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Got a plan to cut spending? Good luck finding consensus

Published November 28, 2011 10:01 am

Divide paralyzing Congress playing out in Utah, too
This is an archived article that was published on sltrib.com in 2011, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

A new report released by the Institute for Policy Studies, "America is Not Broke," identifies $824 billion in potential annual revenue that the nation could tap to ease its deficit and heal the economy.

By the way, that's seven times the savings that the congressional supercommittee was asked to find, the report points out. Even though its aims were lower, the bipartisan congressional panel last week couldn't meet a deadline to agree on a debt-cutting proposal, and imploded in failure.

So, up steps the institute with its solutions, and if local response is any gauge, the long-running war between Democrats and Republicans (and liberals and conservatives) over the Bush-era tax cuts that doomed the supercommittee will remain a key hurdle in the way of achieving consensus.

The progressive think tank based in Washington, D.C., contends that the country's financial resources have been misdirected, and it identified several reforms to make the United States "more equitable, green and secure."

The report recommended a combination of spending cuts and tax increases to move the country toward those goals:

• A potential $375 billion could come from taxing Wall Street transactions, corporations and millionaires. Since 2001, the United States has borrowed almost $1 trillion to provide tax breaks to the rich, and the report recommends reversing those Bush-era tax cuts as "the first step in any program to reduce deficits and raise revenue."

• Defense cuts, yielding $252 billion, include ending the war in Afghanistan, exiting Iraq, reducing the nuclear warhead arsenal, closing one-third of U.S. bases in Europe and Asia and other cutbacks.

• $197 billion could come from taxes on carbon emissions, air and water pollution, along with the elimination of subsidies for fossil fuels, ethanol, clean coal, nuclear power and projects that harm the environment.

Reaction in Republican-dominated Utah seemed to mirror the divide paralyzing Congress.

Jeff Thredgold, an economist who serves as a consultant to Zions Bank in Salt Lake City, said "it sounds like a wish list written by liberal Democrats. You wouldn't find a single Republican who would agree with that."

Bob Springmeyer, a former Democratic candidate for governor and president of Salt Lake City-based Bonneville Research, spoke for others when he said he believes that some of the proposals have merit, although he added that "some will probably be impossible to do."

Everyday folks find fault with both sides. West Valley City resident Melissa Gontcharov — a stay-at-home mom with a political science degree — expressed frustration over the supercommittee's inability to find middle ground and accomplish its task.

"It's kind of ridiculous that you can't find $1.2 trillion in cuts over 10 years," Gontcharov said, adding that both sides need to compromise and abandon their sacred cows. "We need to cut spending and increase revenue."

Salt Lake City resident Walter Haman, a cellist with the Utah Symphony, acknowledged that the state of the economy doesn't keep him up at nights, but said he does expect elected representatives to act responsibly and "do the best thing."

"If we as a nation decide there are certain things we want, be it Medicare or something else, we've got to pay for it, and that only comes through taxes," said Haman, a registered Democrat who sometimes votes independent.

No wonder politics and lawmaking have become so hard.

Thredgold agreed with the institute's overall assessment that the U.S. has not gone bust, but said he differs on solutions.

"Government — and government overspending — is the problem," Thredgold said. "It's doing a huge disservice to the American economy."

In his mind, it's impossible "to tax your way to prosperity." But in trying to find legislative solutions, polarization within both dominant parties has resulted in Washington gridlock, he said, leaving most moderate Americans without representation.

"The Democrats aren't willing to look at slowing the growth rate of entitlement programs without the Republicans increasing taxes," Thredgold said. "But Republicans are not willing to go for 'revenue enhancements' without slowdowns in entitlement spending."

Derek Monson, policy director for the conservative Sutherland Institute based in Salt Lake City, balked at the $252 billion in defense cuts put forward by the institute.

"They ignored the 50 percent of the budget that goes toward entitlement spending," Monson said. "That seems like a joke in my opinion."

To Monson, the commonsense solution seems obvious. "We spend more than we take in," Monson said, a habit that has continued for decades. "The last time we had a surplus without a deficit was 1998 through 2001."

For his part, Springmeyer thinks the conservative mantra of smaller government and less spending backfired when the Air Force announced earlier this month that 261 jobs would be cut at Hill Air Force Base, among other cuts nationwide.

"Our entire congressional delegation and the Governor's Office said go gore someone else's ox," Springmeyer said. "It can't always be someone else's ox that gets gored."

Springmeyer said he supports increasing taxes on the wealthy and imposing a carbon-emission tax. "It's the combination of the Bush tax cuts and conducting two overseas wars that really tipped us over," he contends.

However, Springmeyer sides with conservatives in putting some entitlement changes on the table. He said he would support raising the eligibility age to qualify for social security and Medicare by two years.

Allison Rowland, research and budget director for the advocacy organization Voices for Utah Children, agrees with the report's premise that America's wallet has more than lint left in it.

"The idea that the country is in some kind of debt crisis has been greatly overstated," Rowland said. "We do have an imbalance, but that's because we're trying to get out of a recession."

Rowland advocates job creation in the short term and a more balanced budget over the long term.

She, too, thinks she sees an obvious step toward a more sure-footed economy.

"You can't tax low-income people and expect to raise much revenue, so there's really only one answer. You can say that people who have really done well in spite of the recession should be willing to give more right now."

The trick is getting everyone else to agree.

cmckitrick@sltrib.comtwitter: @catmck —

"America is Not Broke," a new report

The Institute for Policy Studies points to fiscal reforms that could redirect $824 billion annually toward deficit reduction:

$375 billion • Tax Wall Street transactions, big banks, corporations and millionaires.

$252 billion • Cut defense spending by ending the war in Afghanistan and reducing U.S. presence overseas.

$197 billion • Tax carbon emissions, air and water pollution, and ax subsidies for fossil fuels, nuclear power, ethanol and clean coal.

Source: http://www.ips-dc.org