Christina Romer issued a plea for “compassionate” deficit reduction in the NYT over the weekend. As the former Chairwoman of President Obama’s Council of Economic Advisers, she noted that the Republicans had a bit of a point when they criticized Democrats for failing to offer any deficit cutting specifics. Now safely out of government and in the warm embrace of a Berkeley sinecure, Ms. Romer is liberated to set out nine concrete spending cuts or tax hikes the looming fiscal implosion demands:
1. Increase ordinary income tax rates on families making over $250,000.
2. Reduce deductions and tax credits for the wealthy.
3. Increase tax rates on capital gains and dividends realized by the wealthy.
4. Reduce waste and fraud in Medicare.
5. Make wealthy pay more for Medicare.
6. Raise the Medicare eligibility age.
7. Reduce agricultural subsidies.
8. Reduce high-speed rail subsidies (maybe).
9. Reduce defense spending.
That’s it. The bold call for specific cuts consists of four parts soak-the-rich boilerplate (1, 2, 3 and 5), two parts cutting corporate welfare to rich corporations (7 and 9), and that old chestnut waste, fraud and abuse (4). Only two, raising the Medicare eligibility age and curtailing high-speed rail subsidies, are not standard liberal talking points. She doesn’t specify what age Medicare eligibility should be set at, but at 67 (the figure most often floated) the increased eligibility is meaningless in terms of deficit reduction. And high-speed rail, monstrous boondoggle that it is, is a rounding error in our fiscal outlook.
It’s sobering that in what Ms. Romer views as “risky” talk about hard choices she lists as many sacred cows or calls for increased spending as she does spending cuts!* The simple fact is the cuts and tax hikes listed don’t come close to closing this year’s $1.3 trillion deficit, much less address our longer-term imbalances. Anyone counting on liberals to forestall economic calamity (if any such persons exist) might want to make another plan.
1) Infrastructure program, 2) continuation of payroll tax cut, 3) employment tax credit, 4) state and local government aid, 5) school lunches and vaccinations, 6) veterans aid, 7) worker retraining, 8) college aid and 9) scientific research and infrastructure.