Asking the Hard Questions


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In yesterday's Washington Post, here's a warning from the former director of the Congressional Budget Office (CBO), Douglas Holtz-Eakin. The column raises important questions about the role of government, fiscal accountability, and the impact of the aging baby boom generation on the federal budget.

Holtz-Eakin begins by pointing out weaknesses in the official budget forecasts from the CBO and the Office of Management and Budget (OMB). According to the author CBO claims that the nation's deficit will be eliminated over the next decade. However, CBO gets there by assuming that the Bush tax cuts will be allowed to expire--something Bush himself hopes won't happen, as he made clear during his State of the Union, when he said, "Because America needs more than a temporary expansion, we need more than temporary tax relief. I urge the Congress to act responsibly, and make the tax cuts permanent." Meanwhile, the OMB assumes "that the President's policies are adopted--all of them." Holtz-Eakin sniffs that "neither agency's forecast is likely to match reality next year, much less five or 10 years from now."

Perhaps it's too much to grapple with to understand why OMB and CBO operate under such different assumptions, but here's something worth grappling with and something each American should think about especially as the President's budget is introduced, "What exactly do you want your government to do?"

Inevitably policymakers will need to deal with Alternative Minimum Tax Reform and whether or not to extend the Bush tax cuts. But the ironically larger question (both AMT reform and extending the Bush tax cuts are pretty large policy hurdles) is what to do about the aging baby boomer generation.

Holtz-Eakin tells us that "By 2016, Social Security, Medicare, and Medicaid alone will consume over one-half of federal spending." These huge future expenses have many policymakers worried. They wonder something along these lines, "Is it possible to cut these popular programs? Or will we have to raise taxes to continue to provide these services?"

Before considering cutting this or that program, we need to think about the kind of government we want. Do we want a government that is equipped to assist the poor, the elderly, the disabled? Do we want a government that invests in technology, research, economic development? Do we want a government that acts to protect and defend its citizens? Do we want a government that strives to educate each and every resident? If you answered "yes" to these questions - then each of us must be willing to dig a little deeper into our pockets and paychecks in order to pay for the government we want.

The author raises a question as to whether or not Americans will tolerate these increased taxes. If we want a government that protects, defends, educates, and supports - then we must pay for these services, increased debt is not an option. If we choose a government that does less, then we should be content with less, and we will pay accordingly.

Now is not the time for political parties, our President, or the American people to "monkey around." Holtz-Eakin makes it incredibly clear that these fiscal issues are coming to a head, and sooner rather than later. So before jumping on the "tax cut" bandwagon, it's necessary to ask what type of government we want and then figure out how to fund it, in a fair and equitable fashion.

Thank you for visiting Tax Justice Blog. CTJ and ITEP staff will soon retire this domain. But ITEP staff are still blogging! You can find the same level of insight and analysis and select Tax Justice Blog archives at our new blog, http://www.justtaxesblog.org/

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