News / USA

'Do Nothing' Option for US Deficit Reduction Explored

If Congress went on vacation for the next two years, automatic federal revenues would rise, trimming spending
If Congress went on vacation for the next two years, automatic federal revenues would rise, trimming spending

Hopes were dashed this week for bold congressional action to slow the growth of America’s $15 trillion national debt. A special bipartisan committee failed to agree on ways to trim the deficit by $1.2 trillion. But if Congress has shown itself incapable of boldly addressing the U.S. fiscal woes, consider this: current law, if unchanged, would slash deficits by as much as $7 trillion over 10 years.

For those yearning to see a dramatic reduction in the federal deficit, there is something astonishingly easy Congress could do.

Absolutely nothing. If Congress went on vacation for the next two years, much would happen automatically to significantly raise federal revenues and trim spending. An array of temporary tax cuts would expire, new taxes would be collected, and automatic cuts to domestic and national defense spending would go into effect. There would be additional savings in U.S. debt-servicing costs.

All of these measures are written into current U.S. law. If those laws hold, the Congressional Budget Office estimates the annual budget deficit would fall from $1.3 trillion this year to the $500 billion range for most of the next decade - a 60 percent improvement.

Some in Congress have already seized on this data. Democratic Representative Peter DeFazio of Oregon highlights one component: tax cuts enacted under President George W. Bush slated to expire next year. “If Congress continued to do nothing, then all the Bush tax cuts go away, $4 trillion of additional revenues. That would take care of 40 percent of the deficit problem over the next 10 years. If they [lawmakers] are really concerned about debt reduction, the ‘do-nothing’ option is the best,” he said.

Independent budget-watchers say the math is correct: doing nothing would significantly improve U.S. finances.  Jason Peuquet of the non-partisan Committee for a Responsible Federal Budget. “If Congress just went home over the next several years, then our debt path is not nearly as bad,” he stated.

But there is a catch.

“It is really not realistic that Congress just goes home and does not extend the tax cuts, at least part of them,” Peuquet noted.

Republicans say higher taxes would deal a damaging blow to a shaky U.S. economy, resulting in slower growth that could reduce government revenue. Senator Jon Kyl of Arizona. “Especially in an economic downturn, like we are in now, it is not a good idea to raise people’s taxes,” he stated.

Even President Barack Obama has said only the wealthiest Americans should see their taxes go up, and only after the U.S. economy fully recovers. Days ago, Mr. Obama urged Congress to extend and expand a temporary cut in workers’ contribution to the federal retirement income program, Social Security.

Because so much of what would transpire under current law involves added taxation, the "do-nothing" option appeals most to progressive Democrats eager to avoid the major spending cuts that Republicans advocate. Indeed, all Democrats would have to do to enforce a "hands-off" approach to deficit reduction would be to block all budget-related legislation in the Senate, where they retain a majority. But many Democrats are also wary of massive tax hikes.

“I think that is not a balanced approach,” Democratic Senator Ben Cardin of Maryland said.

“That is obviously leverage to get to where we need to get to. I am for a full balanced approach that brings down spending and allows the revenues to be adequate to pay for our bills,” Cardin explained.

Note Senator Cardin’s use of the word “leverage” - meaning Democrats could threaten to block tax cut extensions to pressure Republicans to compromise on a so-called grand bargain of spending cuts and tax hikes. His message foreshadows what could be a furious budget battle next year, when the United States holds general elections.

You May Like

India PM Modi's party distances itself from religious conversions

BJP under fire for being slow to rein in hardline affiliate groups allegedly trying to promote a Hindu-dominant agenda by luring Muslims and Christians to convert to Hinduism More

Anti-Whaling Group Found in Contempt of Court

Radical environmentalists who threw acid and smoke bombs at Japanese whalers in the waters off Antarctica continue their campaign to disrupt Japan's annual whale hunt More

UN's Ban Urges End to Discrimination Against Ebola Workers

Ban was speaking in Guinea on the second day of a whistle-stop tour aimed at thanking healthcare workers of the countries at the heart of the epidemic More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Sudan School Becomes Target of Aerial Attacksi
X
December 19, 2014 12:45 AM
The school dropout rate is at an all-time high in Sudan's South Kordofan state because many schools have been destroyed during the three-year civil war between the government and SPLA-N rebel forces. Adam Bailes visited Sudan's Nuba Mountains' region and reports many children are simply too scared to go to school
Video

Video Sudan School Becomes Target of Aerial Attacks

The school dropout rate is at an all-time high in Sudan's South Kordofan state because many schools have been destroyed during the three-year civil war between the government and SPLA-N rebel forces. Adam Bailes visited Sudan's Nuba Mountains' region and reports many children are simply too scared to go to school
Video

Video VOA Reporter Tours Devastated Peshawar School

Islamist militants wearing military uniforms and strapped with explosives attacked a military run school Tuesday in the northwestern Pakistani city of Peshawar. At least 141 people were killed in the horrific attack, most of them young students. VOA reporter Ayaz Gul visited the devastated school and attended the funeral of the principal who courageously tried to save her students from the deadly attack.
Video

Video Nigerians Fleeing Boko Haram Languish in Camp Near Capital

In its five-year effort to impose Islamic law in northeastern Nigeria, the Boko Haram extremist group has killed thousands of people and forced hundreds of thousands to flee. Some of those who ran for their lives now live in squalor on the edges of the capital, Abuja. Chris Stein reports for VOA.
Video

Video Putin Says Russian Economy Will Emerge Stronger

Russian President Vladimir Putin has said his country's sinking economy will not only recover but also become stronger, despite falling oil prices and Western sanctions over Ukraine. VOA's Daniel Schearf reports.
Video

Video Detained Turkish Journalists Follow Teachings of US-Based Preacher

The Turkish government’s jailing of critical journalists has sparked international condemnation and is being seen as an effort to undermine the followers of an ailing Turkish preacher based in the United States. VOA religion reporter Jerome Socolovsky has more.
Video

Video ‘Anti-Islamization’ Marches Increase Tensions In Germany

Anti-immigrant rallies in Germany have been building in recent weeks, peaking Monday night in the city of Dresden where tens of thousands of people turned out to demonstrate against what they call the ‘Islamization’ of the West. Germany has offered asylum to more Syrian refugees than any other country, and this appears to have set off the protests. Henry Ridgwell reports from London.
Video

Video Aceh Rebuilt Decade After Tsunami, But Scars Remain

On December 26, 2004 there was an earthquake in the Indian Ocean so powerful it caused the Earth’s axis to wobble a few centimeters. Onshore on the island of Sumatra, the resulting tsunami was devastating. A decade later, VOA Correspondent Steve Herman reports from Banda Aceh, Indonesia, where although there is little remaining evidence of the physical devastation, the psychological scars among survivors remain.
Video

Video Refugees Living in Kenya Long for Peace in the Home Countries

Kenya is host to numerous refugees seeking safe haven from conflict. Immigrants from Somalia face challenges in their new lives in Kenya. Ahead of International Migrants Day (December 18) Lenny Ruvaga has more for VOA News from the Kenyan capital.

All About America

AppleAndroid