Start with spending cuts
In this presidential campaign there'll be lots of debate over how to pay for budget priorities. Some argue for tax increases because, they tell us, we can't cut federal spending. Economist and commentator Glenn Hubbard thinks otherwise.
Glenn Hubbard (Glenn Hubbard)
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TEXT OF COMMENTARY
Kai Ryssdal: The non-partisan Tax Policy Center's been doing its thing. It's been digging into the tax promises John McCain and Barack Obama have been making.
Take health care out of the equation and it turns out both candidates would wind up costing the government money. For Obama: $2.7 trillion less in tax revenues over the next 10 years. For McCain: $3.7 trillion.
Big numbers, but commentator and economist Glenn Hubbard says it's time to turn the debate from how much Washington's bringing in to how it's being spent.
Glenn Hubbard: It's impossible to reduce spending in the near term, right?
Wrong. To balance the budget by the end of the next president's term, non-defense spending growth needs to be restrained to inflation. Now, this will be tough. The federal government has been on a bipartisan spending binge for a decade. Compared to the 1997 level, adjusted for inflation and new homeland security spending, actual non-defense spending for the decade is $900 billion higher.
Now, we can fix this without raising tax rates, but conventional wisdom also says we can't cut spending in the long term. That's because spending on Social Security and Medicare is projected to rise in the coming decades, right?
Well again, no. Spending restraint is our only sensible choice. The Congressional Budget Office tells us Social Security and Medicare spending, left unchecked over the next generation, will rise by 10 percentage points of GDP. Ratifying this spending with higher taxes would require an across-the-board tax increase of 60 percent.
We can meet our spending challenges on defense and education and training, but we must do three things: Change entitlements to slow their cost growth by reducing assistance for the better off, eliminate the binge spending in the remainder of the budget and adopt policies that promote economic growth. The greater economic growth, the larger the economic pie to finance the entitlement obligations and other national priorities.
Memo to presidential candidates: If you propose to restrain federal spending, tell us how. And if you propose to raise taxes, talk to us about the lost opportunities in economic growth for the country's priorities and dreams.
Ryssdal: Glenn Hubbard is the dean of the business school at Columbia University. He used to run the Council of Economic Advisers for President Bush.
Comments
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From WV, 06/13/2008
Wait, wait - Hubbard used to run the Council of Economic Advisers for President Bush? So he would be the guy who got us in the worst economic mess this country has been in since the Great Depression? And we are supposed to listen to anything he says without gagging? Puh_leaze. Freedom of speech and all that, but surely there must be someone with more credibility you can get to speak on what we should do to fix the economy he destroyed. He's still beating the old "entitlements" drum. Bush et al bankrupted this country with their tax breaks for the rich, running a ridiculous war on a credit card they don't intend to pay, destruction of the dollar, egregious corruption in crony contracts, and Enronizing every commodity that matters to our security. Doesn't anyone get it? The NeoCons were WRONG! We got conned. They got richer.
From Framingham, MA, 06/13/2008
I second Donald Barker's question about why Glenn Hubbard takes defense spending out of the spending equation. The war in Iraq has cost us about $600 billion already. That's 2/3 of the amount of the growth in non-defense spending over the past decade Hubbard points to. Let's get this elective war over with ASAP, and in the meantime, let's stop paying KBR et al. for reconstruction projects they don't even finish, transfer reconstruction project funding responsibility to Iraq, and then we'll be realizing some real savings in the nation's blood and treasure.
From Des Moines, IA, 06/13/2008
Professor Hubbard says:
>Change entitlements to slow their cost growth by reducing assistance for the better off...
Assume Person A and Person B have the same income for their entire work life. If Person A saves for retirement his entire life, and Person B squanders his money, saving nothing. According to Professor Hubbard's plan, Person B should get more money in Social Security and better Medicare benefits than Person A. Where is the justice in that?
From NEWTON, MA, 06/12/2008
COMMENTATOR HUBBARD BETRAYS HIS POLITICAL BIAS AND INVALIDATES HIS ARGUMENT BY ASSUMING THAT CUTS IN FEDERAL SPENDING MUST BE CONFINED TO THE NON-DEFENSE SECTOR. IF ONLY HALF THE STORIES COMING FROM IRAQ OF VIRTUALLY NON-EXISTENT ACCOUNT PRACTICES ARE TRUE THEN THE DEFENSE SECTOR OF THE BUDGET WOULD BE THE FIRST PLACE TO LOOK TO ACHIEVE SAVINGS. WHILE THESE DEFENSE MONIES ACCOMPLISH NOTHING, AND PROBABLY ARE COUNTERPRODUCTIVE, WE ARE INVESTING OUR MONEY FOR THE NATION'S WELL BEING WHEN WE BUDGET MORE FOR EDUCATION, RESEARCH, HEALTH, AND INFRASTRUCTURE
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