions were to be enacted,
the U.S. would spend $166 billion a year less than it does today.
That's a lot. But not when it's compared with how much is spent in a
year -- $3.5 trillion in 2012. And it's even less when compared with the
total national debt.
Economist John Taylor, who wrote the book "First Principles: Five
Keys to Restoring America's Prosperity," said lawmakers could solve the
problem by focusing on a few key areas.
"The problem was created in Washington. It can be fixed in
Washington," he said. "I have to think in terms of economics what the
best thing to do (is) and for me that's to gradually reduce spending as a
share of GDP, that means reduce the growth rate."
He continued: "That's what a family would be doing if they were
borrowing too much, they'd just go back to where they were before the
problems began. ... Number two, we have an opportunity now for, to
reform our tax code, that will also stimulate economic growth and work
on this high unemployment rate. And longer term, there are some reforms
in Social Security, Medicare in particular, that can reduce really what
is expected to be an explosion of spending into something that's more
sensible, more sustainable."
Former Democratic Sen. Evan Bayh narrowed the solutions down to two categories.
"Number one, getting our future rates of entitlement spending under
control, particularly in the health care arena. Those are the big
numbers," he said. "Secondly, even modest increases in the rate of
growth in the economy, even .5 percent more per year."
He said that over a decade or more, that growth "generates huge money
which makes it so much easier to solve this problem in a way that's
politically palatable."
Alice Rivlin, Bill Clinton's budget director and one of the only
people to serve on both of the most prominent deficit-reduction
commissions in Washington, agreed that the growth in health care
entitlements must be slowed.
She added: "You have to put Social Security back on a firm foundation
and you have to raise more revenues through a reformed tax code.
Everybody who's looked at it comes out that way. ... But (lawmakers) are
caught in this political game of blaming each other."
Economists urged lawmakers not to squander the opportunity to correct course.
"I'm actually convinced that now is a better time than ever," Arthur
Brooks, president of the American Enterprise Institute, said. "We have a
golden opportunity to do some of the things that we should have done a
really long time ago. We have an opportunity to actually shape the
entitlement crisis. ... The key thing that we have to remember is not to
let this slip away."
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