SalemNews.com, Salem, MA

Opinion

April 17, 2013

Watson: Balancing taxes and cuts requires a grand bargain

(Continued)

Another positive thing to remember is that roughly one-third of the annual federal deficit in 2012 was a result of the large unemployment we still have. The combination of laid-off workers paying reduced taxes, but using more safety net programs, hurts the government balance sheet. So getting people back to work will help us immensely.

There is a wealth of reforms and improvements that can be made in the public sector. People like Harvard professor Linda Bilmes and Paul Volcker, chairman of the Fed from 1979 to 1987, have offered many smart, doable ideas. Bilmes’ ideas extend to reforming the budgeting process itself.

Two things are absolutely clear though, and nobody will like them. One: Some spending cuts and program reductions are necessary, and some additional revenues (higher taxes) will be required. No solution is feasible without both of those parts.

Two: For a 25- or 30-year grand bargain to occur — one that works financially and programmatically — every member of Congress and the president will have to compromise — and compromise significantly — to reach an agreement on the deal that this country needs.

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Brian T. Watson is a Salem News columnist. Contact him at watson@nii.net.

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