Charles Krauthammer advocates real compromise when it comes to avoiding the fiscal cliff, saying Republicans should concede to tax increases only as accompanied by cuts to discretionary and entitlement spending along with tax code reform. In his weekly Washington Post column, Krauthammer writes that Speaker Boehner and his House Republican majority shouldn’t deal as if they come to the table without a card to play. They’ll take a hit, but President Obama will suffer lasting damage to his legacy if the American economy gets hit with across-the-board tax hikes in January.
There’s been a scuffle within the GOP family about the best way to proceed here. The reality is that we have a massive and growing national debt that must be addressed. The fiscal cliff does just that – but so suddenly and substantially that it seems untenable. The better way is with a deal that steadily reduces debt but also promotes prosperity and growth.
Real cuts to discretionary spending is probably the easiest place to start politically, and the need for them should be self-evident. Some of the fiscal cliff cuts are actually a decent place to start, but a new deal could contain a smaller package of cuts and one that no longer requires the military to take on the largest proportional share of spending reductions.
Entitlement reform will be incredibly difficult to agree (especially in such a short period of time) but really it must be included – even if it is a modest, incremental change, such as the gradual raising of the age of social security eligibility, say, by one or two years over the next decade. Something that will at least begin to change the liability curve over time and prevent these programs from not only consuming an ever-greater share of the budget annually but eventually drowning us in red ink entirely. We have got to start somewhere.
In exchange for these cuts, Republicans should go along with the removal of certain exemptions from the tax code. Everything should be looked at. All things being equal, you avoid popular programs like the home mortgage interest deduction to the degree possible. You also bring to the table cuts to corporate welfare; most obviously cases like Solyndra, where economically dubious pet projects are being promoted, but handouts for other business interests as well. Scaling back exemptions and subsidies not only relieves deficits but also flattens the tax code, which should be a perennial goal for the Republican Party.
All of that is easier said than done of course, but it could be a good road map for the next month as lawmakers try to avoid walking us off this cliff we have created for ourselves.