By: Rudy Mayor
Because Washington Can't Solve the Problem...We Will. The following suggestions form a plan that is all-inclusive of present proposals and other considerations that have been taken off the table; for purposes of promoting it should be called an "all of the above" plan. If the root of the problem is spending, why not tackle every expense possible? This proposal does what the current Boehner and Reid plans do not -close tax loopholes, temporarily increases taxes on the highest income bracket, reforms costly entitlement programs and votes on a Balanced Budget Amendment.
1. Reform Entitlement Programs Like Social Security, Medicare and Medicaid.The largest chunk of our Federal budget goes toward obligations for social insurance and health insurance programs; this is the core problem with America’s spending. While radical changes to these programs cannot be reasonably debated while having a nearby August 2nd deadline for the passage of legislation, small changes can go a long way to saving billions of dollars. Some examples include increasing the retirement age, an option to legally opt out of social security payments who don’t need it after retiring and requiring higher co-payments for Medicaid beneficiaries.
Political Implication: Although these are big government programs, beneficiaries make up large portions of both parties. It may hurt the Democrats more to cut these programs, but more and more Americans are seeing the need to do so. Regardless its big government being downsized so, +1 for Republicans.
2. Increasing Federal Revenues Revenues have fallen because fewer Americans are employed and fewer are paying taxes. We can make larger repayments toward our debt if we temporarily repeal the Bush tax cuts to Clinton era percentages on the highest income earners for a period of five years. The quicker we pay our debt, the less interest we accrue, and the less we pay in the long run. After a recovery has been made, and more Americans are working, we can cut taxes to spur further economic growth. We cannot expect, however, to resolve our debt issue by raising taxes alone. Ending tax breaks on luxury items can also supplement revenues.
Political Implication: Republicans argue it will deepen the recession and cause even more unemployment. This is very possible, but some of the wealthiest tax payers can hire and pay a marginally higher tax at the same time. The compromise lies in the temporary nature of the tax increase. If the recession in fact goes deeper, Obama may get most of the blame and the Republicans rewarded in 2012 and 2014 with election victories. This will be true only if Republicans fight off claims that they too supported the temporary tax increases. +1 for Democrats.
3. Increasing the Debt Ceiling To create confidence in consumers, investors and international lenders, the U.S. should raise the debt ceiling once and it should be a reasonable increase. We all agree that the U.S. cannot default on loans and that uncertainty is one of the most influential driving factors in our economy. By increasing the debt ceiling we solve both problems, although looking back at how many times its been increased, probably temporarily. Needless to say, this should be part of any deal, not doing so many end up catastrophically.
Political Implication: Raising the debt ceiling is something both Republicans and Democrats have done. When Bush was in office, Obama voted against raising the debt ceiling in 2006, saying that “increasing America’s debt weakens us domestically and internationally.” Now it seems everything depends on raising it. Americans recognize it needs to be raised, so the debt ceiling may not be an issue in 2012 unless it needs to be raised again in about a year, causing another similar debate. -/- No Republican/Democrat Advantage
4. Ending SubsidiesSubsidies help certain industries survive and compete with international producers, but not all of these industries depend on subsidies to profit. Incentives for oil exploration exist in the potential profits from selling oil. Incentives for exploring renewable sources of energy exist for industries that could potentially profit from the green movement. Agribusiness is no exception. If America is truly capitalist, it should stop falsely picking the winners and losers by, essentially, funding private businesses.
Political Implication: Ending subsidies is more capitalist than maintaining them and it also cuts costs, helping many Republicans politically if they successfully frame the issue during election season. Still a lot of other Republicans and Democrats alike come from states like Iowa whose citizens lobby for farm subsidies and the GOP has large oil companies who may hold back on donations. Both Democrats and Republicans will hurt from farmers’ claims that they are hurting and no one really wants to hurt farmers, but cuts needs to be made! -/- No Republican/Democrat Advantage
5. Balanced Budget AmendmentAdding a Constitutional Amendment to the legislation means that it requires 2/3 of both chambers of Congress in order to pass. Nothing says “we’re in this together!” more than having such a large percentage of Congress getting behind one single piece of legislation. The Amendment legally binds the U.S. to spending what it can as opposed to what it wants. Of course, the Amendment should not tie the country’s hands in times of unforeseen wars and national emergencies. Enough flexibility is needed, perhaps by requiring a cap on debt and/or a cap on money spent as percentage of GDP. Another hurdle is having states also ratify the Amendment which of course would require time, maybe a couple of years. If enough states don’t ratify, the Amendment would not pass.
Political Implication: Passing the Amendment in this bill would really help Republicans politically back home; it was their idea and their credit to have. Of course, the amendment wouldn’t be added until states ratify it, meaning that even if the bill passes, the Amendment may not. Constitutional and legal issues may come up in the future involving the Supreme Court. Advantage +1 Republicans.
Overall Political Scorecard:Both sides come up with wins and losses, and believe me, with 2012 right around the corner they are thinking about who wins what battles. It seems that this approach is balanced enough to deliver victories and defeats to both sides. What would require is for both parties to designate a member of their party to work together on the language of the legislation. The most obvious choices are probably Boehner and Reid, but whoever it is, it must be a bill that no single party can claim credit for. If any one party can claim credit for passing or writing the whole bill, the other party will not let it pass and there’s just no way around it. It can’t be a Reid Plan or a Boehner plan it has to be a Reid-Boehner Plan.
Politicians are going to have to understand that sometimes you win some and sometimes you lose some and that the American people shouldn't be held hostage by their personal and selfish needs to be re-elected. They need to make the right decisions now and later defend themselves in the campaign if they so wish to be re-elected; if they aren't, it aint the end of the world and they shouldn't act like it will be.