The government’s surging deficit can be cut, easily. Getting it done? Almost impossible.
Economic recovery and the end of stimulus spending will do the heavy lifting in this not-so-secret plan to slash the deficit that the Treasury department has put forth.
The plan is to bring the deficit down to 3 percent of GDP from 10.6 percent, through a combination of tax increases and spending cuts. Treasury believes 3 percent is sustainable.
If economic growth (GDP) is at 3 percent and debt growth is at 3 percent, they would cancel each other out, leading to a revenue-neutral situation.
Sixty percent of the deficit reduction will be accomplished through higher tax revenues; 40 percent through reduced spending.
Without a plan to arrest the growing deficit, it will continue to skyrocket and, as a result, a huge portion of what the public will be paying is interest on the debt.
Here's the math: $105 billion from a spending freeze talked about by President Barack Obama, $252 billion from the expiration of tax cuts for couples earning more than $250,000 annually, $331 billion from bank fees, and $250 billion from reduced spending on the Afghanistan and Iraq wars.
And now for the hard part: how it gets done. First, you appoint a bipartisan committee to make recommendations, while also figuring out the wild card of whether the health care law is a positive or negative for the deficit and whether imposing a value-added tax will yield a trillion dollars. Finally, you factor in how entitlement cuts will improve the picture.
Easy math? Yes. Getting the politics right? Not so fast.