WASHINGTON — Expanding on the point I made this morning about the Clinton tax codes…
Slate’s Annie Lowery points out that as a structural matter of law, the budget is already on its way to fiscal health. In fact, Congress and the White House can actually balance the budget within this decade by doing exactly nothing. Seriously. Here’s how:
So how does doing nothing actually return the budget to health? The answer is that doing nothing allows all kinds of fiscal changes that politicians generally abhor to take effect automatically. First, doing nothing means the Bush tax cuts would expire, as scheduled, at the end of next year. That would cause a moderately progressive tax hike, and one that hits most families, including the middle class. The top marginal rate would rise from 35 percent to 39.6 percent, and some tax benefits for investment income would disappear. Additionally, a patch to keep the alternative minimum tax from hitting 20 million or so families would end. Second, the Patient Protection and Affordable Care Act, Obama’s health care law, would proceed without getting repealed or defunded. The CBO believes that the plan would bend health care’s cost curve downward, wrestling the rate of health care inflation back toward the general rate of inflation. Third, doing nothing would mean that Medicare starts paying doctors low, low rates. Congress would not pass anymore of the regular “doc fixes” that keep reimbursements high. Nothing else happens. Almost magically, everything evens out.
These are the CBO’s baseline projections. But, of course, Congress is not likely to let the Bush tax cuts fully expire, or slash doctors’ payments. So the CBO also prepares an “alternative fiscal scenario” that looks more like the path we expect Congress to take. It’s the alternative scenario that has the horror-show deficits. But Congress doesn’t have toact. It just has to do nothing. Or when it does do something, it has to pay for it.
Of course, much of this is politically untenable, at least as far as recent history goes. And one could make the argument that this would be good, OK, bad or terrible as a matter of policy, an argument I’m not casting judgment on one way or the other.
The point here is, and the fact remains, that the math needed to balance the budget is already there.