Underestimating the long-term budget situation is an old game in Washington. But never have the numbers been this large.
There is no way to raise taxes enough to cover these problems. The tax-the-rich proposals of the Obama administration raise about $700 billion, less than a fifth of the budgetary consequences of the excess economic growth projected in their forecast. The whole $700 billion collected over 10 years would not even cover the difference in interest costs in any one year at the end of the decade between current rates and the average cost of Treasury borrowing over the last 20 years.
Only serious long-term spending reduction in the entitlement area can begin to address the nation’s deficit and debt problems. It should no longer be credible for our elected officials to hide the need for entitlement reforms behind rosy economic and budgetary assumptions. And while we should all hope for a deal that cuts spending and raises the debt ceiling to avoid a possible default, bondholders should be under no illusions.
It is absurd to maintain that “only serious long-term spending reduction in the entitlement area can begin to address the nation’s deficit and debt problems.” Long-term spending reductions will surely help, of course, but only in the long run. To begin immediately to reduce the deficit, however, requires some revenue increases. As long as Republican legislators refuse to concede this point, they will be seen to fail as public servants.
There’s something preposterous about the Wall Street Journal engaging in hand wringing over the deficit — as the financial crisis figures largely in the short term debt problem, and, um, last I checked, Wall Street firms of the sort the Journal tends to lionize had something to do with the financial crisis.
NOBODY is suggesting that we “tax-the-rich” our way out of this. It’s a straw man. Everyone who is serious realizes that this will involve a combination of entitlement reform, medicare reform, tax reforms, defense cuts, and, least significant, discretionary spending cuts. The Biden talks had everything to do with cuts in spending. There is posturing to spare all around — “it’s all part of the show” as David Brooks says. Sadly, some of the “reforms” in the Health Care bill amount to posturing, at least if Robert Samuelson is to be believed. But that doesn’t excuse the usual suspects, BOTH left and right.
Increasing the tax on the “rich” will reduce job growth.
#1–If you took every penny form everybody who makes over $250,000 it still wouldn’t cover this year’s deficit. I concur that tax reform is needed, but class envy won’t solve our problems. There are a myriad of things that could be done to solve the problem, and this administraion and the Democrats can only think of one–new taxes. BTW-Obama conceded yesterday that they don’t want to increase income taxes. What we need is a complete re-vamp of the tax code, which elimintes almost all deductions and lowers tax rates. We also need to quit punishing manufacturers and start encouraging them to close factories overseas and come back home. That will require a significant change in corporate tax rates and repealing the NLRA. These moves will increase revenue. Finally one doesn’t need to be an actuary to look at the numbers and see Social Security and Medicare are not sustainable for our children and grandchildren. Somebody in DC needs to start thinking about things other than getting re-elected–and I concur with #2 that includes both sides of the ailse.
I withdraw my criticism of the piece — it is fair and balanced. Except that I do not believe it is fair to characterize the current administration as believing that “tax-the-rich” will get it. The Time article by Clinton and the discussion of Gates’s farewell interview on Fox News, both posted today, both give interesting commentary on the issues raised.
Almost,50% of the American public pay no taxes; many get a credit. Raising taxes on the “rich” will gain no more income, as revenues hold tightly to 18-20% of GNP no matter what the tax rate. The key to raising revenues is, counter-intuitively, lower taxes, coupled with easing of regulation ( hello EPA, DOE), Thereby increasing GNP. Ending the entitlement Ponzie schemes is a no brainer, unless your goal is to destroy the US government in favor of world government.
Stop immigration, send illegals and their children back home, expel those with incompatible anti-american idealogies – send them to a country that is compatible.
Stop sending billions to foreign countries. (ie, the 3 billion pledged to Egypt’s Muslim Brotherhood, cut aid to Pakistan)
Stop pork barrel spending.
Stop funding abortion.
How do we know whom to expel on an “anti-American ideology” basis? One of the great strengths of America is that it doesn’t have an ideology.
Watch Greece fall. This is what happens when a nanny state is created. Inevitably, after the passage of a sufficient amount of time during which the state entitles, spends, entitles, spends, entitles. . . . the nanny state is done. Rome found that out. Greece is now learning it the hard way. And so shall we, unless we simply put a stop to the entitle, spend. . . . . . .