YES. Wait, make that HELL YES!!!!
Democrats have been publicly demanding the efforts to balance the budget not include cuts in entitlement spending. A great many conservatives say this is impossible. Unfortunately for them and fortunately for us, their logic falls somewhere behind that of Microsoft Windows Defaults.
You see, when you have a functioning computer, and then you make some change that prevents the computer from working, one of the first suggestions it helpfully offers is to go back to the last working settings. In the case of our budget, that would be right around 1999. So lets look at what we’d have to reset to get back to a balanced budget, and whether we can spare entitlement programs in the meantime.
In 1999, Federal revenues were 1.82 trillion dollars, and the national GDP was 9.2 trillion, meaning that revenues equaled 19.78% of total GDP. Remember that with that tax burden, the economy was humming right along. Apply that same tax burden to today’s GDP of 15.8 billion dollars, and you get revenues of…drumroll please…3.125 trillion dollars. Now, in 2012 we spent 3.78 trillion, so we’re not out of the woods yet, even if we bring revenue to Clinton levels…but we’d have cut down the deficit substantially.
Now lets look at the Pentagon. In 1999, the Pentagon constituted something like 3% of our GDP. Bring our defense spending back in line with our current GDP, and defense spending would be at just about 515 billion dollars. Instead, we spent 868 billion on defense last year. Figure in that 350 billion dollars in savings and you’re looking at a deficit in the neighborhood of 300 billion dollars, a mere 2% of GDP. Indeed, given that over 200 billion of that is interest payments on our current debt, we’d be very close to turning a net operating profit, in business terms. But suppose we want to do better?
There’s a variety of ways to get rid of that last chunk of the deficit. Republicans would like to see deep cuts in non-defense discretionary spending, while Democrats would probably be more at ease with recouping the money through restrictions on tax breaks and shelters. Either way, what would remain of the deficit would be controllable without touching entitlements.
Am I suggesting we take all these steps now? Certainly not. The economy is still fragile and a shock like balancing the budget would immediately could have a very negative impact. The point is, it is possible, wails from the right not withstanding, to structure our fiscal policy in a way that we know keeps the economy running (because we’ve seen it before), balances the budget, leaves our military well-funded and powerful, and doesn’t renege on the promises the government already made to its people regarding entitlements.