Friday, November 30, 2012

A modest sacrifice for everyone

The president has proposed an opening offer. Congressional Republicans don't like it. The "fiscal cliff" is getting closer, and we're all looking more and more like Thelma and Louise at the movie's end.

Neither the president's proposal nor anything from the Republicans truly solves the problem of uncontrolled deficit spending, which has produced a $16 trillion debt. The Paul Ryan plan doesn't get us to a balanced budget in the foreseeable future. Obama does not have a balanced budget in his crystal ball. The Bowles-Simpson plan does not achieve a balanced budget. Even Warren Buffett suggests that it would be OK if we could just get our revenues to 18% of GDP and our spending to 21% of GDP — but we'd be borrowing 3% of GDP every year.

No one seems to be asking the American people for sacrifice. Obama wants higher taxes on the wealthiest, and it's true that they have fared far better over the past decade of rising debt than the remaining 98% of us. But no one is asking everybody to give something for fiscal solvency.

Here's a modest proposal: Consider raising everybody's income tax rate — individual, corporate, capital gains, all of it — by one percent, or even half of one percent. Make it affect everybody, sort of. Those who pay no federal income tax — and that's a substantial portion of the population (just ask Mitt "47%" Romney) — would have to pay more. One percent added to zero is still zero. But the higher rate would be there, and it would apply to everyone. Obama's focus on increasing tax rates for the wealthiest is not a formula for balancing the budget. His tax increase would bring in less than $1 trillion over 10 years, but we're spending $1 trillion more than we earn every year. The middle class is going to have to pay up if America is ever going to get out from under the debt it rang up fighting two unbudgeted foreign wars, bailing out banks and providing for people who lost their incomes in the Great Recession.

Yes, we should cut spending, and in a bloated federal budget, there are plenty of places to cut. Here again, the pain should be shared. All federal programs should have to sacrifice.

If we begin with the premise that closing the budget deficit is a top priority, we will find a way. If this is just a political tit-for-tat, we'll crash at the bottom of that fiscal cliff.

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