While trying to find out how Tiger Woods did in the playoff round of the U.S. Open today (he birdied the last hole to force sudden death and then won on the first sudden death playoff hole) I stumbled upon news of the launching of PerotCharts.com. This website is a project of Ross Perot which provides important information that every person in the U.S. needs to understand (and every member of Congress needs to accept). Helping Ross Perot is David Walker who was the Comptroller General of the United States until recently – he was the person responsible for creating government fiscal projections and he seems to be tired of having his numbers spun by politicians for their own gain at our national peril.
Using data from the government itself, Perot Charts shows the fiscal cliff that we are facing and on “chart” 34 of a 35 chart Fiscal Challenges presentation there are four suggestions for how to begin correcting our dire situation:
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- Restructure existing entitlement programs
- Raise payroll taxes and/or income taxes
- Borrow more money each year to make up the shortfall
- Cut discretionary spending even further
Of those four suggestions, we should be implementing at least 2 if not 3 of them (restructuring entitlement programs, cutting discretionary spending, and finding ways to raise revenue as well). What we don’t need is to borrow more – that only exacerbates the problem.
I’m sorry, but none of these things will actually work. Why? Because we have a culture that demands increased social programs, as long as “the rich” bear the expense for it. Voters that largely no longer foot the bill for government sprawl have no problem with the expansion.
Until the culture changes, you won’t find political will to pull off any of the four items listed. Even if one were passed, it would be riddled with so many caveats and holes that it would be meaningless.
Let me put it bluntly. I hate the idea of any tax increase. But as long as large swaths of voters bear no direct fiscal responsibility for the cost of government (they do pay it, but it’s hidden in the costs of goods and services they buy and in the cost of stifled innovation), there will be insufficient will to rein in the welfare state.
It’s not that the solutions proposed will not work, it’s that we don’t have the culture necessary for the political will required to act on those proposed solutions.
Just because our culture is bereft of fiscal or political judgment does not mean these solutions are incorrect – it just means that we are unable to do what needs to be done.
So Reach, would you advocate repealing the Bush tax cuts? And I don’t necessarily mean the ‘tax cuts for the rich’, I mean the cuts that created the huge swath of citizens who no longer pay much if any income tax. Do we raise taxes on the ‘poor’ and middle class in order to make them more interested in how it’s all spent?
As much as I hate the idea of a tax increase, I favor a more equal, less progressive model than was produced by the social engineering portions of the Bush tax cuts. Please note that it was the lower marginal rates and the business tax cuts that spurred the economy, while the social engineering parts of the tax cuts did not.
It is true that a dollar has greater marginal value to the family pulling down $25K annually than to the family raking in $500K annually. Thus, a 15% tax rate ‘costs’ lower income households more than it does higher income households. That is the argument that is used as the basis for progressive tax policies.
But the more we transfer the cost of government to the segment of society that we say “can afford it,” the more we encourage a shift away from self-reliance to dependency. If each of us directly bore our fair share of the cost of government, there would be less government.
Well said Reach. I expected that your answer would look something like that – and I agree with everything you said.
I think the progressive rationale would be that the rich should pay the most because they benefit the most. It is this country that allows them to become rich, therefore their portion of that benefit should correspond to their wealth.
Cameron,
I’m sure that’s their rationale. Using that same logic (that the rich benefit most from our government) it would be the rich who would be the hardest hit if our government were to shrink because of a flatter tax system causing millions of voters to suddenly get more cost conscious of the government that they are now paying for.
David, thanks for that last comment. I have often heard the liberal suggestion that the rich owe more because they have ‘won life’s lottery’ or benefited the most. (I guess it has nothing to do with their labor, discipline, work, and risk.) But I have never seen the argument turned around to explore its logical conclusion.
Yes, like many partisan arguments, once you follow them to their logical conclusion the end does not often support the original partisan intent. I think that is the result of limiting ourselves to soundbite debate.