The event, sponsored by the Center for Strategic and International Studies and other organizations, emphasized the need to head off the sequestration provisions of the 2011 Budget Control Act (BCA). They are concerned that sequestration would require $50 billion in additional cuts next year. Also, over the following nine years spending would grow, but each year it would be $50 billion less than originally planned.
Those across-the-board sequestration reductions, along with a roughly similar amount in non-defense discretionary budgets of all agencies, are scheduled to begin Jan. 3.
“Sequestration,” Gates said, “reminds me of the scene from ‘Blazing Saddles’ where the sheriff holds a gun to his own head and warns the crowd not to make him shoot.”
It was never meant to happen. It was agreed to by congressional Democrats and Republicans and President Obama as the way to force a compromise for $1.2 trillion in debt reduction over the next 10 years through increased revenue and budget cuts.
The original $1 billion agreed to in the 2011 BCA was solely in budget cuts because Republicans refused to accept any revenue increases. The fact that the end of the Bush tax cuts have to be dealt with by Dec. 31 makes the lame-duck session even more critical.
As of today, the only way to stop sequestration is for the current Congress and president to agree on some new legislative approach — one that clearly will be influenced by the Nov. 6 election.
Gates recalled trying to cap the F-22 stealth fighter program when everyone agreed that procurement needed reform. His predecessors, including Dick Cheney, all had cut that program. However, as Gates put it, “The F-22 had suppliers in 44 states. That’s 88 senators.” It took an Obama veto threat to cap the program at 188 airplanes, far below the 720 planned. (The F-22 is one program Mitt Romney has said he wants to resume.)
“Figuring out how to get these people [in Congress] to rise above their parochial interests and frankly be willing to put their reelection at risk to do the right thing for the country” is critical, Gates said. He pointed out that reducing defense alone does not solve the problem because roughly two-thirds of all federal spending goes to entitlements.
Erskine Bowles, President Bill Clinton’s chief of staff and budget director, and former senator Alan Simpson (R-Wyo.) chaired the bipartisan commission that came up with a deficit-reduction plan that never got enough support.
Bowles said Monday that every dollar spent last year “on national security, homeland security, education, infrastructure, research . . . was borrowed, and half of it was borrowed from foreign countries.” He laid out five areas that would help with the deficit. The first is health care. His facts were familiar, such as our spending twice as much on health care than any other developed country, yet ranking “between 25th and 50th in things like infant mortality, life expectancy and preventable death.” The 32 million uninsured are treated in the ER, where costs are five to seven times that in a doctor’s office. Those costs shift to taxpayers with higher insurance and tax rates.
Defense is his No. 2. He noted that we spend more on defense than the next 15 largest countries combined — including Russia and China.
The third problem Bowles outlined was the tax code, which he called “the most inefficient, ineffective, globally anti-competitive income tax code that man could dream up.” He said in 2011 that the government got $1.3 trillion in income taxes but lost $1.1 trillion through “backdoor spending in the tax code.”
He listed Social Security as the fourth biggest problem. “We never talk about it in terms of deficit reduction,” he noted. Simpson had earlier told the panel that howls are heard to suggestions of going to age 68 by 2050 before you can draw Social Security or raising current wages subject to the payroll tax from $110,000 to $200,000 “where it should be.”
Interest on the national debt, which Bowles put at $250 billion a year, was his fifth target. The total is more than what’s spent on Commerce, Education, Energy, Homeland Security, Interior, Justice and State combined.
If interest rates were not at today’s low levels, 1.82 percent for a 10-year bond, but at the 2002 level of 3.86 percent, interest payments would more than double and almost swallow all of the base Defense Department budget.
Former budget director Alice Rivlin, who sat on the Simpson-Bowles panel, summed up what could be done. First, reduce Medicare and Medicaid growth and put Social Security on a firm foundation — hard for Democrats, she said. Then, impose tax reforms that raise more revenue — “hard for Republicans.” And reduce defense and domestic appropriations — “hard for everybody.”
Former senator Pete Domenici (R-N.M.), another panel member, picked up Gates’s remark, noting that when the “adults come back from campaigning . . . let us hope those adults are from both parties. Let’s hope they are willing to give and compromise in the best interests of this great country.”
For previous Fine Print columns, go to washingtonpost.com/fedpage.