It’s not a spending problem, it’s a revenue problem


Defense, Social Security, Medicare/Medicaid. Lather, rinse, repeat.

Why talk about such a small number of federal programs? Because those programs, when lumped together, take up about three-quarters of the federal budget. Everything else — the Department of Education, federal earmarks, transportation funding, poverty reduction, even farm subsidies — fits into the other quarter.

And the federal budget deficit is between a quarter and a third of the federal budget (over a trillion dollars against a budget of over three trillion). That means you could eliminate every single program other than the three identified above and still not close the federal budget hole.

Simply put, we have a revenue problem, not a spending problem.

Federal spending is a society-wide statement about what we want — strong defense, a safety net for our seniors and working class, national education policies — and for too long the Reaganites in our federal government have been trying to convince us that we either can’t or shouldn’t pay for those things, and should instead give more otherwise-taxable dollars back to the rich, whose job-creating magic is questionable at best, and an outright lie at worst.

Necessities cost money. If you want something at the store, you pay money for it, and items in the federal budget are no different. It’s a bit frustrating to see op-eds like Amy Klobuchar’s recent piece in the Star Tribune, which buys into the “OMG RUNAWAY FEDERAL SPENDING” meme hook, line, and sinker, without addressing any of the true underlying causes of the deficit.

A deficit simply means revenue falling short of spending. If a certain spending level is necessary thanks to priorities shared by everyone in a political system (anyone remember the Tea Party screaming that Medicare had to be protected from evil Obamacare?) then the other choice is to increase revenue.

Perhaps by allowing the Bush-era tax cuts (which didn’t create a single net job over their lifespan) expire, and going back to 1990s-era tax levels. In a rough economy we should definitely extend them temporarily for low- and middle-income earners, or perhaps phase them out for those earners over time. But the rich could afford it before, and they can afford it now.

Perhaps by continuing the drawdown in Iraq, or finding a practical way out of the disaster in Afghanistan. I am loathe to recommend removing America from the decades-long India-Pakistan row, but spending billions upon billions supporting a pretty hardline regime as it takes on extremists within its borders with mixed results…well, we’ve been there before. Perhaps we could reform our foreign aid budget to focus on the causes of international strife rather than supporting questionable leaders around the world in nations with nothing to offer but strategic geography and control of a nuclear arsenal.

Perhaps by admitting that the 2009 economic stimulus package was too small to do anything but reinforce the dam holding back the deluge, and refocus our efforts on jobs programs that immediately get people back to work until the private sector starts hiring in large numbers again. The manufacturing sector is one area, but I’m sure the many smart people in the federal government can figure out ways to make large-scale stimulus work in the service sector as well. Of course, getting people back to work is a win-win, since it means people paying taxes and not drawing unemployment benefits.

You see, this Deficit Reduction Commission thing isn’t difficult — and we didn’t have to suggest what the real Commission chairmen did (slashing Social Security, inexplicably lowering taxes for top earners). Of course, the Bush tax cuts are right in the left ventricle of our soon-to-be House leaders, President Obama is committed to Pakistan, and it’s doubtful that any new stimulus program is going to make it through a House of Representatives in which Michele Bachmann can make a serious play for a majority leadership position.

Of course, according to a recent CBS poll, a huge majority of Americans don’t care about the deficit anyway. Must be that whole “it’s the economy, stupid!” thing coming back to bite the Beltway punditry. Again. And again.