Apocalypse Soon? Finding Solutions to our Deficit Problem
“With the financial future of the nation at risk, you would think federal policymakers would take strong action to prevent the apocalypse,” wrote Ron Haskins of the Brookings Institution. Leonard Burman of the Urban Institute warned of the “potentially disastrous economic consequences” of what he called a “catastrophic budget failure,” even as Jeffrey Miron of the Cato Institute cautioned that “something must change, and soon. Otherwise, nothing will stop the U.S. fiscal train wreck.” When policy experts from think tanks across the ideological spectrum seem near consensus in forecasting such gloom and doom, we should all take notice.
Sound fiscal policy needs to start with the principles of wise stewardship and shared sacrifice. We must seek justice and give special concern for society’s most vulnerable members. (For a more detailed discussion of important principles, see the Call for Intergenerational Justice.) Government programs and services benefit us all and help secure the common good, and we all have an interest in maintaining a stable and well-functioning system. Given the current budget realities, however, we all will need to make sacrifices to ensure future stability. Continued deficit spending burdens our children and grandchildren and threatens their future. Economic problems in the United States reverberate across the globe. We must find the political will to address the debt crisis with meaningful and substantive reform.
Can we adequately reduce the current federal budget deficit by only enacting cuts in federal expenditures? No. Can we do so solely by enacting tax reform? No. The only way to address our current budget deficit problem is to rein in spending, revisit the tax code with the understanding that we likely need to increase some taxes, end many tax breaks and fundamentally reform existing entitlement programs. Everything has to be on the negotiating table.
Our current budget woes were decades in the making, and it will take some time to reverse course. Democrats and Republicans alike have contributed to the financial problems, and leaders in both parties need to come together and implement a fiscally responsible plan for curbing deficit spending and securing our nation’s financial future.
Sound policy approaches to the deficit problem must include a combination of long-term and short-term solutions. Because the short term economic circumstances remain rather grim, we likely need to phase in reforms over a period of years, perhaps accepting some deficit spending in the short term until the economy can better support more drastic measures. At the same time, we must consider the long term ramifications of current policy choices.
So what combination of policy proposals might help us chart a path forward?
Tax policy: Perhaps the best way to raise revenues is to broaden the tax base, a goal that can be achieved with comprehensive tax reform that limits deductions and tightens or eliminates loopholes. In the interest of justice, we must maintain a progressive tax system that asks those who benefit the most to contribute the most.
Spending reductions: We also need to curb government spending. Federal spending (measured in constant dollars) has increased almost every year since 1970; such a pattern needs to end. We can and should debate the exact ways of reversing the trend, but it is possible. Consider a few examples. One proposal suggests we can save an estimated $100 billion over the next decade by reducing agricultural subsidies. Government grants should include accountability measures to ensure we fund programs that meet their goals and cut programs that don’t.
Entitlement Reform: Social Security and Medicare are essential safety net programs. But we must curb the rising projected costs. Entitlement spending in coming decades will skyrocket due to the increasing costs of health care and the aging of the population that adds many more beneficiaries to the Medicare and Social Security rolls. Reinventing the Medicare program for future beneficiaries so that it provides premium support for a range of health plans is one promising idea. Relying on panels of medical experts to set coverage policies based on the latest research is likely another piece. At the same time, we have to confront the changing demographics of our aging population and longer life spans by gradually increasing the age of eligibility for Social Security and Medicare.
In our current political climate of stalemate and blame casting, leaders in both parties have failed to reach compromise agreements necessary to move us away from deficit spending. In order for any meaningful policy change to occur, the president and congressional leaders will need to demonstrate great courage and be willing to take great political risks. As we saw last November, a bipartisan congressional committee could not reach a budget deal even with the strong incentive of avoiding more than a trillion dollars of automatic spending cuts.
Budget politics are complex, and global factors affect the economy in ways we cannot predict. But we can all agree that deficits of more than a trillion dollars a year, our rapidly escalating national debt, and the exponential growth of entitlement spending create a fiscally unsustainable future. Instead of waiting for financial apocalypse and blaming political opponents for the disaster, we should demand that our elected officials cross party lines, gather together to forge workable compromises, make difficult choices that secure the long-term good, and exercise true political leadership. In turn, we should reward their political courage in the voting booth.
