Now, one way to deal with this deficit is to cut expenses. Well, what are our national expenses? What do we spend our tax money on? The Federal Budget breaks out something like this:
19% Non Defense Items (Discretionary)
16% Defense (Discretionary)
34% Entitlement Programs like Medicare and Medicaid (Mandatory)
8% Interest on National Debt (Mandatory)
23% Social Security Trust Fund (Mandatory)
As you can see, some of our expenses are discretionary and some are mandatory. Mandatory items are contractual items that the government is obligated to pay. Discretionary items are at the discretion of Congress. They can choose to fund them or not. A discretionary item in our home budget might be something like spending money on ice cream or going out for dinner. A mandatory item would be something like paying your electric bill, your doctor bill or paying off a car loan. If we only cut expenses, which type of expenses should we zero in on? Now I don’t like paying on my car loan, but I do like going out to dinner. If I choose to keep going out to dinner and skip paying my car loan, I could find myself without a car and no way to get to my job. Then I’d be out of work. I guess looking at discretionary expenses first would make more sense.
Only cutting our discretionary budget items won’t solve the deficit problem alone. Some items like Defense are necessary in a dangerous world. We can’t go blindly hacking away at that budget and not put ourselves in danger, but we can still find substantial cost savings as we review our national policies for getting into war. Iraq and Afghanistan are wars that have now lasted 10 years and are costing taxpayers $10 billion a month. I’m not saying that mandatory expenses are exempt either, but just like the defense budget, we cannot make drastic cuts to entitlement programs that harm our elderly and the poor who depend on them. Yes, we will need to find cost savings in Medicare and Medicaid. We will have to find more efficient ways to administer these programs and reduce healthcare costs in the marketplace. In all of these programs, discretionary and mandatory, we will need to root out waste and corruption for substantial budget savings, but it will most certainly take political will, compromise and technology to make it happen.
So if we can’t solve the deficit problem by just cutting the budget items, what else needs to be done? We also need to raise revenue. Raising taxes? Horror of horrors, I brought up the “T” word! Wash my mouth out with soap. The bottom line is that we need both spending cuts and more revenue. One Democratic plan called for increasing taxes on the wealthiest Americans and corporations and actually lowering taxes for 95% of the rest of us and small businesses. Another plan calls for reforming the whole U.S. Tax Code and doing away with loopholes for millionaires, billionaires and large corporations. Some corporations like GE pay no taxes at all while qualifying for billions of dollars in tax credits. “Between 1986 and 2006, the top 1 percent of U.S. households almost doubled their share of the nation’s income, from 11.3 percent of the total to 22.1 percent. Over that same span, the share of top 1 percent income paid in federal income tax dropped by nearly a third, from 33.1 to 22.8 percent.” Is that fair?
-Source: Kyle Mudry and Justin Bryan, Individual Income Tax Rates and Shares, 2006, Statistics of Income Bulletin, Winter 2009, Internal Revenue Service.
Even with a more balanced approach of both cutting expenses and enhancing revenues with tax reform, there is still one more very important thing to do. Jobs. We need to create jobs and get people back to work. Working people don’t draw unemployment. Working people buy things. Working people pay their bills and their mortgages. Working people pay taxes. Taxes bring in revenue that can pay down the debt. For too many years, our government has allowed and even encouraged large corporations to take American jobs out of this country by offering tax incentives and tax breaks. These same corporations turned around and exploited cheap, third-world labor, leaving factories in this country shuttered and Americans unemployed. Perhaps it is time to start bringing the jobs back home.
Here’s a novel idea! Let’s bring back the WPA! Let’s provide jobs for all those folks who have exhausted their unemployment and are still looking for work. They can build things, clean up our parks, repair our nation’s crumbling infrastructure and install solar panels on homes. They can go back to school and learn a new trade, new skills and technology for the 21st century.
Our nation is at a crossroads and it is time to put political ideology and rhetoric aside for the good of this once great nation. It is a time that calls, no, it screams for innovation and new ideas. Liberals and conservatives must stop digging in their heels in this endless gridlock. America must reinvent itself and get our economy moving and growing again. Oh, but wait… all these things will cost money and this government and this congress is all about cutting things…not growing things. Just remember… fertilizer is cheap and water is free, but pruning blindly… could be deadly to this American tree.
Food for THOUGHT…
