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A 5-step test for our politicians

November 20, 2012

The upcoming “fiscal cliff” gives the President and Congress an opportunity to show that they can actually do something good for the country (and not just for their own political careers).

I’m not optimistic — and there will probably be some “kicking of the can down the road” — but here are some long-term non-partisan solutions that could make sense:

  1. Cut government spending across the board.  The Simpson-Bowles Commission made sensible recommendations, but the President and Congress have ignored them for their own partisan reasons.   (See more about Simpson-Bowles at http://www.fixthedebt.org/take-action.)
  2. Cut military spending, too.  Our defense spending of $740 billion is “madness” says former Republican Sen. Alan Simpson of Wyoming.  He points out that the combined defense budget of 17 other major countries — including Russia and China — is $540 billion.  With American ingenuity and efficiency, we shouldn’t have to outspend the entire combined rest of the world to adequately defend our nation.  (See more in the National Security chapter.)
  3. Gradually increase the age for Social Security benefits.  A gradual approach would protect those already drawing Social Security and give future recipients plenty of time to prepare.  (See more in the Entitlements chapter.)
  4. Cap and then gradually eliminate all income tax deductions.  Tax deductions unfairly favor the wealthy, undermine public confidence, and give politicians and lobbyists too many chances to play favorites and engage in political mischief.   (See more in the Career Politicians chapter.)
  5. Adopt a lower and flatter income tax.  To curtail the class warfare that threatens our union, everybody should pay the same income tax rate, and all income — including dividends and capital gains — should be taxed equally.  Capping deductions will allow lower tax rates for everybody.  (See more in the Taxes chapter.)
4 Comments
  1. Tom Basso permalink

    Love every one of these suggestions from a macro-economic view. Less government spending as a percent of GDP, combined together with a lower, flatter tax would: reduce the deficit and be like rocket fuel for the economy. It’s a similar concept to Cain’s 9-9-9 proposal that seemed to somewhat die with his failed presidential bid. Lower incremental rates would help attract businesses to the US, create more jobs and growth and the last of the 9’s would have brought some of the underground cash economy to the tax base.

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  2. Mike Ruddell permalink

    I actually think one of the best things B.O. did during his 1st 4 years was the debt study done by Simpson-Boles. But then he ignored the results. If that is re-visited and used, then maybe we can avoid some of this pending disaster.

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    • Tom Basso permalink

      My only concern on Simpson-Boles is the increasing taxes side of it. Washington has proven beyond a shadow of a doubt that they like to spend whatever they can get. Giving them more might be giving them more to spend or not cut in the case of balancing the budget. I’m convinced at this point, we need to starve the beast.

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      • I certainly can’t argue with Tom Basso’s distrust of the spenders in Washington. What’s needed is a political compromise that packages tax reforms with real spending cuts (not just future promises of spending cuts that can easily be broken).

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