What is known is this: My taxes are increasing.
What is NOT known is this: What spending will decrease?
The President has always advocated for a “balanced solution” to the deficit and national debt, which means BOTH tax increases and spending cuts. There is so much attention paid to the tax increase and precious little attention paid to the spending cuts.
The second biggest mistake we can make is to make further cuts in spending for infrastructure. It has already been deferred too long and will be a real “job creator.” The biggest mistake we can make is to ignore the 800-pound gorilla, which is entitlements. This is “non-discretionary spending,” as the total drain on tax revenue is not determined by anybody. The best known are Medicare, Medicaid, and Social Security. Depending on how measured, they consume up to 70% of every dollar spent. In other words, two out of every three dollars spent goes into old, sick and/or poor people. How much is enough?
The only “trial balloon” I’ve heard taken seriously is raising the age of Medicare eligibility from age 65 to age 67. Given that Obama initially supported a “single-payer” system for ObamaCare, I cannot imagine he would be willing to do this. What I don’t want is another thousand pages of regulations. (Personally, I would prefer to see public executions of those convicted of Medicare or Medicaid fraud. However, the greatest waste in our Medicare system is “end-of-life” spending, when heroic efforts are made to save the hopeless. Unfortunately, “death-panel” is a radio-active four-letter word and is beyond discussion.)
So, how are we going to re-write the 2,500 pages of Internal Revenue Code, containing 5.6 million words as well as all entitlement programs in the next two weeks? The answer is . . . We’re not!
The best we can hope for is a binding framework to resolve the myriad remaining issues. For example, we can agree to raise the highest marginal tax rate by 2% now, but that increase expires in six months unless agreement is reached to cut entitlements by 6%. It would be a step in the right direction, even though it is still “kicking the can down the road.” At least, it is a smaller can . . . containing only entitlement reform.
The stock market would react somewhat positively to such a deal, as it precludes an immediate recession. Still, it maintains and continues the massive uncertainty, which means it also postpones real economic recovery . . . but for only six months.
Isn’t it a shame that it takes a crisis to bring about change? What kind of crisis would it take, for example, to address the horrendous cost of futile end-of-live medical treatments?