What Cutting the Federal Budget Entails By Josh Barro

What Cutting the Federal Budget Entails

By Josh Barro
The Center for American Progress released a report earlier this month on ways to shrink the federal budget deficit with spending cuts. A Thousand Cuts, by Michael Linden and Michael Ettinger, lays out specific program cuts of $255 billion per year by 2015 (about 7% of total federal spending), and is a valuable contribution to the discussion of the coming fiscal adjustment.
In this column, I highlight three areas where I don't believe the report has identified as many cuts as it could have: Medicare, military employee compensation, and tax expenditures. At the end, I will also discuss whether balancing the federal budget is "simple."
Two caveats should be noted to the report's presentation of a "spending cuts only" program. One is that it starts from a baseline of President Obama's proposed budget, meaning that the expiration of part of the Bush tax cuts is baked into the proposal. The other is that it treats the elimination of tax expenditures (credits and deductions offered through the tax code) as the deletion of spending items, a view that I endorse but will be controversial with some people
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