Annie Lowery’s provocative piece about budget policy is making the rounds this morning. There is a lot to enjoy and a lot of familiar ground to disagree with, but the essential point is worth repeating:
So how does doing nothing actually return the budget to health? The answer is that doing nothing allows all kinds of fiscal changes that politicians generally abhor to take effect automatically. First, doing nothing means the Bush tax cuts would expire, as scheduled, at the end of next year. That would cause a moderately progressive tax hike, and one that hits most families, including the middle class. The top marginal rate would rise from 35 percent to 39.6 percent, and some tax benefits for investment income would disappear. Additionally, a patch to keep the alternative minimum tax from hitting 20 million or so families would end. Second, the Patient Protection and Affordable Care Act, Obama’s health care law, would proceed without getting repealed or defunded. The CBO believes that the plan would bend health care’s cost curve downward, wrestling the rate of health care inflation back toward the general rate of inflation. Third, doing nothing would mean that Medicare starts paying doctors low, low rates. Congress would not pass anymore of the regular “doc fixes” that keep reimbursements high. Nothing else happens. Almost magically, everything evens out.
What I like about her argument is her point that it is not the baseline that has the deficits, it is all of the interventions that Congress and the President enact. If you are worried about the defcit, stop intervening to extend the Bush-era tax cuts, stop extending AMT relief, and stop suspending the “doc fix” in Medicare. And, I would add, if you are worried about the deficit, pick the low-hanging fruit first. Recognize that a $700 billion defense budget is a lot for any country to bear and that 62 is an early age for the government to be facilitating the retirement of healthy people who could continue to work and pay taxes.