Professor Black:
I would like to thank you for your reasoned contribution to this conversation. While I believe that I follow your overall line of reasoning, I seek clarity regarding some of your basic terms or tenants. To me this is important, as I have come to believe that two fundamental dynamics of “disrespectful conversation” are differing understanding of terms and unexamined premises. Hence—
When you charge your readers, in the second sentence of your second paragraph, that “We must seek justice…” what do you mean by the term “justice?” It seems apparent that the definition of justice may vary from person to person (or community to community). How do you define “justice” in the context of this discussion?
In the following paragraph you assert (1) “Can we adequately reduce the current federal budget deficit by only enacting cuts in federal expenditures. No.” and (2) “Can we do so solely by enacting tax reform. No.” On a personal level, I happen to agree with you. However, in terms of a conversation or dialogue, I am curious regarding your grounds for either (or both) of these assertions.
Finally, your section regarding tax policy concludes with the recommendation that “In the interest of justice, we must maintain a progressive tax system that asks those who benefit the most to contribute the most.” It seems that, from a strictly formal definition, both flat-rate and progressive-rate tax systems ensure that “those who benefit the most…contribute the most.” Flat-rate systems accomplish this based on the premise that “contributing the most” means application of a common standard to varying bases of wealth; progressive-rate systems on the premise that “contributing the most” means application of varying standards to varying bases of wealth.
In the Judeo-Christian tradition, prima facie cases could be made from Scripture for either approach (tithing is a flat-rate approach, the provisions for varying sacrifices based on wealth in Lev. 5 et al is a progressive-rate approach). What is the basis for your (apparent) premise that a progressive-rate system best serves “the interest of justice?”
Regards,
Lindsey E. Arnold
Quantico, Virginia
Professor Black:
I would like to thank you for your reasoned contribution to this conversation. While I believe that I follow your overall line of reasoning, I seek clarity regarding some of your basic terms or tenants. To me this is important, as I have come to believe that two fundamental dynamics of “disrespectful conversation” are differing understanding of terms and unexamined premises. Hence—
When you charge your readers, in the second sentence of your second paragraph, that “We must seek justice…” what do you mean by the term “justice?” It seems apparent that the definition of justice may vary from person to person (or community to community). How do you define “justice” in the context of this discussion?
In the following paragraph you assert (1) “Can we adequately reduce the current federal budget deficit by only enacting cuts in federal expenditures. No.” and (2) “Can we do so solely by enacting tax reform. No.” On a personal level, I happen to agree with you. However, in terms of a conversation or dialogue, I am curious regarding your grounds for either (or both) of these assertions.
Finally, your section regarding tax policy concludes with the recommendation that “In the interest of justice, we must maintain a progressive tax system that asks those who benefit the most to contribute the most.” It seems that, from a strictly formal definition, both flat-rate and progressive-rate tax systems ensure that “those who benefit the most…contribute the most.” Flat-rate systems accomplish this based on the premise that “contributing the most” means application of a common standard to varying bases of wealth; progressive-rate systems on the premise that “contributing the most” means application of varying standards to varying bases of wealth.
In the Judeo-Christian tradition, prima facie cases could be made from Scripture for either approach (tithing is a flat-rate approach, the provisions for varying sacrifices based on wealth in Lev. 5 et al is a progressive-rate approach). What is the basis for your (apparent) premise that a progressive-rate system best serves “the interest of justice?”
Regards,
Lindsey E. Arnold
Quantico, Virginia
Professor Black:
I would like to thank you for your reasoned contribution to this conversation. While I believe that I follow your overall line of reasoning, I seek clarity regarding some of your basic terms or tenants. To me this is important, as I have come to believe that two fundamental dynamics of “disrespectful conversation” are differing understanding of terms and unexamined premises. Hence—
When you charge your readers, in the second sentence of your second paragraph, that “We must seek justice…” what do you mean by the term “justice?” It seems apparent that the definition of justice may vary from person to person (or community to community). How do you define “justice” in the context of this discussion?
