PRAY FOR GRIDLOCK:

Last year's debt ceiling negotiations produced a deal that is scheduled to produce $2.5 trillion in spending cuts over 10 years. Meanwhile, the George W. Bush-era tax cuts are set to expire at the end of December, which would mean an extra $2.8 trillion in revenue.

However, it is widely expected that Congress and the President will intervene to stop many of those gap closing measures, just as they have done in the past. Obama remains committed to making permanent the tax cuts that apply on incomes below $250,000, which is about 80% of the total. Republicans want to make all of the cuts permanent, and all of the GOP presidential candidates want to cut taxes even further than that.

Those would all be major fiscal mistakes. In retrospect, the Bush tax cuts were never affordable, and today the long-term budget gap is a much larger threat to the U.S. economy than excessively high tax rates. Some prominent economic voices from the right and left, including Alan Greenspan, Peter Orszag and Mayor Bloomberg, have called for letting all the Bush tax cuts lapse. They are right, and the President should heed their advice.

On the expenditure side, the main threat is that Congress and the President will agree to undo the "triggered" cuts that will take about $100 billion a year out of the federal budget, due to last year's debt supercommittee deadlock. These triggered cuts don't start until 2013; if growth is strong between now and then, Congress should maintain them, though it should feel free to tinker with where they fall -- and, particularly, to cut Medicare more and discretionary spending less.

Washington's dirty secret is that everybody there wants to cut Medicare. No wonder: It's where the money is. But because Medicare cuts are politically toxic, the parties spend more time attacking each other's Medicare plans than discussing their own.

Republicans want to introduce more private competition and hold traditional Medicare to no more cost increases than in the private sector. Democrats want top-down controls on traditional Medicare spending.

Some members in each party want to narrow the scope of the Medicare benefit, for example by raising the retirement age and further means testing the program.

The one nice thing about the Medicare fight is that all of these are good ideas, and there is no reason they can't be combined as a cost-saving compromise. An aggressive program to save money in Medicare -- starting today, not in 10 years -- would have the added benefit of lessening the need to collect more tax revenue and deeply cut discretionary spending programs.

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