WASHINGTON (Hispanic News) July 27, 2010 —

Democrats and Republicans alike claim to have found religion about the need to control the nation's unsustainable trillion dollar budget deficits.

As it happens, with the so-called Bush tax cuts of 2001 and 2003 set to expire at the end of this year, both parties have a chance to do something about the deficit simply by doing nothing.

So are they prepared to seize this rare opportunity? Hardly.

President Obama and most Democrats want to extend those tax cuts — which slashed marginal rates as well as taxes on dividends and capital gains — for all but high-income households. Never mind that most Democrats voted against the cuts in the first place, or that the economy had been flourishing before they were enacted.

Republicans, for their part, are not satisfied with extending most of the tax cuts. They want to extend them all. Never mind that these are the very people who turned a budget surplus into a $5 trillion mountain of debt during the Bush presidency and who have been making the most noise about the deficit recently.

The best approach, though the least likely, would be to put aside the political maneuvering and do what is in the nation's long-term interest. That would be to let the tax cuts expire — first for the wealthy and more gradually for everyone else — then couple that move with large-scale spending cuts in a two-pronged attack on the deficit.

While that might seem a bit harsh, consider this: Nearly half of the nation's households now pay no federal income tax at all, an unhealthy level that undermines the national sense that everyone is in this together. Taxes have been cut so much that federal receipts are less than 15% of the U.S. economy, the lowest level since Harry Truman was in the White House 60 years ago.

Some of this drop in revenue comes from tax cuts in recent economic stimulus bills. But the vast majority comes from the cuts of 2001 and 2003. At a 10-year cost of $2.3 trillion in lost revenue, their impact on the deficit has been greater than Obama's stimulus, the war in Iraq and the 2003 Medicare drug benefit combined.

No less an authority than former Federal Reserve chairman Alan Greenspan, who gave a crucial endorsement in 2001 to the tax cuts, now says unequivocally that they should expire. "Unless we start to come to grips with this long-term outlook, we are going to have major problems," he told Bloomberg News. "I think we misunderstand the momentum of this deficit going forward."

Those who support extending the Bush tax cuts argue that the worst time to raise taxes is in a recession. That is true, and it's why Congress might want to let the cuts expire first for the wealthy — who have been the biggest beneficiaries — and for others as the economy recovers. Bigger spending cuts should be added after a bipartisan commission on the deficit reports at year end.

With the nation edging ever closer to a major debt crisis, there simply isn't much choice but to start living within its means.

That message is being heard in other debt-laden parts of the world. British Prime Minister David Cameron, for example, has put forward a budget that slashes spending 25% and hikes taxes. Remarkably, his fiscal responsibility is politically popular.

The message needs to be heard on this side of the Atlantic. Allowing the Bush tax cuts to expire, while simultaneously reining in bloated benefit and military programs, would be an indication that it is.