In the following paragraph you assert (1) “Can we adequately reduce the current federal budget deficit by only enacting cuts in federal expenditures. No.” and (2) “Can we do so solely by enacting tax reform. No.” On a personal level, I happen to agree with you. However, in terms of a conversation or dialogue, I am curious regarding your grounds for either (or both) of these assertions.
Finally, your section regarding tax policy concludes with the recommendation that “In the interest of justice, we must maintain a progressive tax system that asks those who benefit the most to contribute the most.” It seems that, from a strictly formal definition, both flat-rate and progressive-rate tax systems ensure that “those who benefit the most…contribute the most.” Flat-rate systems accomplish this based on the premise that “contributing the most” means application of a common standard to varying bases of wealth; progressive-rate systems on the premise that “contributing the most” means application of varying standards to varying bases of wealth.
In the Judeo-Christian tradition, prima facie cases could be made from Scripture for either approach (tithing is a flat-rate approach, the provisions for varying sacrifices based on wealth in Lev. 5 et al is a progressive-rate approach). What is the basis for your (apparent) premise that a progressive-rate system best serves “the interest of justice?”
Regards,
Lindsey E. Arnold
Quantico, Virginia
Thanks to Lindsey for the questions and the opportunities to continue the conversation. In a 600-800 word essay, we can only touch on topics that need far more explanation and explication. To provide some answers – or at least feedback related to your questions – I’ll try to link you to some other sources that may be useful. I can’t promise to have the time to respond to every comment directly given my teaching and family responsibilities, but I will set aside time each week to participate in this important conversation.
You make an important point that popular notions of justice vary. The term is complicated and needs greater discussion beyond these short entries. But it is essential that we as Christians seek to understand what God means when he calls us to seek justice. I find theologian Paul Louis Metzger’s definition quite helpful: “Biblical justice involves making individuals, communities, and the cosmos whole, by upholding both goodness and impartiality. . . Justice follows from God’s heart and character.” (For more detail on this definition, see Metzger’s article in Leadership Journal “What is Biblical Justice?”)
In my postings, I should probably be using the term “public justice” most often. This notion is rooted in my belief that government is ordained by God and is one of His gifts to us to help live out our call to love our neighbor. (To read more about my perspective on this, see my essay, “Defining the Role of Government”). One source that I find particularly helpful in articulating the biblical principles behind public justice is the Center for Public Justice, whose Guidelines for Government and Citizenship provide constructive and longer discussions of central questions like yours. CPJ’s Guideline on Government, for example, explains: “Public justice, consequently, always has at least two dimensions:
• Upholding the common good of the political community in its own right, which includes protecting citizens from domestic and foreign injustice
• Recognizing in law the non-political responsibilities that belong to those who live in the territory of government's jurisdiction
These two dimensions go hand in hand and cannot exist without one another.
Upholding public justice for a political community must include responsiveness to a variety of interrelated principles, such as distributive justice, which holds for the way government allocates benefits, and retributive and restorative justice, which hold for the way government punishes offenses and seeks restitution and reconciliation. The diverse demands of justice come to light as governments act, for example, to collect taxes, fund education and welfare services, punish violators of the law, distinguish civil from criminal penalties, and withstand domestic and foreign aggression.”
You also ask for more clarification on why I maintain that spending cuts alone or revenue increases alone will not suffice to reduce the current budget deficits. Part of my answer comes from the simple math.
According to the Congressional Budget Office, last year’s budget deficit was $1.3 trillion, revenues were $2.3 trillion, and mandatory spending was $2 trillion. (See this graph for more details). We can’t change mandatory spending in the short term (we can reform entitlements in ways that will help for the future). Assuming the same figures for this year, if we tried to balance the budget with these numbers with just spending cuts, we’d have $300 million to pay for net interest, national defense, and all other forms of federal discretionary spending (areas that include education, health, veterans’ benefits, income security, housing, and more). When we look at the other side of the equation, increasing revenues, we would need to raise total revenues about 57% to fill the gap.
