To bring the deficit down, your own tax bill might need to go up.
The Wall Street Journal reports that a federal commission charged with finding ways to reduce the deficit is considering whether to tinker with popular tax breaks such as the mortgage interest deduction and child tax credits.
All told, experts say tax credits such as those add up to about $1 trillion a year. That makes them an extremely attractive target as the commission considers ways to reduce the hulking deficit. The aim of the deficit commission, a bipartisan committee created by President Obama, is to balance the budget by 2015.
But voters love those tax credits, and they can lead to the type of real savings that make it affordable for a mother to work, a family to have health insurance or a couple to decide whether or not to buy a house.
"These [tax credits] are very popular. They have a big effect on people's lives. You can afford the house instead of not being able to afford it," said Roberton Williams, a senior fellow at the Tax Policy Center, a think tank.
That's why Williams thinks there's virtually no chance House and Senate leaders would consider doing away with mortgage interest deductions completely. Still, he does think there's a chance that lawmakers would be open to modifying those tax breaks to save the government some money.
The current housing and foreclosure crisis, not to mention the fragile economy, means any change to mortgage interest deductions could be risky. It could cause home prices to drop more, and it could make it harder for first-time home buyers to afford a home.
"On the one hand we don't want to do things in the short run that will squelch the economic recovery," Williams said. "At the same time we don't want to tie our hands in ways that will make it harder to get our fiscal house back in order in two or three years."