The Budget Debate: When Yin and Yang Don’t Meet
There is in Chinese philosophy, the concept we know as yin and yang: dark and light, cold and hot, male and female. Very simply put, the idea that opposites only exist in relation to each other.
It takes a little stretching, but not much, to apply this to the brewing debate over reining in spending by the federal government. (Only in Washington do we think like this.) It’s a debate that was accelerated this week by House Budget Committee Chairman Paul Ryan, R-Wis., when he rolled out his plan to slice the national debt for the coming decade by about $6 trillion.
Some would argue that the yin is budget cuts, and the yang is tax increases. That was the recommendation of most members of the bipartisan National Commission on Fiscal Responsibility and Reform — otherwise known as Simpson-Bowles – and of the Bipartisan Policy Center’s Debt Reduction Task Force, headed by former Republican Sen. Pete Domenici and former White House Budget Director Alice Rivlin. They and many others believe that any solution to the nation’s multi-trillion-dollar growing debt crisis rests with doing both.
The fiercest partisans, however, aren’t buying this. Die-hard Democrats argue that so-called entitlements, like Social Security and Medicare, don’t have to be trimmed in a significant way, that it can all be done on the revenue side. But that would involve repealing all the Bush-era tax cuts, not just those on the wealthiest, and then raising taxes by another $2.5 trillion over the next decade. In other words, the middle class would feel the pain.
True-red Republicans argue that it can all be done on the spending side, that the problem is not too few taxes, but too much spending. The budget cuts that would be necessary, however, on top of cutting Medicare and Social Security by at least $2 trillion over the next decade, as Ryan has recommended, and involve programs like cancer research at the National Institutes of Health, college grants for needy students and basic infrastructure repairs. These aren’t likely to be warmly embraced by a large chunk of the American people.
But, still, thoughtful observers like David Cote, CEO of Honeywell, the international manufacturing conglomerate, and a participant in the “Moment of Truth” project, established to continue the momentum created by the Simpson-Bowles Deficit Commission to increase public awareness of the deficit problem, argue that any solution has to involve both spending cuts and tax increases. Cote told me in an interview I did for Bloomberg Television recently that programs like Medicare must be trimmed because the baby boomer generation is retiring, leaving not “enough people paying into the system.”
His message to Democrats is “unless there are cutbacks, we will literally crush the system.” By the same token, he said he tells his Republican friends “there has to be some revenue increase … stop arguing and start doing something, because right now, instead of finger pointing, what the public needs is being brought together.”
Cote, one of the few corporate chieftains to serve on the Simpson-Bowles panel, summed up the current political climate: “…it’s almost like we want to revel in our discordant pluralism rather than pull together. We’d rather pull apart than pull together. And there do come times in a democracy when you actually have to pull together and say, ‘we need to get something done, and let’s deal with the facts.’”
Ryan isn’t ready to embrace both the yin and the yang. He told me this week on the NewsHour that he doesn’t “think raising taxes is a good idea in this economy. …Raising taxes on businesses at a time when they’re struggling to compete in the international economy doesn’t work.” On the contrary, he wants lower taxes on businesses and the wealthy, something he argues will stimulate business expansion, and grow the economy. He repeats the GOP mantra that government “spending … is the core root cause of our problem.”
And plenty of Democrats are arguing against cutbacks in the growth of Medicare and Social Security, saying these are the promises the government has made to senior citizens, now and in the future, who have few if any options for other sources of revenue.
Since the country’s leaders are still struggling to find common ground on a budget for this fiscal year — a budget that involves differences of “just” tens of billions of dollars in spending cuts, along with some important statements of principle, compared to the multi-trillions in the longer-term fiscal picture — the question of spending cuts and tax increases — yin and yang if you want to call it that — hasn’t been joined yet. But its turn is coming.
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