There is no doubt that America has an unsustainable deficit over the medium and long-term trajectory. In the past, Congress has simply tried to deal with these issues from a short-term perspective, with politics in mind instead of the health of our economy. This must change. Band-Aid solutions will not solve our deficit crisis.
Balancing the budget is no easy task. I tinkered with the New York Times' interactive budget-balancing game and it forces you to make some difficult choices, none of which are politically expedient. As the tool shows, there's just no getting around it: we have to both decrease spending and increase revenues if we are serious about tackling the budget.
It's obvious that we cannot continue along this current path. If we do, the deficit will balloon out of control and account for four to five percent of our GDP in 2015. As most economic experts have said, to prevent this drastic increase, Congress must reduce the deficit by 1 or 2 percent by 2015. To lower the deficit by one percent, we will likely have to reduce spending by .5 percent and increase revenues by .5 percent.
It's a challenge to reduce spending because entitlements account for half of the budget. Any changes to entitlement spending will provide minimal short-term benefits. Even if one were to entertain the idea of increasing the retirement age for Social Security for my generation, those savings would not be realized for decades. Another avenue for spending reduction would be to cut discretionary funding, which would force Congress to make tough choices on defense and education. The deficit commission recommended that a significant cut in the defense budget could help generate that .5 percent in savings.
Given the current state of the economy, finding sources of revenue in the form of permanent tax increases is also challenging. It has been argued that while we must extend the Bush tax cuts for middle class families in the short term, given the deficit crisis we probably cannot afford to make those tax cuts permanent.
Peter Orszag recommends that we extend the Bush tax cuts for only two years andWicked then completely eliminate them. He argues that doing so would reduce the deficit by $200 billion to $350 billion per year from 2015 to 2020.
The New York Times tool demonstrates that the choices we face are painful and not easy to make. I encourage everyone who is reading this post to try the game. The only way our political leaders are going to take deficit reduction seriously and stop offering short-term, politically expedient band-aid solutions is if we demand it. Pressuring our elected officials to make long-range deficit reduction decisions is the only hope of tackling our long-term fiscal problems. This tool gives voters a real grasp on the options open to us for balancing our budget. Try it!
Reshma Saujani ran an unsuccessful campaign in the 2010 Democratic primary against Rep. Carolyn Maloney in New York's 14th district, which covers Manhattan and Western Queens. A community activist, attorney for hedge funds and a legal scholar, she is a graduate of the University of Illinois, received her Masters in Public Policy from the Kennedy School of Government at Harvard University and her JD from Yale Law School.