I don’t anticipate that we can balance our budget in a single year, but I argue that we must move in that direction. I suggest that we need to find solutions that combine tax reform, spending cuts, and entitlement reform because it looks like all parts of the equation are necessary. It took many years to get our fiscal situation where it is, and it will take some time to return to a balanced budget, even with the wisest, most economically sound policy options imaginable.
I expect we will talk more about taxation policy in future position papers, but my basic premise is that flat taxes are typically regressive – that is, they place a greater burden on the poor. A sales tax is a flat tax, but the almost 9 cents on every dollar we pay in my area will create a larger financial burden for a worker earning $10 an hour than for a worker earning $50 an hour.
In the words of the Psalmist, “I know that the LORD secures justice for the poor and upholds the cause of the needy.” It is my prayer that in our conversations and debates as part of this project we will challenge one another and encourage one another as we seek to know and understand more about what it means to seek biblical justice.
Thanks to Lindsey for the questions and the opportunities to continue the conversation. In a 600-800 word essay, we can only touch on topics that need far more explanation and explication. To provide some answers – or at least feedback related to your questions – I’ll try to link you to some other sources that may be useful. I can’t promise to have the time to respond to every comment directly given my teaching and family responsibilities, but I will set aside time each week to participate in this important conversation.
You make an important point that popular notions of justice vary. The term is complicated and needs greater discussion beyond these short entries. But it is essential that we as Christians seek to understand what God means when he calls us to seek justice. I find theologian Paul Louis Metzger’s definition quite helpful: “Biblical justice involves making individuals, communities, and the cosmos whole, by upholding both goodness and impartiality. . . Justice follows from God’s heart and character.” (For more detail on this definition, see Metzger’s article in Leadership Journal “What is Biblical Justice?”)
In my postings, I should probably be using the term “public justice” most often. This notion is rooted in my belief that government is ordained by God and is one of His gifts to us to help live out our call to love our neighbor. (To read more about my perspective on this, see my essay, “Defining the Role of Government”). One source that I find particularly helpful in articulating the biblical principles behind public justice is the Center for Public Justice, whose Guidelines for Government and Citizenship provide constructive and longer discussions of central questions like yours. CPJ’s Guideline on Government, for example, explains: “Public justice, consequently, always has at least two dimensions:
• Upholding the common good of the political community in its own right, which includes protecting citizens from domestic and foreign injustice
• Recognizing in law the non-political responsibilities that belong to those who live in the territory of government's jurisdiction
These two dimensions go hand in hand and cannot exist without one another.
Upholding public justice for a political community must include responsiveness to a variety of interrelated principles, such as distributive justice, which holds for the way government allocates benefits, and retributive and restorative justice, which hold for the way government punishes offenses and seeks restitution and reconciliation. The diverse demands of justice come to light as governments act, for example, to collect taxes, fund education and welfare services, punish violators of the law, distinguish civil from criminal penalties, and withstand domestic and foreign aggression.”
You also ask for more clarification on why I maintain that spending cuts alone or revenue increases alone will not suffice to reduce the current budget deficits. Part of my answer comes from the simple math.
According to the Congressional Budget Office, last year’s budget deficit was $1.3 trillion, revenues were $2.3 trillion, and mandatory spending was $2 trillion. (See this graph for more details). We can’t change mandatory spending in the short term (we can reform entitlements in ways that will help for the future). Assuming the same figures for this year, if we tried to balance the budget with these numbers with just spending cuts, we’d have $300 million to pay for net interest, national defense, and all other forms of federal discretionary spending (areas that include education, health, veterans’ benefits, income security, housing, and more). When we look at the other side of the equation, increasing revenues, we would need to raise total revenues about 57% to fill the gap.
I don’t anticipate that we can balance our budget in a single year, but I argue that we must move in that direction. I suggest that we need to find solutions that combine tax reform, spending cuts, and entitlement reform because it looks like all parts of the equation are necessary. It took many years to get our fiscal situation where it is, and it will take some time to return to a balanced budget, even with the wisest, most economically sound policy options imaginable.
