From the Editor

The HPR recently released a special online-only report examining the U.S. federal budget—the Annual Report of the United States of America (available at AnnualReportUSA.com). This report provides an accessible but comprehensive view of how the federal government spends our tax dollars. Realizing that there are a lot of misperceptions out there, we thought it would be helpful to provide citizens with a basic set of facts, figures, and charts—as well as a range of policy options for dealing with problems like short-term budget deficits and long-term debt.
We called this report “annual” because we hope to repeat it every year, so that readers can be updated on policymakers’ management of the federal budget. Citizens are going to have to be vigilant, because nothing is easier than for politicians to jack up spending and cut taxes. At this point, with the economy still languishing, that isn’t the worst thing in the world. But it’s unsustainable in the long run, and we need to demand better of our leaders.
The insurance industry, for example, is mobilizing to dial back the Affordable Care Act’s cuts to lavish Medicare Advantage plans and to do away with the tax on insurance premiums. If health care costs, which are the biggest driver of our long-term fiscal imbalance, are ever to be bent downwards, these are the kind of politically expedient decisions our politicians will have to avoid.
Social Security is another issue where it’s too easy for politicians to skirt hard choices. Luckily the choices that must be made are not as difficult as the ones that face us when it comes to making our mammoth health care system more efficient. A modest increase in the amount of income subject to the Social Security payroll tax would ensure the program’s long-term solvency.
Finally, there is the oft-overlooked issue of defense spending. Earlier this year, the Sustainable Defense Task Force, organized by Rep. Barney Frank (D-MA), identified almost $1 trillion that could be cut from the defense budget, ostensibly without harming military preparedness. The Republicans, whose pre-election pledge to cut spending included a farcical exception for “seniors, veterans, and our troops,” might have some mavericks in their ranks who are willing to put the Pentagon on the table. Newly elected Sens. Kirk, Paul, and Toomey have all indicated openness to the idea.
Such cross-party collaboration on common-sense budget solutions is what the HPR’s Annual Report is all about. In that same spirit, I hope that the deficit-reduction proposals put forward by Erskine Bowles and Alan Simpson, and by Alice Rivlin and Pete Domenici, will receive due consideration from both sides of the aisle. The public would benefit from an honest debate about the tough choices that face us.