Similar to what’s going on in Spain, Ireland and Greece,
the United States is trying to focus its budget on austerity measures rather than on growth. Growth, in the case of the U.S. means revenue growth – otherwise known as tax increases. God forbid!
“With more than 500 members of Congress opposing his budget — and not a single one willing to support it — this president’s failures of leadership and fiscal responsibility are obvious to everyone,” Romney’s policy director Lanhee Chen said.
The president’s budget blueprint presented in February contained some $4 trillion in deficit reductions by 2022, combining tax increases for the rich with spending caps on some agencies. But, this wasn’t enough for the Republicans. Or, more to the point, it gave the Republicans the tax increase ammunition they needed to shoot it down.
An alternative Republican plan put forward this year by Representative Paul Ryan, the House Budget Committee chairman, called for balancing the budget over three decades in part by deeply cutting some social safety services and reforming entitlement programs like Medicare. This plan wasn’t enough for the Democrats, who steadfastly protect social security and so-called entitlement programs with their political lives.
Of course, neither plan garnered any serious votes.
The deadly third rail of American politics continues to be tax increases. Even the Democrats won’t explain the very simple truth about this. If we want to continue to make good on the contracts with the American worker called Social Security and Medicare, we must raise taxes, cut spending elsewhere, or increase Federal revenue. We saw how painful and difficult it was to pass a simple JOBS act which is now drowning in the SEC. We’re not going to find many other job creation or revenue opportunities elsewhere, so cutting non-entitlement spending or raising taxes, or both, seems to be the obvious answer.
Although, as those who have seen the movie, “Titanic” can attest, obvious is relative.
So, let’ see. We have a $15.7 Trillion U.S. debt, which is now over 100% of GDP and upon which we pay interest of $454 Billion every year. In other words, our INTEREST payments are over half of our entire military budget, which is the largest in the world and over 5 times that of our nearest competitor, China.
I think we can all see where this is going. My simple explanation yesterday about families that carry $30,000 in credit card debt at 30% interest taking 15 years and $110,000 to pay that off should illuminate the problem. We could just print money. Or, we could just drop the whole partisan thing and do our freaking jobs!
Budgets that fail to make tough compromises between Democrats and Republicans may please the party faithful. They won’t, however, get us out of the deep fiscal hole both parties have had a hand in digging.
Compromises need to be made between competing priorities. No one can expect to get everything they want — with the other side making all the concessions. Moreover, those compromises must involve the thorniest points of contention: health care, Social Security, and taxes. They must also add up to substantial and sustained deficit reduction, not just a temporary fix.
The prescription for deficit reduction from Bowles and Simpson (who got it right by the way), who served as co-chairmen of the president’s bipartisan fiscal commission, begins with the premise that everything must be on the table: domestic spending, defense, entitlements, and revenues.
After the November presidential election, the Obama administration and Congress will have less than two months to make crucial decisions on taxes and the budget that could seriously hinder or help the country’s economic recovery.
What do you guess will be the outcome?