Why Deficit-Cutting Is Good Rhetoric but Hard Reality

Cutting entitlement spending has real consequences that neither party seems ready to live with, at least not at the moment.

Two recent events underscore why the U.S. has a deficit problem and why it's unlikely to be solved without deep concessions by both parties and most Americans.

The first is Representative Paul Ryan's budget proposal, which is expected to be unveiled next week. Ryan, a Wisconsin Republican, is expected to balance the budget within 10 years -- without raising any additional taxes beyond those agreed to earlier this year. To make this math work, Ryan needs to cut costs and was reportedly considering raising the age cutoff for his Medicare premium-support plan to 56. While details haven't been released, such a move could shave the health program's near-term costs, since fewer people would be eligible for traditional Medicare within the 10-year budget window.

But cutting benefits isn't easy, and Ryan is now apparently reversing course after members of his party balked at an idea that would violate a promise to protect Medicare benefits for those 55 and older (a key sector of the electorate).

The second revealing move is one by Republican governors in eight states to expand Medicaid and accept money from the Affordable Care Act (aka Obamacare). After decrying Obamacare all through the 2012 election, Republican governors are now coming around to the idea they need federal money to help provide health insurance for the poor. The decision is largely an economic one: The federal government will cover costs for the first three years, saving states like New Jersey $227 million in the first year alone. The alternatives are denying health care to the most vulnerable or states assuming the tab themselves.

Both of these moves help illustrate why it's so hard to cut the deficit: Cutting benefits -- whether to retirees or the poor -- is politically difficult and not something most lawmakers appear willing to embrace (despite rhetoric to the contrary).

There are, of course, other ways to trim the deficit, and Ryan's budget proposal will likely roll out a host of cuts for other areas of the federal government. But the long-term deficit is not a problem that can be solved simply by slashing discretionary programs. The rate of growth on spending for entitlement programs must slow or taxes must go up (or, preferably, some combination of the two must occur).

Washington's dysfunction is inexcusable, but it's also grounded in a harsh reality: Cutting entitlement spending has real consequences that neither party seems ready to live with, at least not at the moment.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

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    Deborah Solomon

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