Saturday, August 13, 2011

Voices of Reason Invited to Speak Up, published in the Centre Daily Times, July 2011

Imagine a group of incompetent firemen in a burning building, arguing about where to attach their hoses, when to turn them on, and how much water to use.  While they bicker, a modest fire builds into a raging inferno.  The firemen are our congress, the fire is our debt ceiling and economy.  Where are we?  On the sidelines, helpless, and shaking our heads sadly.

The House Republicans, a few months after nearly shutting down the government and finally approving a budget, now want to deny funds to actually execute it by refusing to raise the country’s debt ceiling.  Their reasons are good – we do need to reduce our deficits.  The problem is, this has now turned into yet another gunfight at the O.K. Corral with the Democrats, and this time, amongst the Republicans themselves.

Their goal:  reduce the federal deficit by the same amount the debt limit is raised, which is about 2.5 trillion dollars through the end of 2012.  However, in true politician fashion, they’ve decided to do this over ten years instead of two, spreading most of the pain downstream.  But now the Democrats have jumped on board, and want a grander reduction – 4 trillion dollars.

As usual, the devil’s in the details.  Republicans will only consider spending cuts.  However, they can’t meet their goals without massive cuts to the big hitters in the budget – Defense, Medicare, and Social Security.  Democrats want a deal with ¾ spending cuts, and ¼ revenue increases. Many Republicans insist on no revenue increases, calling them tax hikes.   Some Republicans won’t vote for raising the debt limit under any conditions.

The puzzling thing is that Republican governors across the country are balancing state budgets through both spending cuts and revenue increases.  The revenue increases are from state employees who will now pay more for their health care and retirement.  The national equivalent to this would be increases in Medicare and Social Security taxes.

Here’s a painful fact, though: the $4T isn’t nearly enough, only reducing yearly deficits from about $1.5T to $1.1T.  We need far more than that, and in fact need to be running surpluses soon to pay down our debt or we’re in for even more serious problems.  Spending cuts alone cannot get us there – we simply must have tax increases of some sort, particularly to fund Medicare.

Another way to crank up our revenue is to finally do something to help put unemployed Americans back to work so they can pay taxes again.  Simply continuing to lower taxes isn’t helping – after the cuts of 2009 and 2011 our taxes are among the lowest in the industrialized world.  And yet our unemployment rate remains over 9%, with our companies still wary about hiring because our citizens are pessimistic and reluctant to spend.

Much of this pessimism is from watching our dysfunctional government.  The only way to fix our budget problems in the long term is to stop voting in extremists from both parties, and put reasonable, independent non-ideologues in office to address our debt issues in a common-sense bipartisan way.

1 comment:

  1. How about raising taxes to a flat 15% across the board?

    How about not printing anything in Spanish anymore? If you are in this country and want to be a citizen, you can learn to speak and read English.

    How about not giving any money/aid to foreign countries until we no longer have debt of our own to deal with?

    How about legalizing drugs and prostitution and taxing them at a 15% level too?

    How about alcohol and cigarettes which are hazardous to self and others being taxed at 50%

    How about, well, never mind, I'm getting hot and bothered and riled up about how dysfunctional it all is. Common sense seems to be on permanent vacation.