Small Pain, Real Gain

WITH the federal deficit headed toward $1.5 trillion both this year and next, the Obama administration is under pressure to produce a plan for fiscal stability. Some of that pressure has come from editorial pages, including this one, so we thought it was only fair that we offer a few specific ideas of our own.

Obviously the big dollars are in defense and Medicare, Social Security and other entitlements, as well as the monumentally inefficient tax code. A true fix to the country's structural fiscal problem must await their comprehensive overhaul. But the point here is to show how much Congress and the administration could accomplish even without taking on those huge political battles. In fact, with the help of the Congressional Budget Office's recently released annual budget options report, we've identified $100 billion in savings over the next five years. They could be achieved without imposing sacrifices on the needy, reducing middle-class living standards below recent norms -- or even touching farm subsidies.

Much of the savings in our proposal would come from adopting a more accurate measure of inflation for annual adjustments in both taxes and spending. Currently, income tax brackets, exemptions, standard deductions and the like are indexed to keep up with the Consumer Price Index for urban consumers, which is based on buying pattern surveys that can be up to two years out of date. The government should instead use a slightly different, but more realistic version of the index, which reflects the fact that people maintain their standard of living by substituting cheaper products when prices rise. Use of this infelicitiously titled "chained CPI" in the tax code would save $22 billion over the next five years, according to the CBO. Adopting the chained CPI for all federal benefit programs that are indexed to inflation would save another $20 billion -- merely by slowing the growth of future benefits slightly, not actually cutting them or taking away any that have already been awarded.

No Post editorial would be complete without a pitch for the federal gas tax, but let's keep it modest this time: Simply restore the gas tax, currently 18.4 cents per gallon, to its real value when enacted in 1993. The necessary increase, nine cents per gallon, would still leave gas prices lower than they were a year ago -- while cutting the deficit by about $45 billion over the next half-decade. If this rankles, remember: Because the tax discourages petroleum consumption, it will make it harder for oil producers to jack up the world price of oil. Hugo Chávez and Mahmoud Ahmadinejad would be getting hit, too.

Thirteen billion dollars to go: Let's consolidate three existing tax credits and deductions for higher education expenses into a single credit program ($6.6 billion), eliminate school-lunch subsidies for non-poor children ($1.2 billion) and phase out capital grants to big airports ($5 billion). For the last $200 million, get rid of just one of Amtrak's five most unprofitable routes.

There. Now, was that so hard?