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

Lebanese Media Unite to Support Palestinians in Gaza

Joint newscast billed as Arab world’s first unified news bulletin in support of Hamas-controlled Gaza Strip More

Photogallery Australian PM Alleges ‘Coverup’ at MH17 Crash Site

Meanwhile, Russia's ambassador to Malaysia denies plane's black boxes were opened before they were handed over to Malaysian officials More

Despite Advances in AIDS Treatment, Stigma Lingers

Leading immunologist tells VOA that stigma is often what prevents those infected with disease from seeking treatment 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.
IAEA: Iran Turns its Enriched Uranium Into Less Harmful Formi
X
July 22, 2014 10:26 AM
Iran has converted its stockpiles of enriched uranium into a less dangerous form that is more difficult to use for nuclear weapons, according to the United Nations’ Atomic Energy Agency. The move complies with an interim deal reached with Western powers on Iran's nuclear program last year, in exchange for easing of sanctions. Henry Ridgwell reports for VOA from London.
Video

Video IAEA: Iran Turns its Enriched Uranium Into Less Harmful Form

Iran has converted its stockpiles of enriched uranium into a less dangerous form that is more difficult to use for nuclear weapons, according to the United Nations’ Atomic Energy Agency. The move complies with an interim deal reached with Western powers on Iran's nuclear program last year, in exchange for easing of sanctions. Henry Ridgwell reports for VOA from London.
Video

Video Relic of Saint Draws Catholics Worried About Immigration Issue

A Roman Catholic saint who is a figure of devotion for those crossing the border into the United States is attracting believers concerned about the plight of undocumented immigrants. Mike O'Sullivan reports from Los Angeles, where a relic of Saint Toribio has drawn thousands to local churches.
Video

Video Ukraine Rebels Surrender MH17 Black Boxes

After days of negotiations, a senior separatist leader handed over two black boxes from an airliner downed over eastern Ukraine to Malaysian experts early Tuesday. While on Monday, the U.N. Security Council unanimously demanded that armed groups controlling the crash site allow safe and unrestricted access to the wreckage.
Video

Video In Cambodia, HIV Diagnosis Brings Deadly Shame

Although HIV/AIDS is now a treatable condition, a positive diagnosis is still a life altering experience. In Cambodia, people living with HIV are often disowned by friends, family and the community. This humiliation can be unbearable. We bring you one Cambodian woman’s struggle to overcome a life tragedy and her own HIV positive diagnosis.
Video

Video Nature of Space Exploration Enters New Age

Forty-five years ago this month, the first humans walked on the moon. It was during an era of the space race between the United States and the Soviet Union. World politics have changed since then and -- as Elizabeth Lee reports -- so has the nature of space exploration.
Video

Video Chicago’s Argonne Lab Developing Battery of the Future

In 2012, the U.S. Department of Energy’s Office of Science awarded a $120 million grant to a new technology center focused on battery development - headquartered at Argonne National Laboratory in suburban Chicago, Illinois. As VOA’s Kane Farabaugh reports, there scientists are making the next technological breakthroughs in energy storage.
Video

Video In NW Pakistan, Army Offensive Causes Massive Number of Displaced

Pakistan’s army offensive in North Waziristan has resulted in the large-scale displacement of the local population. VOA's Ayaz Gul reports from northwest Pakistan where authorities say around 80 percent of the estimated 1 million internally displaced persons [IDPs] have settled in Bannu district, while much of the remaining 20 percent are scattered in nearby cities.
Video

Video Kurdish Peshmerga Force Secures Kirkuk, Its Oil

The Kurdistan regional government has sent its Peshmerga troops into the adjacent province of Kirkuk to drive out insurgents, and to secure the area's rich oil fields. By doing this, the regional government has added a fourth province to the three it officially controls. The oil also provides revenue that could make an independent Kurdistan economically strong. VOA’s Jeffrey Young went out with the Peshmerga and filed this report.
Video

Video Malaysia Reeling: Second Air Disaster in Four Months

Malaysia is reeling from the second air disaster in four months involving the country’s flag carrier. Flight 340 vanished in March and despite an extensive search, no debris has been found. And on Thursday, Flight 17, likely hit by a surface-to-air missile, came apart over eastern Ukraine. The two incidents together have left more than 500 people dead. VOA Correspondent Steve Herman reports from Kuala Lumpur.

AppleAndroid