Weeks have passed now, and the negotiations over whether to cut spending, raise taxes, do both, by how much, who for, and — what were we talking about anyway? — have continued at a pace that makes glaciers look like Usain Bolt. The president’s initial plan, which called for $1.6 trillion in tax hikes, was laughed out of the GOP caucuses in both houses of Congress — in the case of the Senate, quite literally. The Republicans responded with a plan that calls for $800 billion in new tax revenue without actually raising rates on anyone, though whether this is actually possible is a source of some debate. And even though the GOP held the line on refusing to increase rates, that $800 billion, supposedly saved in closed loopholes, was widely panned by conservatives as total capitulation. The Obama administration then came down a bit, offering a $1.4 trillion tax increase. The GOP countered by offering … the same thing it offered in the last go-round, if rumor is to be believed, though both sides have remained largely silent since the offer came in a day ago.
Through it all, of course, both sides have also offered spending cuts to go along with the tax reforms, though the divide on cuts is as bad, or worse, than the divide on taxes. And Obama’s proposal to increase infrastructure spending by $50 billion has been greeted with howls of derision by Republicans, who have written it off as more government spending contributing to an already bloated government. Never mind that $50 billion is a drop in the bucket compared to the trillions of dollars in infrastructure upgrades that this country desperately needs to stay even moderately competitive with rising economies.
But at least all sides agree their needs to be spending cuts. And yet, both sides have also accused the other of offering no specifics whatsoever. House Speaker John Boehner demands specifics from the Obama administration on spending cuts. The Obama administration demands specifics from the Republicans on spending cuts.
And yet, no one’s really going to offer specifics. This is because, despite Republican insistence to the contrary and despite the widespread conventional wisdom, there aren’t a lot of cuts to be made. The United States spends a paltry amount on social programs when compared to other countries. And that’s despite the fact that healthcare costs in the States are far higher than anywhere else in the Western world, more than twice as high as other countries on average. In other words, if healthcare costs in this country were equivalent to costs in other countries, our spending on social programs such as Medicare and Medicaid would be even more pathetic than it is now.
So, where do we cut? One Republican idea that has some cachet is means testing for Social Security and Medicare — less benefits to wealthier retirees. But while income inequality in America is near an all-time high, and 1 percent of our population controls almost half the country’s wealth, cutting that tiny percentage of Americans’ benefits is not going to save anywhere close to the amount of money we need. The only cuts that would have a significant effect on deficit spending are so onerous that the public would never support them. And that’s why both sides are demanding that the other get specific on spending cuts — because whichever side gets specific first is going to get beaten like a mule.