The biggest obstacle to eliminating federal deficits and reducing the debt: Americans’ ignorance of the numbers

I’m going to be making some posts in the coming months about various options for reducing the deficit and whittling down the federal debt.

As beautifully and succinctly outlined by Calculated Risk, we can view the problem as having four layers: 1) a cyclical decline in revenues caused by the recession, 2) a structural problem regarding the general fund (not enough coming in to pay expenses excluding entitlements), 3) the strain on Medicare and Medicaid from rapidly escalating health care costs and an aging population, and 4) Social Security, which will need either lower benefits or higher income eventually. Right now our attention needs to be focused on #2 and #3.

The biggest issue confronting politicians is — and I don’t know how to say this nicely — ignorance. Yes, there are inefficiencies and waste that we can root out; yes, there are some programs that could be cut that might save millions or even billions. But if we don’t do something about the major federal outlays — Social Security, Medicare and Medicaid, and national defense — we simply cannot reduce the deficit or debt without the prospects of higher taxes (maybe much higher taxes).

But it’s those very programs that Americans — many of whom are incredibly angry about federal spending right now — do not want to cut. Take a look at this poll in today’s Washington Post. 78% of Americans oppose cuts to Medicare, 69% oppose cuts to Medicaid, and 56% oppose cuts to defense spending. This mirrors similar polling in recent years.

Only one deficit reduction area consistently polls well: higher taxes on the wealthy. In this latest poll, 72% support higher taxes on those earning over $250,000.

I’ll be posting more about some of these issues in the future. I hope these posts will in some small way encourage rational thinking and a firmer grasp of the math that we’re facing.