ANALYSIS/OPINION:
Reduce the federal deficit by $1.5 trillion. That’s the mandate for the Senate supercommittee created by the Budget Control Act. And many are urging the committee to “go big” — to chart a path for deficit reduction two, three, even four times bigger than the target.
Whether the committee goes big or small, it must set priorities. Simply cobbling together a hodge-podge of spending cuts and tax hikes won’t cut the mustard. The wrong decisions could be worse for the nation than none at all. Solving Washington’s spending and debt crisis will require bold decisions, but these decisions must reflect the right policies.
To that end, the supercommittee should adopt three priorities to drive its work.
1. Fully fund national defense. After a decade of constant combat and ever-increasing noncombat missions — think disaster relief and homeland security — the U.S. military faces a readiness crisis. Deploying units have plugged personnel and equipment shortfalls by cannibalizing other units. Maintenance and training have been delayed or cut short. Today, barely half of all Air Force units are fully mission-capable
Meanwhile, the Pentagon has taken four rounds of serious funding hits since April 2009. This year’s 20 percent cut for Navy maintenance, for example, could leave a 250- to 280-ship Navy able to keep only 60 ships at sea. Across the military, readiness problems are worsening, and breakdowns are happening more frequently. Additional defense cuts are out of the question.
The military cannot possibly do everything the nation continues to ask — only with fewer people and rusting resources. Unfortunately, it will try. The supercommittee should not place our servicemen and servicewomen — or indeed the nation — at unacceptable risk. Instead, it should ensure full funding for America’s armed forces.
2. Transform entitlement programs. What makes our fiscal future so bleak is out-of-control entitlement spending on Social Security, Medicare and Medicaid. But how we rein in these programs is at least as important as how much we reduce their costs. The goal is to transform these programs so they improve economic security for those truly in need, without busting the budget.
Sure, reducing physician fees or diagnostic services under Medicare and Medicaid might save money, but it would leave patients and the health care system far worse off. Instead, Medicare should focus on subsidizing care for those who need it most. Rather than commanding health care services from Washington, ultimately, Medicare should feature premium-support that lets retirees select health plans that suit their needs best. Such an approach would spur better-quality care at a lower price.
Similarly, Medicaid should be converted to a program that helps low-income families buy private coverage of their own. And Social Security should be gradually transformed from an income-replacement system for every American to a flat benefit that protects seniors from poverty, as originally intended, and ensures a decent retirement income.
The supercommittee must begin these kinds of bold changes not only to make entitlement programs affordable, but also to improve them. And of course the very first change should be to repeal the unworkable nightmare that is Obamacare.
3. Do not raise taxes. Progressives insist that tax hikes must be part of any deficit-reduction package, if only to assure a “balanced” approach. Don’t be fooled. Tax revenues are low today only because of the global recession and useless “jobs” policies adopted in response to the recession (think temporary payroll-tax cut).
The good news is that revenues will increase as the economy recovers and grows. The bad news is that raising taxes would only exacerbate our current economic challenges. With unemployment levels stubbornly high and not expected to improve anytime soon, tax hikes are especially ill-advised. Even talking about hiking taxes chills hiring and other economic activity. And did anyone ever hear of a tax hike that didn’t go toward new spending? Raising taxes is not a necessity, but a choice — one that the supercommittee should resoundingly reject.
Only by taming runaway spending can Congress truly reduce deficits, reduce the size and scope of government, and solve the nation’s deficit and debt crisis.
• Alison Acosta Fraser is director of the Heritage Foundation’s Roe Institute for Economic Policy Studies.
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