I expect we will talk more about taxation policy in future position papers, but my basic premise is that flat taxes are typically regressive – that is, they place a greater burden on the poor. A sales tax is a flat tax, but the almost 9 cents on every dollar we pay in my area will create a larger financial burden for a worker earning $10 an hour than for a worker earning $50 an hour.
In the words of the Psalmist, “I know that the LORD secures justice for the poor and upholds the cause of the needy.” It is my prayer that in our conversations and debates as part of this project we will challenge one another and encourage one another as we seek to know and understand more about what it means to seek biblical justice.
Thanks to Lindsey for the questions and the opportunities to continue the conversation. In a 600-800 word essay, we can only touch on topics that need far more explanation and explication. To provide some answers – or at least feedback related to your questions – I’ll try to link you to some other sources that may be useful. I can’t promise to have the time to respond to every comment directly given my teaching and family responsibilities, but I will set aside time each week to participate in this important conversation.
You make an important point that popular notions of justice vary. The term is complicated and needs greater discussion beyond these short entries. But it is essential that we as Christians seek to understand what God means when he calls us to seek justice. I find theologian Paul Louis Metzger’s definition quite helpful: “Biblical justice involves making individuals, communities, and the cosmos whole, by upholding both goodness and impartiality. . . Justice follows from God’s heart and character.” (For more detail on this definition, see Metzger’s article in Leadership Journal “What is Biblical Justice?”)
In my postings, I should probably be using the term “public justice” most often. This notion is rooted in my belief that government is ordained by God and is one of His gifts to us to help live out our call to love our neighbor. (To read more about my perspective on this, see my essay, “Defining the Role of Government”). One source that I find particularly helpful in articulating the biblical principles behind public justice is the Center for Public Justice, whose Guidelines for Government and Citizenship provide constructive and longer discussions of central questions like yours. CPJ’s Guideline on Government, for example, explains: “Public justice, consequently, always has at least two dimensions:
• Upholding the common good of the political community in its own right, which includes protecting citizens from domestic and foreign injustice
• Recognizing in law the non-political responsibilities that belong to those who live in the territory of government's jurisdiction
These two dimensions go hand in hand and cannot exist without one another.
Upholding public justice for a political community must include responsiveness to a variety of interrelated principles, such as distributive justice, which holds for the way government allocates benefits, and retributive and restorative justice, which hold for the way government punishes offenses and seeks restitution and reconciliation. The diverse demands of justice come to light as governments act, for example, to collect taxes, fund education and welfare services, punish violators of the law, distinguish civil from criminal penalties, and withstand domestic and foreign aggression.”
You also ask for more clarification on why I maintain that spending cuts alone or revenue increases alone will not suffice to reduce the current budget deficits. Part of my answer comes from the simple math.
According to the Congressional Budget Office, last year’s budget deficit was $1.3 trillion, revenues were $2.3 trillion, and mandatory spending was $2 trillion. (See this graph for more details). We can’t change mandatory spending in the short term (we can reform entitlements in ways that will help for the future). Assuming the same figures for this year, if we tried to balance the budget with these numbers with just spending cuts, we’d have $300 million to pay for net interest, national defense, and all other forms of federal discretionary spending (areas that include education, health, veterans’ benefits, income security, housing, and more). When we look at the other side of the equation, increasing revenues, we would need to raise total revenues about 57% to fill the gap.
I don’t anticipate that we can balance our budget in a single year, but I argue that we must move in that direction. I suggest that we need to find solutions that combine tax reform, spending cuts, and entitlement reform because it looks like all parts of the equation are necessary. It took many years to get our fiscal situation where it is, and it will take some time to return to a balanced budget, even with the wisest, most economically sound policy options imaginable.
I expect we will talk more about taxation policy in future position papers, but my basic premise is that flat taxes are typically regressive – that is, they place a greater burden on the poor. A sales tax is a flat tax, but the almost 9 cents on every dollar we pay in my area will create a larger financial burden for a worker earning $10 an hour than for a worker earning $50 an hour.
In the words of the Psalmist, “I know that the LORD secures justice for the poor and upholds the cause of the needy.” It is my prayer that in our conversations and debates as part of this project we will challenge one another and encourage one another as we seek to know and understand more about what it means to seek biblical justice.