WASHINGTON (Reuters) - Ditch the Pentagon’s F-35 Joint Strike Fighter and cut school breakfasts for poor kids, or raise taxes on the rich. On second thought, scratch those and raise the retirement age.
It is your choice in an online debt-reduction simulator that a quarter million Americans already have played.
Known as “Stabilize the U.S. Debt,” the game created by a bipartisan group of experts, the Committee for a Responsible Federal Budget, will never be as much fun as “Mortal Kombat Komplete,” but serious gamers likely would find it just as difficult to master.
Launched in May 2010, the simulator gives the general public a chance to create a winning deficit-reduction formula, drawing from a continually updated menu of choices that will shrink or increase U.S. public debt by specific amounts.
The player’s goal is to stabilize the debt at 60 percent of U.S. economic output, a much safer rate than the current and rising 67 percent level.
The game’s creators - former government fiscal policy experts - have no political agenda. But what they’ve found may dismay the most polarized in Congress: nearly all of the debt-minded wonks who try the game choose to combine new revenues with spending cuts.
“Many people might prefer smaller government or bigger government, but once you see what’s really involved in coming up with a package that’s big enough to fix the problem, most people - the overwhelming majority - come to the conclusion that you just can’t do it without looking at both sides of the budget,” said Maya MacGuineas, the group’s director.
“The problem is so huge that you have to look in every corner of the budget to find enough savings.”
The game shows the agony that faces budget negotiators on Capitol Hill, when every cut comes at a price and no solution is as easy as it seems.
Want to cut foreign economic aid in half to reduce debt by $80 billion? That might sound like a lot, but it is a speck in the $10.9 trillion mountain of U.S. public debt.
Want to pursue Newt Gingrich’s dream of a NASA moon colony? Go ahead, but that will add back $160 billion in debt. The tool automatically calculates your choices, including interest.
So far, 94 percent of participants have chosen to cut debt by combining spending and revenue changes, the committee says.
“It’s pretty clear from the simulator that Republicans who are playing are willing to consider pretty large changes to revenue and Democrats are willing to make changes to entitlements, including raising retirement ages,” said Marc Goldwein, the group’s senior policy director.
To be fair to members of Congress, cutting the debt is not just a numbers game. Any move has an impact on people who vote. Factory and construction workers would face a couple more years of physical labor if the retirement age is raised and farmers could face more uncertainties from cutting crop subsidies.
A major defense contractor, Lockheed Martin, would survive if its F-35 jet fighter got whacked, but manufacturing jobs in Texas and Georgia could be lost.
Unencumbered by these political chains, a Reuters reporter gave the simulator a try. How hard can this really be?
Plenty hard. The results of four attempts follow.
FIRST TRY - Conservative Republicans, including Tea Party activists, rely mainly on cutting domestic spending to heal budget ills. So, we tried their approach by blasting away at everything from food stamps to Medicaid healthcare for the poor.
President Barack Obama’s healthcare overhaul law gets zapped. We chose two revenue raisers touted by conservatives - selling government assets and improving tax collection.
Meanwhile, the sweeping tax cuts on all income groups enacted by former President George W. Bush are extended and other existing tax breaks remain. Defense outlays also are protected.
Result: “Uh Oh! You failed to reduce the debt to a sustainable level. Without further changes, a fiscal crisis is likely to occur.” Actually we were $3.06 trillion short of a sustainable level, and public debt rose to 73 percent of GDP.
SECOND TRY - Let’s take the conservative approach from above and add in defense cuts: Draw down Iraq/Afghanistan troops to 45,000 by 2015, replace the F-35 with cheaper F-16s and F/A-18s, and shrink the U.S. Navy to 230 ships from 287, among other cuts. Result: still $1.69 trillion short, with debt flat at the ominous 67 percent of GDP.
THIRD TRY - Give liberals their turn at the controls and rely on tax hikes to end the fiscal mess. Bush tax cuts: Killed. Estate and alternative minimum taxes revert to 2009 levels, and we scaled back prized deductions for mortgage interest, charitable giving and state and local taxes.
Result: “Congratulations! You reduced the debt to 59 percent of GDP in 2021 and kept it at a sustainable level through 2030.”
But what the simulator did not say: We have probably stopped the economy cold. Most economists argue that such a massive snap-back in taxes would crush the recovery for a year or two.
FOURTH TRY - No hard-core gamer would tolerate this, but let’s do the bipartisan thing and mix some revenue increases with spending cuts. We’ll start with Obama’s plan to raise taxes on those earning over $250,000 and impose a millionaires surtax. We cut troop levels and shrink the Navy but the F-35 lives.
Americans must be slightly older before qualifying for Medicare and Social Security and some benefits are shrunk. There are further savings from repealing portions of Obama’s healthcare reforms, which the Supreme Court may do anyway. We phase out the mortgage interest deduction while keeping the research and development funding increase.
Result: The pain is spread all around by picking and choosing from a menu of liberal and conservative options: raising taxes, giving up the moon base, cutting school breakfasts and arts funding. But we still are $750 billion short. “Nice try. You reduced the debt to 60 percent of GDP, but not until 2023. Hopefully, you will have done enough to avert a fiscal crisis.”
Congress, it's your turn to play. Here's the link: crfb.org/stabilizethedebt/
“The best thing we can do is ask every politician to run through the simulator themselves. Put them into a quiet, dark room with the shades drawn so they can figure out what it really takes,” MacGuineas said.
Editing by Richard Cowan and Vicki Allen