Some of you are probably thinking, "Oh NO! Not another post from somewhere on the fact that the President has never presented a plan to manage the deficit/debt." Rest assured, this is not that post. It is however inspired by the recent debt ceiling and downgrade news. Basically, I started running the following thought experiment with myself. Assuming that the Democrats in Congress actually wanted to reduce the projected debt increase by $4 trillion over the next 10 years, what would they put together to do so. Having thought about it and invited comment from folks on the left, I've pretty much come to the conclusion that it isn't possible. Let me explain how I got there.
To define terms, I am going to be using the CBO current policy baseline for this conversation. If one were to use the current law baseline (the one that assumes that all the Bush/Obama tax cuts will end and we'll cut doctor reimbursement in Medicare by 30%), there's simply no way that the Democrats could ever get to $4 trillion. So off of the current policy baseline, let's start.
1. Taxes. This is undoubtedly the largest bucket for Democrats or at least you'd think so. They've committed to ending the Bush tax cuts for the rich (as opposed to the Obama tax cuts for the middle class). That's worth about $800 billion versus the current policy baseline. They've also committed to closing corporate loopholes and (maybe) limiting certain deductions (again for the rich). So let's count that for another $300 billion. That's probably generous but we're just playing around. So $1.1 trillion for taxes. We're about a quarter of the way there.
2. Discretionary spending. Having signed the recent deal, it's probably fair to assume that the $900 or so billion in the deal that just passed (all of which is discretionary spending) would stay. Again, that's a charitable assumption as only half of House Dems voted for that bill when it was attached to the debt ceiling. As a standalone bill, I very much doubt it would have gotten the votes of half the House Dem caucus but let's leave it.
3. Military spending. Our starting point here is that ending the wars is in the baseline (that was the difference between the Reid and Boehner bills) so it doesn't count. So now we are working off a basis of about $600 billion per year. Let's say the Dems were willing to cut projected defense spending by 10%. I very much doubt such a bill would get through but again, let's assume it for the sake of argument. That's another probably $750 billion (because defense grows slowly over time) so we're up to $2.75 trillion.
4. Entitlements. Now we need $1.25 trillion from entitlements. Does anyone really believe this would ever happen, leaving aside a IPAB like solution that asserts we're going to save money without anyone feeling any pain? Anyone for that? Not I
So the conclusion is simple. There is no $4 trillion debt reduction plan that a majority of Democrats in the House and Senate would vote for. For all the noise about Republican culpability (much of which they deserve), it is shocking that the Democrats not only don't have a plan; but, at least by my thinking couldn't have a plan.