NEW YORK (CNNMoney) — Trillions in spending cuts. No tax increases. No kidding.
That is House Speaker John Boehner’s opening bid in negotiations over raising the debt ceiling.
Politically, the Boehner parameters aren’t likely to fly. President Obama and other Democrats have already made clear they want to reduce debt through a combination of spending cuts and increased tax revenue.
But practically, can the country live with a regimen of spending cuts alone? It’s unlikely, since the changes could end up being too severe to be palatable, fiscal experts say.
Just to keep the country’s total debt where it is now — around 60% of GDP — without tax increases, lawmakers would need to cut spending today by 35% or about $1.2 trillion, according to the Government Accountability Office.
That’s almost as much as what the country spends on defense and other discretionary spending — i.e., nearly everything Americans expect their federal government to do outside of providing Medicare, Medicaid and Social Security benefits.
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Keep in mind, too, that stabilizing public debt at 60% likely won’t be enough because it’s still well above the country’s historical average — which is under 40%. Translation: Even more cutting would be necessary in subsequent decades.
Another reason that a spending-cuts-only debt-reduction plan may not be the best option: It likely would require less of a sacrifice from the wealthy than from everyone else.
And any plan lawmakers agree to has to be seen as credible by the markets since the push to bring deficits down is driven by a fear that bond investors at some point may turn tail on U.S. Treasurys.
A Reuters survey this week suggests that spending cuts alone wouldn’t fly. A majority of bond firm economists and fund managers said that tax increases, in addition to spending cuts, must be part of the solution.
It’s not clear how many trillions Boehner and the GOP will aim for in spending cuts or over what time period.