According to a story from the Associated Press, it appears that President Obama’s bipartisan deficit reduction commission is ready to bring some realism and logic to Washington on ways to reduce the federal budget deficit. Of course, the odds that politicians will support these ideas are low since they have proven lately that they believe in magic (on one hand calling for deficit reduction while on the other refusing to support entitlement spending cuts or tax increases — both of which are needed to balance the budget).
Not all is lost though, according to this AP story. I say that because the recommendations being put forth by the two leaders of the commission (one from each party) are exactly the kinds of budget cuts that we should be talking about. Social security and defense spending together account for about 40% of government spending, making it imperative not to deem those areas “untouchable.” I was also happy to see that they mentioned farm subsidies and the mortgage interest deduction as other areas of focus.
While the mortgage interest deduction is a tough sell politically (if eliminated it would hit the middle class), it costs the United States about $100 billion per year and makes little sense from a policy perspective. In a day and age when many Americans believe that Washington, DC is spending money unnecessarily, why should the federal government help us out with our mortgage payments? Really, that is all the mortgage interest deduction is, the federal government reimbursing you for a portion of your mortgage. There is no reason whatsoever for a government running annual deficits of over $1 trillion to be paying some of people’s mortgages.
Let’s cross our fingers that the new Congress, filled with people who got elected by campaigning on deficit reduction, actually deliver on their promises and support some of the commission’s recommendations, because if they don’t real cuts will be impossible.