The current projections of government debt to GDP are unacceptable. I understand that both parties recognize the need to reduce this ratio. I demand that progress to be made toward a plan to do so prior to August 1, 2011, and I demand that the debt limit be increased by that time. I also demand that further progress be made in the development of next year's appropriations, and still more prior to the 2010 election.
That progress should be built on three bases:
- Economic growth. A high rate of economic growth should both increase government revenues and reduce some expenditures such as on unemployment insurance. Government actions to promote economic growth (building infrastructure, promoting technological innovation, building a strong workforce) are thus part of the overall plan for deficit reduction.
- Changes in taxation. Negotiations should include possible increases in taxes on the wealthy and reductions in tax expenditures, especially where such reductions may achieve other public purposes. Thus I would suggest a limit on the deductions on home mortgage interest to something like $7,000 per year.
- Reductions in government expenditures. Military expenditures should be cut, including by prudent withdrawal from Iraq and Afghanistan. Spending on entitlements should also be reduced, including Social Security, Medicare and Medicaid. Cuts in discretionary government expenditures will also be required, and a major effort should be directed at identifying programs that are not working well or that can be made more efficient.