Eventually, the country will have to confront the deficit we have, rather than the deficit we imagine. The one we imagine is a deficit caused by waste, fraud, abuse, foreign aid, oil industry subsidies and vague out-of-control spending. The one we have is caused by the world's highest health costs (by far), the world's largest military (by far), a Social Security program built when most people died by age 75 -- and, to pay for it all, the lowest tax rates in decades. The recent string of budget deadlines and crises may be manufactured. The problem is not."
After the jump, my review.
This short e-book (a Kindle Single) by New York Times economic columnist David Leonhardt is as good and concise summary of the current fiscal challenges facing the United States as you're likely to find. As much as any such analysis can, it avoids the politics of the situation and describes the facts of the challenges.
Here's the Deal tries to break out of the stale debate over cutting spending versus raising taxes by focusing on the importance of spurring economic growth. He allows for both spending cuts and tax hikes, but only where they promote growth through investment in programs that will make life better tomorrow.
Unfortunately, this book won't break the gridlock in Washington, as the balanced approach recommended by Leonhardt largely conforms to policy positions of one political party. The other party is wedded to policies that focus solely on the spending side. Still, Here's the Deal is worth reading by anyone interested in cutting through the politics of the daily talking points in the news.
"A good deficit plan doesn't simply impose across-the-board spending cuts or tax increases for years on end. It cuts funding for some programs that do not spur economic growth and increases funding for those relatively few that do. Likewise, it raises tax rates that do not have a clear record of promoting growth and cuts those that do."
"'These tax cuts,' Ryan, then a little-known Congressman, predicted in 2002, 'will grow the economy and get us back on track and grow those surpluses.' The economic growth that actually followed -- indeed, the whole history of the past 20 years -- offers a serious challenge to the tax-cut theology. If anything, economic growth has been significantly faster after tax increases than after tax cuts."
"Historically, the most successful economic-growth strategy revolves around investment: devoting resources today to making life better tomorrow."