If we can't cut entitlements, what can we do?

The way to prevent such outcomes is clear. We must deal with the drivers of our future debt: Social Security, Medicare, and Medicaid. But for those who think it is not politically feasible to tackle entitlements, the Congressional Budget Office (CBO) recently published a report with a broader range of suggestions. They include limiting highway and transit funding to expected revenues (translation: don’t spend more than you collect), eliminating Head Start, and creating a federal value-added tax (VAT).

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Disappointingly, many of the CBO’s alternatives are meant to grow government revenue rather than shrink government expenditures. All told, the report details $15.9 trillion in tax hike options vs. $5.7 trillion in spending cut options. Nine of the top 10 “savings” come from tax increases, including a 5 percent VAT (which may eventually hit 20 percent, as has happened in Europe), a carbon tax, and an increase in the maximum taxable earnings for the Social Security payroll tax. These off-the-shelf options are worrisome. Given the choice, politicians will likely opt to take more of our money rather than to confront special interests and reduce the size of government.

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