Never particularly grounded in reality, budget talk in Washington has taken on an Alice in Wonderland quality. A paroxysm of deficit cutting is sweeping the US, with Republicans and Democrats hurling around dubious figures like confetti. But both are trying to win the battle to be the party of fiscal responsibility without broaching the one step every sensible analyst knows is necessary to solve America’s budget crisis: meaningful tax increases.
With conservatives determined to hold raising the US federal debt ceiling hostage to a deficit agreement, some progress toward reducing the current gap seems likely. But like so much about Washington, a closer inspection should temper any euphoria. Take the recent agreement to reduce the funding gap in this fiscal year by $38bn. It looks impressive until you examine the fine print. It included, for example, measures to eliminate $6.2bn of “budget authority” for census-taking – even though the decennial census is complete and that money was never going to be spent. Nonetheless, scrubbing those funds garnered full credit.
More important, however, is the way in which longer-term proposals from both sides stretch credulity. The Republicans’ alternative plan gets close to the $4,000bn target established by the independent Bowles-Simpson commission, but it does so by amputating health plans that are popular even among staunch conservatives. A recent McClatchy-Marist poll found that 70 per cent of Tea Party supporters were opposed to cutting Medicaid and Medicare. The Republican plan does not so much trim these programmes as eviscerate them.
