A question for the young ones: Perhaps you’d like an 88 percent tax increase? Perhaps not. If not, then the United States government must spend less on the major entitlement programs — Social Security, Medicare, and Medicaid. And that has to happen approximately now.
Rep. Paul Ryan’s budget addresses Medicare and Medicaid spending, and the Democratic whining about that fact already is under way. Representative Ryan’s budget would cut some $4 trillion off the deficit in ten years. And we cannot get spending under control without reforming the entitlements — they are the main drivers of spending. Axing NPR and foreign aid is not going to balance the books.
The Democrats’ plan will be to make Paul Ryan the most hated man in America, if not the world. The campaign will be — and already is — personal. It will be personal because the facts are not on their side. Our choices are: 1. raise taxes severely, and pretend that that is not going to have catastrophic economic consequences; 2. court a national fiscal crisis on the Portugal model but on a significantly larger scale, and pretend that that is not going to have catastrophic economic consequences; 3. cut spending.
If I were a Republican strategist, I’d be preparing to make sure that the number 88 is on the tip of every tongue. Ryan’s entitlement reforms are intelligent and they are reasonable — an 88 percent tax hike is neither. And that’s the choice.
Glad to see the conversation move toward the reality that real budget reform does not need to include tax increases.
Cutting spending is usually unpopular, raising taxes is usually unpopular, but cutting spending AND raising taxes ticks off nearly everyone.
Reply to this commentLinkReport AbuseI think taxes should be raised. I think that's a fantastic idea.
Reply to this commentLinkReport AbuseI'm all for cutting spending but let's not delude ourselves into thinking it will have no economic consequences, either. Our entire "recovery" has been fueled by borrowed or printed money, and the shell game is going to end once Bondzilla hits DC.
Reply to this commentLinkReport Abuse"$4 trillion off the deficit in ten years."
Off the debt or the deficit?
Reply to this commentLinkReport AbuseIt is not necessarily true that cutting spending will have negative economic consequences, or that the "recovery" has been fueled by borrowed money. The recovery may be occurring despite all the borrowed money - it is being borrowed from someone, who would otherwise have done something else with it. We were all taught demand-side Keynesianism in school, but that doesn't mean we have to believe it. Besides, none of this cuts total spending very much from what it is now, merely from what it will be if we do nothing. Ryan-style reform of spending and taxes will increase efficiency, remove uncertainty, and increase incentives for work and investment, thus providing actual stimulus to economic growth.
Reply to this commentLinkReport AbuseSean? The "recovery" isn't fueled by spending. It's sabotaged by spending. Only once before in American history has this type of spending been tried - that was the last great depression. Look how well that turned out.
Reply to this commentLinkReport AbuseYes, ALipscxxtz: raising them is a great idea. Let's start with yours. Mine already remove 40% of my income from my pocket.
Reply to this commentLinkReport AbuseWe spend too much.
Government is not Mommy. If you like NPR, great: fund it. Yourself. And enough entitlement programs with automatic raises built in. Enough bailouts. Enough, enough. Time for some people to get off the dole.
Let us also remember that the relationship between marginal tax rates and tax revenue is precisely the OPPOSITE of what the liberals would have one believe.
Tax me at 15%? I'll work into the wee hours.
Tax me at 65%? I quit. Cure your own illness, while I sit home and watch game shows.
Take your pick, Lipshxxz et al.
Oh, and PS: I can't write your name in my comment as it's flagged as objectionable. Consider changing it to 'Smith'.
Can we all agree now that the Democrat party should forever more be the Marie Antoinette party?
Reply to this commentLinkReport AbuseThe question is, can the Republicans withstand the withering attacks that are going to come from the left? This will be the Democrats version of "shock and awe" - the insults, the demagoguery, the countless strawmen attacks. It is going to be ugly.
Reply to this commentLinkReport AbuseKDW has a fine summary of the available options. This leaves the democrats in the position of either saying
-- an 88% tax increase is their preference
-- stick there fingers in their ears and chant that there is no risk of financial collapse, so that we can simply keep on spending.*
-- a mixed strategy which would increase taxes on a very fragile economy with unsustainably low participation in the labor market.**
* This is equivalent to adopting Michael Moore's recent rant that we are "awash in wealth and cash", so we can simply eat the rich. See Bill Whittle's excellent recitation on this topic that recently appeared in these pages.
