As a corollary revenue problem as opposed to "deficit problem" issue identified earlier, Ezra Klein adds the "Congress" problem. This is a follow-up to the "do nothing" idea for closing the deficit—by doing nothing other than allowing the Bush tax cuts to expire, the deficit could be closed in a decade.
I asked Marc Goldwein, the policy director at the Committee for a Responsible Federal Budget, whether he could build out a graph showing exactly what deficit-creating policy decisions the Congressional Budget Office is expecting Congress to make, and how much of the fiscal gap they each account for. Turns out he could:
What you’re seeing here is the differences between doing nothing and doing what we expect Congress to do. The blue slope at the base of the graph is what our deficit picture looks like if Congress goes on permanent recess tomorrow. Every colored chunk above that is a deficit-increasing policy that the CBO thinks Congress is might pass.
You can see from the chart that the biggest chunks for our future deficits are probably going to be the Bush tax cuts and the patch to the alternative-minimum tax. We might see an infusion of spine within the White House and Congress next year to see the Bush tax cuts finally ended, but based on past experience the CBO's prediction that they will be renewed is a safer bet.
The "do nothing" approach is not a silver bullet, because it would raise taxes on the middle class at a time when the middle class can't absorb the cost, and it would also do things like cut physician payments under Medicare by 30%, thereby resulting in many fewer physicians accepting Medicare patients. But here's the real point: "we don't necessarily need grand bargains or debt-ceiling brinksmanship. We just need Congress to abide by PAYGO."
The best way to abide by PAYGO, the pay-as-you-go rules that lately have meant robbing safety net programs to pay for tax cuts, is to start increasing revenue. Serious revenue, not just nibbling around the edges with things like taxing corporate jets.