Doing nothing is still an option
Ezra has pointed out before that there’s an uncomplicated way to fix America’s medium-term debt woes. All Congress has to do is … nothing. At the end of 2012, the Bush tax cuts would automatically lapse. As inflation rose, the alternative minimum tax would hit more and more Americans. A whole slew of business tax breaks would expire. And the Sustainable Growth Rate formula in Medicare would trigger large automatic cuts to payments to doctors. Here’s a new chart from Michael Linden:
That doesn’t mean the do-nothing plan is the best way to curb the debt, but it’s certainly an option. Note that even if Congress steps in and tweaks the doctor pay rate (so as to prevent doctors from fleeing Medicare en masse), and decides to index the alternative minimum tax to inflation, the federal debt still drops down to manageable levels. As Linden notes, “Even throwing in the extension of all the expiring business tax breaks would still yield a stable debt-to-GDP ratio at about 70 percent.”
Of course, this only covers the medium-term deficit. Over the long run, health care costs will keep growing and the debt will start rising again, but that’s a somewhat separate problem.
Tags
The Post Most: BusinessMost-viewed stories, videos and galleries int he past two hours
Blog Contributors
Ezra Klein
Ezra Klein is the editor of Wonkblog and a columnist at the Washington Post, as well as a contributor to MSNBC and Bloomberg. His work focuses on domestic and economic policymaking, as well as the political system that’s constantly screwing it up. He really likes graphs, and is on Twitter, Google+ and Facebook. E-mail him here.
Suzy Khimm
Suzy Khimm covers the budget, economic policy, and financial regulatory reform. Before coming to Washington, she was based in Brazil and Southeast Asia, where she wrote for the Economist, Slate, and the Wall Street Journal Asia. Follow her on Twitter here, and email her here.
Sarah Kliff
Sarah Kliff covers health policy, focusing on Medicare, Medicaid and the health reform law. She tries to fit in some reproductive health and education policy coverage, too, alongside an occasional hockey reference. Her work has appeared in Newsweek, Politico, and the BBC. She is on Twitter and Facebook.
Brad Plumer
Brad Plumer is a reporter focusing on energy and environmental issues. He was previously an associate editor at The New Republic. Follow him on Twitter. Email him here.
