Somebody, anybody, cut the federal deficit

Chicago Tribune | Editorial

The Chicago Tribune has spilled lots of ink criticizing President Barack Obama for running up federal budget deficits and the national debt — currently north of $15 trillion. Now comes a report from the nonpartisan Committee for a Responsible Federal Budget saying his main Republican challengers would do even worse.

Apart from long-shot candidate Ron Paul, the major contenders for the Republican nomination score poorly in a carefully researched evaluation of their economic plans.

GOP hopefuls Mitt Romney, Newt Gingrich and Rick Santorum are touting policies that would push the debt well beyond current projections, largely because their proposed tax cuts would outweigh spending cuts, the budget watchdog group reports.

Under Obama’s proposed budget for the fiscal year that starts Oct. 1, the nation’s public debt would rise to 80 percent of gross domestic product over the next decade, from about 70 percent today. Gingrich’s plan would push that debt load to 114 percent of GDP, Santorum’s to 104 percent and Romney’s to between 85 percent and 96 percent. Paul’s plan would put the debt at 76 percent of GDP.

For the record, not that it seems to make a difference to the candidates, any amount over 60 percent is generally considered too much.

So these are the voters’ options: Too much debt, or way too much debt? What a bitter disappointment.

We understand that in an election year, proposed budget plans should be taken at less than face value. No doubt the details of these proposals represent general principles, not the specific legislation that would eventually pass and be signed into law.

Frankly, that’s what bothers us the most.

None of these candidates, of either party, has made a priority of cutting the debt and deficit. None, in fact, comes close to the plan put forward in late 2010 by Obama’s bipartisan commission known as Simpson-Bowles, a plan that we considered a reasonable, achievable compromise. None — including the incumbent — has shown the guts to push for unpopular decisions that would put the country on a sustainable fiscal course.

If the best that Americans can expect is incremental change, at least make it meaningful incremental change. Here too there is reason to be discouraged.

If any single impediment to progress cries out for revision, it’s the federal tax code. We would welcome practically any genuine effort to straighten out this 70,000-page mess.

The system as it stands imposes a terrible burden on the nation’s competitiveness. It distorts the economy, providing incentives to overinvest in real estate, for instance, while punishing companies that bring overseas earnings home. It is riddled with special breaks that make a mockery of fairness. Its very complexity encourages costly, wasteful tax avoidance.

It’s hard to imagine a more counterproductive system than the one we’ve got except in basket cases like Greece, where tax evasion is a way of life — and the economy pays the price.

We’re tempted to cheer even half-baked efforts to improve the situation, including the corporate-tax plan Obama unveiled Wednesday. This one starts off with the right idea: Reduce the overall tax rate and make up for the lost revenue by limiting deductions and closing loopholes. Then it proceeds to ruin its promising underpinnings by going all vague about how the plan would be revenue neutral. The rate cuts would reduce federal revenue by about $1.2 trillion over a decade, but the offsets that were identified would make up only about one-quarter of that money. If the plan is not truly revenue neutral, it would — you guessed it — raise the 80-percent-of-GDP debt burden that Obama projects in the budget he proposed two weeks ago.

On Thursday, GOP candidate Romney floated a rival tax plan with the alluring prospect of an across-the-board, 20 percent cut in income tax rates. That’s a headline-grabber. But how to pay for it? Romney’s short on details — he’s counting on lots of future economic growth to provide new revenue — and we suspect that fiscal responsibility once again is taking a back seat to pre-election pandering. It would be practically impossible to cut the tax rate 20 percent, while also eliminating the alternative-minimum and estate taxes, as Romney proposes, without running up an even bigger deficit than the president’s plan would bring about.

There is no quick, painless fix for reducing the deficit and debt. It will take courage, commitment and a dose of reality. Don’t count on it any time before Nov. 6.