Can the budget crisis be solved without eliminating the mortgage-interest and charity tax deductions?

The deductibility of charitable contributions costs the federal government about $60 billion a year. So how about scrapping or altering that line item? Can you imagine the shrieking from every charity? The cost to donors of charitable contributions would jump significantly, and the expected size of contributions would fall correspondingly, leading to a significant shortfall at not-for-profits. Hence, the vehement opposition of the charitable world to any changes in this domain. It would be an easy PR campaign: We are balancing the federal budget—by destroying our charities!

The point is not that there isn't room for serious discussion here. But until we are clear what loopholes we are really talking about, the mere invocation of the word "loophole" bypasses the difficulty of getting agreement on where and how to cut.

Aren't there some loopholes that are easier? Sure. The president loves to talk about the oil and gas subsidies hidden in the tax code, and the foolishness of adding tax subsidies to the already considerable profits of the energy companies. But the favorite—immediate expensing of exploration and development costs—comes in at only about $1.6 billion per year. Not really big stuff, even if it were totally eliminated. And all the tax subsidies for the fossil fuel industry total $3.2 billion—again, a big number, but not big enough to go very far.

So until we hear an awful lot more about which loopholes will be closed, the entire conversation we are having about tax expenditures as a magical elixir is not a whole lot more helpful than the generic instruction that we need to do something about. It's all theatrics until you know whose ox is going to be gored.