TALK TO fiscal experts about the nation’s long-term budgetary woes, and most make a simple point: Any workable approach to stanching the federal flow of red ink will require both spending cuts and revenue increases. That’s only logical, of course, since both spending hikes and tax cuts contributed to our current deficit predicament.
And yet, that unwelcome reality is easy to ignore. Here’s an illustration. An April Economist survey found that 62 percent of American adults said they’d prefer to see the deficit addressed solely by cutting spending. So what would they cut? The only reduction a majority agreed on was foreign aid, which is about 1 percent of overall spending. No other cuts garnered the support of even 30 percent. Further, when queried about Medicare, a leading driver of federal spending, a mere 7 percent favored paring the program back.
If that highlights the public’s mixed mood, a new report by the Pew Charitable Trusts’ Economic Policy Group demonstrates how difficult it will be to solve our long-term fiscal problems without addressing both sides of the ledger.
The study predicts that the national debt will rise to 95 percent of gross domestic product by 2025 and examines what it would take to reduce it to a more sustainable target of 60 percent of GDP by that same year. Under Pew’s assumptions, corrective action wouldn’t be taken until the economy has recovered, but in 2015, permanent policy changes would be made to put the budget on a trajectory toward that 2025 target.
If all we did was raise taxes, it would require a 32 percent increase in individual income tax revenue. (And that would come atop a tax hike for upper earners, since one of Pew’s baseline assumptions is that the Bush tax cuts for those making more than $250,000 will expire.) If the corporate income tax, payroll and excise taxes, and other federal levies were included, then tax revenues would have to increase by 16 percent.
Tackling the problem just through cuts in discretionary spending, meanwhile, would require cutting about $590 billion, or about 43 percent, of a projected $1.37 trillion in such expenditures. That’s approximately equivalent to eliminating all Department of Defense spending. If the budgetary corrections were made just by reducing entitlements, then Social Security, Medicare, and Medicaid — as well as some veterans’ programs — would suffer cuts of 22 percent. That would decrease the average monthly Social Security check from $1,255 to $985.
So what if both discretionary (including defense) spending and entitlements were on the chopping block? Well, then 14 percent across-the-board cuts would be required. That would eliminate the equivalent of all the spending done by the Departments of Transportation, Housing and Urban Development, Justice, and Treasury, as well as NASA. Those cuts would also mean reducing average monthly Social Security benefits from $1,255 to $1,075.
Now, let’s look at a scenario that treats both sides of the ledger equally. That would mean pairing a 7.5 percent spending reduction with a 7.5 percent increase in overall revenues. Under that approach, the average monthly Social Security payment would be reduced from $1,255 to $1,160.
Ingrid Schroeder, director of Pew’s new Fiscal Analysis Initiative, sums it all up this way: “We are on an unsustainable trajectory and there is no silver bullet for solving the problem. But the more things you put on the table, the less burdensome the remedies will be.’’
Pew, a nonprofit, nonpartisan organization dedicated to producing research to inform the public, isn’t advocating one approach over the others. Still, for those interested in finding practical solutions rather than manning the ramparts for rigid ideological positions, the conclusion should be obvious. Taming our deficit problem will require a pragmatic compromise that both pares back spending and raises more revenue. That’s the only politically realistic route forward.
But even if you’re a left-winger insistent that it all be solved with taxes or a right-winger adamant that spending cuts are the only acceptable remedy, the Pew report is still well worth your while. It provides something sorely needed in the public debate: A clear sense of what each approach means. And on a subject this complex, that’s a true public service.
Scot Lehigh can be reached at lehigh@globe.com. 
