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Opinion

Commentary: Fed needs to get realistic about deficit

The Sacramento Bee

December 02, 2010 11:06 AM

It is far from perfect, but the blueprint from the president's deficit reduction panel is a reasonable place to start.

The long-term spending cuts and tax increases needed to avoid financial ruin are not going to get any easier politically or less painful for Americans.

The plan calls for deep cuts in domestic and military spending starting in 2012; for reducing payments to future Medicare and Social Security beneficiaries and raising the retirement age; for doubling the federal gas tax; and for sweeping changes to the tax code that would lower overall income tax rates but tighten or eliminate popular deductions, notably the one for home mortgage interest.

Everyone in Washington knows that the federal government's current fiscal path is unsustainable and damaging to the economy. With a projected $1.3 trillion deficit this fiscal year, the total public debt (not counting Social Security and other government trust funds) is north of $8 trillion, equal to more than 60 percent of the total U.S. annual economic output – a higher ratio than ever, except during World War II.

As Uncle Sam borrows more, there's less money available for private investment, and America goes deeper into hock to competing countries such as China.

The top Republican and Democrat on the Senate Budget Committee, who also sit on the bipartisan commission, had it exactly right when they offered critical support for the plan Wednesday with its formal release.

"It represents a step forward that we urgently need," said Republican Judd Gregg of New Hampshire.

To read the complete editorial, visit www.sacbee.com.

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