Tucker Cross says: Yes, but it needs to go further cutting entitlement programs
Huzzah! We might actually decrease federal spending! But is it enough? I think not.
The National Committee on Fiscal Responsibility and Reform was created by President Barack Obama to identify “policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run.”
The co-chairmen of the committee, Democrat Erskine Bowles and Republican Alan Simpson, are going out on a limb, proposing big cuts to some of the most sacred cows on Capitol Hill. Simpson said the commission has “harpooned every whale in the ocean.” Perhaps “harpooned” is too strong of a word.
Unless of course you’re harpooning Moby Dick, which in that case will only anger the blasted thing. And angered they have. After proposing spending cuts in Social Security, Medicare and, dare I say it, even defense, Bowles and Simpson might be hard pressed to find a warm crowd of supportive fans desperate to dole out super rad high fives.
If the U.S. truly wants to mend itself, more needs to be done than simply cutting the budget of already failing government programs. Take a look, for instance, at Social Security and Medicare.
Social Security and Medicare are essentially pyramid schemes. That is to say, in order for them to work, they demand an ever-growing population to survive. As soon as one generation stops having as many children as the previous generation, the system collapses because it lacks the number of people required to satisfy the demands of caring for the aging generation. In 1935, the contribution of 17 workers paid for the benefits of one retiree. By 2035, that number will be as low as 2.1. To continue down this road would be insanity.
This is a very large albeit only one example of many government programs which need to be done away with. Can we end such programs tomorrow? No, it simply is not feasible. But if Americans truly want to prosper, they must be weaned from the ills that have brought them into this disease of economic mediocrity.
We can no longer, as a people and as individual citizens, support things such as agricultural, energy and housing subsidies. We can no longer favor tariffs in order to “protect” our markets. Most importantly however, we cannot, nor should we, expect so much from our government. It’s wrong, it’s selfish and it’s too expensive.
And that, frankly, is what it boils down to: money. We don’t have any to spend. When the federal government’s revenue cannot match its costs, there are basically four things it can do: Raise taxes, borrow money, print money and/or lower spending.
I will give you a hint: The first three options have already been tried, and they haven’t worked. Americans don’t like taxes; they feel taxed already as it is. My goodness, the very country itself was founded on people not liking taxes (without representation, of course. But who feels represented now?)
Then how about borrowing? The government borrows money to pay for things it couldn’t afford in the first place. Why this is a good investment plan is beyond me. Then of course we have the favorite current solution: printing money, or “Quantitative Easing” as it’s now called. Whatever we call it, it still means inflation and it means a debasing of our currency. Basically, your money is losing value.
That leaves us with reducing spending, the one option that hasn’t been tried. But to reduce spending, the individual citizen must be asked to take greater responsibility for him or herself. It means taking the government out of the equation of the marketplace, and allowing the private sector to flourish. It means, most importantly, that as a society we should expected to manage our own lives more than the government manages it for us.
If spending was truly cut, and I mean really cut, the American people would all benefit. We would have less taxation and more money in our pockets to spend as we see fit. There would also be more jobs, since companies would be attracted by the lower taxes and fewer regulations put on them.
The debt is only a symptom of the cause. Our mentality as a nation is the real disease. In pursuit of short term material benefit rather than long term growth and prosperity, we have left much of the American legacy on the wayside. Let’s return to the policies that made this country great from the beginning. Lower government spending and more freedom for the market and the individual will bode well for all.
— Tucker Cross, letters senior
Jerod Coker says: No, timing and structure of it not right for reducing debt
The Bowles-Simpson proposal takes a decent stab at one of the biggest problems the federal government faces: debt. Indeed, our national debt has ballooned to well over $13 trillion. To put that in perspective, the entire U.S. GDP for 2009 was around $14 trillion.
Our deficit for 2009 was about $1.4 trillion, certainly not helping our debt problem. However, a man named John Maynard Keynes justifies the most recent deficit spikes.
Keynes, a brilliant economist, said that governments should use expansionary fiscal policy (increasing government spending and decreasing taxes) during economic slumps to help get out of them. Indeed, this is what President Roosevelt’s New Deal, in combination with WWII, did to get the U.S. out of the Depression.
Yay for fiscal stimulus! However, politicians have too-often neglected the flip side to Keynes’ deficit spending theory: During times of boom, the government must run budget surpluses.
These surpluses will help rein in the economy, so that growth levels don’t exceed their natural rates, which helps keep recessions from becoming too severe.
Also, these surpluses during boom times pay for the deficits run during the bad times. Brilliant!
The problem is that only one half of this coin is politically popular.
Cutting taxes and providing more government services is great! Something for nothing!
However, when all we do is increase spending and decrease taxes, we get what we have today: a national debt that equals 90 percent of our economy’s output.
The Bowles-Simpson proposal is therefore quite relevant to our nation, and to our generation especially, for we will be the ones to pay down this monstrous debt left to us by the generation before us.
However, the timing and structure of their proposal is far from what we should be doing to tame the debt beast.
Rather than cut entitlement spending for those who need it most, cut it for those who need it least; as OU President David Boren and many others have proposed, we should enact a “means test” to determine who really needs Social Security, Medicare, etc., rather than simply give it to anyone over a certain age threshold.
Another area of spending that needs to be drastically cut is military spending. The time of us being the World Police is long over. We spend 10 times more than the next 10 top spending countries combined on our military. That in and of itself should be persuasive enough.
With this means test and military spending cuts, the two biggest areas of spending could be drastically reduced.
Regarding taxation, the bottom line is that taxes are going to have to go up. However, they do not have to go up for everybody.
Letting the Bush tax cuts expire for everyone will almost undoubtedly plunge us back into recession.
However, if we let them expire only for the wealthiest Americans, the economy would do fine and we would be able to start reining in the deficit.
Furthering with taxes, the top marginal tax rate should not be reduced, as the Bowles-Simpson plan suggests; rather, they should be increased significantly.
It is absurd that the highest tax bracket is $370,00. People making $370,000 a year should not be taxed at the same rate as those making $3 million a year, and these people should not be paying the same rate as someone making $300 million a year.
We need a tax system that takes into account that there are plenty of people who make more than $370,000 a year, and these people should be taxed more than everyone else.
There are many other tax-related changes that need to be made (simplification, loophole-closing, an estate tax), but not enough room for this article.
In sum, spending needs to be cut and taxes need to be raised, but not at the expense of the middle and lower classes; and, they should probably wait until the economy is back to full employment.
— Jerod Coker, journalism senior
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dargus 1 year, 6 months ago
Social Security works just fine with a shrinking population, assuming you don't pay out huge benefits when the workforce is growing. The problem is that the money from the Trust Fund was spent by the government on other things. If you repay all the money borrowed from the Trust Fund, it is solvent until 2041. Prior to the last recession, I believe it was solvent beyond 2050, and that number had been moving farther into the future. Assuming our economy eventually recovers, Social Security should be able to pay benefits. The problem occurs when politicians use the Social Security Trust Fund as their own personal piggy bank.
cheapnihilist 1 year, 6 months ago
reagan proved that deficits don't matter.