Last week’s column discussed in thematic terms the need for a “grand bargain” on the size and content of the federal budget. This bargain would be all things to all men, and simultaneously, because it would involve significant compromise from just about everybody, it would satisfy nobody perfectly.
The deal would create a 20- or 30-year plan to put the national government on a sustainable financial course while at the same time providing support to those who need it, funding the agencies and obligations of the government, and facilitating the things that the private sector does best. It would select wise, long-term policy goals and integrate economic considerations and quality-of-life considerations into the vision and logic behind the plan.
It would take account of the need for immediate investment and spending by both the public and private sectors, and the need longer-term — after unemployment has been substantially reduced — to have accomplished efficiency improvements to our spending on defense, social programs and other categories of the budget.
Although creating such a plan is a mammoth and daunting task, and looking at the dynamics of the demographic projections through 2035 is enough to frighten us all, there is reason to be optimistic. Already, the federal budget is responding positively to just a few measures we have taken. The combination of raising the top income tax rate and instituting a few other targeted tax increases, implementing some of the sequestration cuts, and decreasing unemployment (thus increasing revenue and reducing social service costs) are already helping the national balance sheet.
There are many other changes we can make to start to flesh out the contours of a smart plan. With regard to defense spending, for example, there is much potential to reduce its cost without damaging our military capabilities. The basic defense and ongoing war budgets — not including veterans spending or Homeland Security — total about $740 billion, roughly 20 percent of the federal budget.