DON’T JUST DO SOMETHING, SIT THERE…. This counter-intuitive truth has been bouncing around for a couple of months, but I’m glad to see it gaining more attention. The fact of the matter is, one of the easiest ways to reduce the deficit is for policymakers to do absolutely nothing.
A trick question: If Congress takes no action in coming years, what will happen to the budget deficit?
It will shrink — and shrink a lot. This simple fact may offer the best hope for deficit reduction.
As federal law currently stands, some significant tax increases are set to take effect in coming years. The most important is the scheduled expiration of the Bush tax cuts at the end of 2012.
Yes, if policymakers simply leave the status quo in place, and let nature take its course, taxes will return to Clinton-era rates, the Affordable Care Act will save us a lot of money, and the deficit will shrink considerably.
This is generally called the “do nothing plan,” and it has a few pertinent benefits.
First, it would eliminate about 75% of the deficit over the next five years.
Second, it wouldn’t actually require any actions at all. As Annie Lowrey explained yesterday, “[D]oing nothing allows all kinds of fiscal changes that politicians generally abhor to take effect automatically.”
And third, doing nothing means no legislative messiness. There’s no need for negotiations, conference committees, or overcoming filibusters when there’s no bill to pass.
Is this approach politically feasible? Probably not. The “do nothing plan” would raise taxes on everyone, not just the rich, and that’s likely to generate quite a bit of bipartisan opposition. It would also scrap the “doc fix,” and slashing doctors’ payments would prove problematic.
But as Lowrey added, “[T]he do-nothing plan proves the point that the budget revolution does not need to be particularly revolutionary. Yes, the dollar figures are enormous, so big that it would appear to require “bold” plans that include massive new taxes or cruel new cuts. But, in fact, we don’t really need to end Social Security, sell Alaska, or ship the poor to Canada to get back in the black. We just need to stick to current law — particularly the tax and health care provisions — and then we can tinker our way toward a better, healthier economy.”