** The mantra offered by the democrats is likely to be "shared sacrifice". One may counter that compelling some business owner or "millionaire-billionaire" to 'sacrifice' on the altar of egalitarianism will result in fewer job openings as collateral damage, harming many people.
Reply to this commentLinkReport AbuseThe options are not just (1) cut spending and/or (2) raise taxes. There is always option (3): print more money.
Option #3 leads to hyperinflation, which is superficially good for the debtors of society, particularly those wildly upside down in their mortgages, and bad for the 'fat cats' aka republicans who saved money. Sure, it makes gas and food prices rise, but the minimum wage can be indexed upwards... with the added (socialist dream) bonus of a large portion of society making exactly the same amount of money.
As the Federal government is the biggest debtor of all, hyperinflation is a way to reduce the real value of that debt without directly 'cutting' spending or 'raising' taxes. I tell you, the income redistribution allowed by runaway hyperinflation looks mighty tempting to Obama.
Reply to this commentLinkReport AbuseButterflyDragon:
Off of the cumulative new deficits -- it does not reduce the debt, but reduces the level of debt that will be added.
Reply to this commentLinkReport AbuseSometimes doing what is right is unpopular. I keep telling my congress critter the same thing - trouble is she (like every other "new" member) is concentrating on getting re-elected.
Reply to this commentLinkReport AbuseThe Left wants the 88% tax rate and insolvancy. This is part of their grand strategy to push this nation toward a crisis. This is all about power. Push the system to the point where it falls apart then the Progressives remake the country into their vision of what it should be.
Reply to this commentLinkReport AbuseIt was 6 trillion in the article I read. Not that it matters. Even 6 trillion over 10 years is only 600 billion a year, which is less than half of what the current deficit spending level is. 12 trillion merely eliminates almost all deficit spending, and leaves the 14.3 trillion debt in place with only the current anemic level of repayment. That isn't enough, not even close.
The real solution is to cut 20-25 trillion out of the budget over the next decade. This would pay down about 1/3 of the national debt, down to about 9 trillion. But to do it, the federal government would have to be scaled back at least 50%. It's going to hurt, but it has to be done.
6 trillion is nowhere near enough. Yes, it's a start, but it's only false hope. Do the real job and do it properly: don't borrow another dime, spend no more than 2/3 of whatever tax revenue comes in, and the other 1/3 goes to paying off the debt.
Reply to this commentLinkReport AbuseRyan's plan is certainly a step in the right direction, but it has the fatal flaw of requiring Congress's of the next 2 decades to behave. I don't trust them to behave more than five minutes after they tell me they will do something. Even in the unlikely chance a Republican controlled Congress can behave (as much blame as Bush deserves for spending under his watch, the budget belongs to Congress), the moment there is a Democrat-controlled Congress the wheels will come off. Unfortunately, unless one or both major parties implodes or fatally splits itself (such as the Democrats in the 1860 election, or the infamous Republic/Bull Moose split), then I don't see much chance of a viable third party that can play in national elections.
Reply to this commentLinkReport AbuseKevin:
Looks like your IMF pals want all the Bush Tax cuts to expire.
And they like Obamacare, too.
Reply to this commentLinkReport Abusejfxgillis:
We can accept the facts without agreeing on the policy.
Reply to this commentLinkReport Abusejfxgillis:
For instance, I think you have to squint pretty hard at the information to come away believing that the Bush tax cuts haven't added to the deficit, or that repealing them wouldn't reduce it. The question is how much you value the good of the tax cuts vs. the good of deficit reduction.
Reply to this commentLinkReport AbuseKevin:
You mean, you can accept the one particular fact that you think supports your particular policy preference while leaving the rest of the facts mouldering.
Look. I'm an Obamacare guy, but even I was stunned at the long-term positive effects of the IPAB on the debt/deficit. Just keeping that part of the law as is solves one-seventh of the problem identified in the paper.
If you were really interested in "facts" and really interested in what your header here says about keeping an "eye on the debt and deficit," you'd be an IPAB supporter.
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