Getting real about balancing the budget

The Economist's blog has the best take on Obama's proposed discretionary spending freeze:

From the standpoint of the purely economical, this is a huge mistake. Even if we assume that the economy will be strong enough in 2011 to handle budget balancing, this proposal is practically worthless. The administration has said this will produce $250 billion in savings over ten years, but as The Economist noted in November, the fiscal deficit will be over $700 billion in 2014 alone, and will grow from there. Non-defence discretionary spending is nothing; those who are serious about long-term budget sustainability talk about defence, they talk about entitlements, and they talk about revenues. In other words, this will do very little about the deficit, and it will do even less to convince markets of the credibility of the American effort to trim the deficit.

Quite true. You CANNOT balance the U.S. government budget without doing at least one, probably two, of the following three things:

1. Raise taxes.

2. Cut security spending.

3. Cut entitlement spending without cutting the payroll taxes that pay for it.

Period. Done. End of story. Republicans who claim to be able to balance the budget without doing any of these things are liars. Democrats who ape the lamest, most gimmicky Republican campaign proposals in the vain hope of seeming "centrist" are fools.

The best way to balance the budget, IMHO, would be to raise taxes by 3-5% on all income groups, raise the retirement age by two years, cut defense and homeland-security spending by a third, limit the growth of Medicare (but not Social Security) benefits to the rate of inflation, and implement a health reform bill that focuses on draconian cost control.

The alternative to this plan, or something like it, is probably an American sovereign debt default twenty years down the road. The odds of such a default were already high as a result of the Republican Party's long-term swing toward massive fiscal irresponsibility. The fact that Obama - the leader of the one party that has any desire to preserve our nation's solvency - is focusing on non-defense discretionary spending raises the odds even further.