Dysfunction breeds dysfunction.  So why are we surprised by the seeming impasse over raising the Federal Debt Ceiling?  Dysfunction gave birth to the debt and now it is trying to reproduce.

There are all sorts of reasons offered by both political parties why their position is principled.  Most of the Congressional comments sound like either pandering or plain misinformation.  Reading blogs and comments, however, suggests there is wide disagreement amongst non-politicians too.

For public consumption, the GOP piously puts forth the line there must be deep spending cuts before they will sign on to any debt limit increase.  Democrats are saying that with any deep cuts, there must be tax revenue increases also.  And, from there any discussion grinds to a halt.

With over $1 trillion in deficits, how can there not be deep spending cuts?

Currently for every dollar of spending, 40 cents is borrowed.  This seems obvious.

With tax revenues at an all time low and well below the level when Bill Clinton last balanced a budget, it should be clear that increased tax revenues should be a legitimate part of the discussion.

Digging deeper, entitlements (Medicare/Medicaid and Social Security) are on well predicted paths.  These entitlements have been projected to be at their current levels for at least three administrations.  There can be no path forward without addressing these expense.

Steps to fix these entitlements are not easy.  On the surface, many suggest shifting Federal costs to recipients.  It seems some cost shifting must be part of a solution.  We must remember, however citizens have been told for years that Medicare would cost them “X” during their working career, and and maybe “Y” in their retirement years. With these shifts, “Y” will be “Z” and “Z” will be more.

Is this shift fair if that is the only change?

Delaying the onset of Social Security benefits and/or adjusting the yearly SS inflation rate seem manageable.  But touching either makes Liberals come out of their shoes.

How do we proceed?

Simpson-Bowles offers an outline.  Their commission report suggests roughly a $3 in cuts for $1 in new revenue.  So lets go through the budget beginning with entitlements.

Social Security.  Democrats could go first and propose delays or rate changes or whatever.  Any reductions in benefits would follow the $3 cost reduction to $1 dollar increased revenue.

Next Republicans could propose changes to Medicare/Medicaid.  They too would have to propose $1 of new taxes for every $3 of cost cuts.  Get the picture?

Democrats would follow with the Defense budget using the same approach.

The rest of the budget would be divided in three parts.  Republicans would take two thirds and the Democrats one third. Of course, the $3 cost to $1 new revenue would be in place.

With both parties agreeing to this approach, the debt ceiling should be raised by $2.5 trillion with a voice vote.

In the end, voters could see how responsible each party was in deciding what and where to cut, and what and where to tax.  Voters could cast their vote at the next election.

I understand there are no snowballs in hell.  I think this proposal could break the log jam, but has about the same probability as the snowball too.

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See more of Jack’s work at Regaining the Center

About Jack Lewis

Jack Lewis is a retired, former senior executive of a large chemical company. He has lived twice in Europe, has traveled extensively to Asia, and is the author of 'Vision, Values, and Results', a how-to business book. He began posting to his blog, Regaining the Center, in 2007. Jack firmly believes in progressive values, and finds his way to the center by balancing these values with practical solutions supported by data.

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