In the short time between the election and Dec. 31, the lame duck U.S. Congress has a “golden opportunity” to close two-thirds of the budget deficit by doing nothing.
Roger Altman, founder of Evercore Partners and a former deputy U.S. Treasury secretary, told CNBC all the Congress has to do is let all the Bush-era tax cuts expire.
That, combined with the mandatory $1.2 trillion in cuts over 10 years that kicks in because of the failure of the bipartisan “supercommittee” to come up with alternatives, will “have two-thirds of the problem in terms of the debt to (gross domestic product) ratio solved,” he said.
Allowing all the tax cuts — including those for upper-income earners — to expire saves $3.6 trillion over 10 years, he said.
“It’s not that you have to extend the tax cuts. They expire by law,” Altman said. Any attempt to extend them could be vetoed by President Barack Obama. Congress would then have to get two-thirds of the members to override “and that wouldn’t happen” in such a short time before the new Congress takes office in January.
Whoever wins the election “has the ability, who ever he is, to unilaterally put in place a giant amount of deficit reduction,” he said.
Altman spoke on Monday, the same day President Obama announced a proposed budget that raises taxes on the rich and defers cuts in the deficit until the economy is back on course.
“I don’t think anyone is satisfied with this [proposed] budget, including [the Office of Management and Budget] and the White House,” Altman said. The budget “confirms the dire deficit and debt outlook” and isn’t likely to be passed in an election year by the Republicans anyway, he added.
As for changes to social programs such as Medicare, “I always thought the Simpson-Bowlesframework was a good one,” Altman said, referring to the bipartisan presidential panel whose recommendations to reform the tax code, cut entitlement spending, and other measures were never formally approved after 10 months of study in 2010.