Try your hand at cutting the federal budget

Opinion: December 15, 2010 at 12:00a.m.

Erskine Bowles and Alan Simpson, co-chairmen of President Obama’s fiscal commission, tried mightily to win support of the panel’s 18 members for their tough bipartisan plan to shrink the federal deficit. They ran through several drafts, made compromises, extended the deadline, twisted arms — and even then fell short of the 14 votes they needed to compel Congress to take a look.

But I can sympathize. I tried cutting the federal budget myself recently, and failed miserably.

You can try too, on one of several websites with do-your-own budgets. I used one designed by a bipartisan think tank, the Committee for a Responsible Federal Budget.

The Web site (http://www.crfb.org/stabilizethedebt) offers anyone a chance to decide what spending should be cut and what taxes should be raised to curb the deficit and bring the public debt under control.

It sets a simple challenge: Take the federal debt, currently about $14 trillion, and cut $2 trillion from it over the next eight years. That would reduce the debt to about 60 percent of GDP and stop it from growing larger.

The exercise takes about 15 minutes, depending on how much time you spend thinking about your choices. The website includes explanatory notes, so you’re not shooting in the dark.

It’s not an impossible puzzle; serious politicians from both parties have already shown several ways to get there. Bowles and Simpson proposed cutting both domestic and defense spending, increasing the Social Security retirement age and limiting the tax deduction on home mortgage interest. Rep. Paul D. Ryan, R-Wis., the House conservatives’ fiscal guru, has proposed replacing Medicare and Medicaid with a voucher system that would cap costs by holding senior citizens to a budget. Rep. Jan Schakowsky, D-Ill., the liberal Democrats’ counterpart to Ryan, has proposed cutting defense spending, eliminating corporate tax breaks and increasing the tax rate on capital gains.

Humbling experience

I figured I could do at least as well, but I was quickly humbled. The options that sound easy — cutting foreign aid, abolishing pork-barrel earmarks, canceling the space program — are all small potatoes when you’re looking for $2 trillion in savings. A 50 percent cut in foreign aid gets you $110 billion. Abolishing earmarks, $80 billion. Cutting NASA, $40 billion. Grand total: $230 billion, only 12 percent of the amount you need.

To make a real impact, you have to head for the big-ticket items: defense, Social Security, health care and taxes. And that’s where it gets hard. Many liberals enjoy cutting defense spending but hate to touch health care. Many conservatives are willing to cut domestic spending but hate to shrink the military. And almost nobody enjoys raising taxes.

Anyhow, I put on my middle-of-the-road hat, resolved to look for a sensible, moderate solution to every problem, and waded in.

Choice one: Defense. I opted for relatively modest cuts: eliminating a few weapons programs; a gradual drawdown of forces in Afghanistan and Iraq. Savings: $770 billion.

Choice two: Social Security and health care. After all those defense cuts, I figured, only a few trims here would do. But I did raise the Social Security retirement age to 68 — a selfless act, since I’m only 10 years away. Savings: $110 billion.

Choice three: Taxes. I decided to stick with President Obama and eliminate the Bush administration’s tax cuts for families earning more than $250,000 a year. Savings: none — because keeping the tax cuts for the rest of us will still cost the Treasury money compared to its “baseline,” which assumes that all the tax cuts will end as they were originally scheduled to do.

Result: Instead of cutting $2 trillion, I added almost $1 trillion to the national debt. Does this mean I qualify for a seat in Congress?

Clearly, I needed to get tougher. On my second try, I cut deeper and raised taxes higher. Cut Social Security benefits for upper-income recipients and reduce the annual cost-of-living adjustment? $180 billion! Limit the mortgage interest deduction on your income tax? $250 billion! Impose a cap-and-trade energy tax? $330 billion! (Good luck getting that one through Congress; the Democrats tried and failed.)

This time, I succeeded in cutting the debt — but by only about one-fourth of the $2 trillion I was aiming for.

What did I learn in my brief career as a budget-cutter?

First, cutting $2 trillion isn’t as easy as it sounds. If it were, Congress might have done it by now. Second, taxes matter — a lot. There’s no realistic way to balance the budget and reduce the debt without raising taxes on somebody. (Even keeping the current tax rates for families earning less than $250,000 a year turned out to be a problem.) Third, Social Security and Medicare can’t be exempted — and anyone who tells you they can is flat wrong.

Complaints

Not everyone will be happy with the range of choices the Committee for a Responsible Federal Budget offers. Some liberals have complained that it doesn’t offer the option of truly radical cuts in the defense budget. Some conservatives have complained that it counts tax cuts the old-fashioned way, as a subtraction from revenue, instead of embracing the supply-side theory that tax cuts increase revenue. And the Web site counts the Obama health care plan at face value as a big deficit-cutter once its projected savings in Medicare costs kick in; there are plenty of reasons to wonder whether Congress will be brave enough to enforce those Medicare cuts when the time comes.

Still, it’s a quick, accessible way for citizens to roll up their sleeves and try cutting the budget themselves. I plan to go back for a third try.

Doyle McManus is a columnist for The Los Angeles Times. Distributed by McClatchy-Tribune Information Services.