The co-chairman of Barack Obama's National Commission on Fiscal Responsibility and Reform released a preliminary report this week that has both Republicans and Democrats grumbling. Now there are some people who would probably say that if both parties are upset about the report, it must be pretty good. However, the commissioners missed a golden opportunity to focus in and change how the federal government does business. Their recommendations amount to band-aids for a country that is bleeding to death.
Don't get me wrong, the preliminary plan does have merit, but as David Limbaugh writes in his column, taxes and spending are not a zero-sum game. Whenever the commissions propose to cut a tax, they propose to raise another one. Co-chairman Erskine Bowles and Alan Simpson have suggested simplifying the tax code and establishing three tax rates of 9%, 15%, and 23%. Corporate tax rates would be lowered as well. That's great news. Everyone pays too much in taxes, because our government is too big and spends too much. However, rather than sticking with that fundamental premise, the commissioners then propose eliminating the home mortgage tax deduction, raising taxes on capital gains, ending the child tax credit, and more.
Just to be clear, I don't think the government should be in the business of social engineering through the tax code. They should not be providing breaks for one activity (such as buying a house) or another. But these breaks should only be removed if we FUNDAMENTALLY change the tax system. Eliminate all of these social engineering tax breaks and give Americans lower tax rates (or one tax rate or the FairTax). Trading some tax cuts for other tax breaks is not a solution.
Commissioner Bowles has it right when he says, "This debt is like a cancer that will truly destroy this country from within if we do not address it." Exactly. But we got into this mess because government was allowed to grow and grow and grow. People were told that the government should "pay" for A and B and C, and the American people were lulled into saying, "OK." Now, we have unsustainable spending and debt that will bankrupt this country. We can no longer "slow the growth" of government or spending. We must cut it.
As noted in a Wall Street Journal analysis, "Overall, the plan would hold down the growth of the federal debt by roughly $3.8 trillion by 2020, or about half of the $7.7 trillion by which the debt would have otherwise grown by that year, according to commission staff. The current national debt is about $13.7 trillion." So, their "plan" keeps increasing the debt... just not by as much as before. This is NOT a solution!
James Pinkerton, in an opinion piece on FoxNews.com, hits the nail on the head by writing, "In the future, if we want to reduce the deficit, we will have to change the frame of the debate."
For example, if the economy were to grow a point or two faster over the next few decades, the deficit would become manageable, and eventually disappear. The historic growth rate of the U.S. economy, over more than two centuries, has been three percent. But in the last decade, the growth rate has been less than two percent. If that growth gap continues, we will never balance the budget.
According to the preliminary report, the federal budget would not come into balance for another 27 years --- 2037. Does it really take 27 years to balance the budget?
There are certainly tough choices that need to be made in order to get America back on track, but the commissioners seem to have taken the approach that they will get there by cutting here and taxing there. Let's change the focus... let's look at the big picture. Taxes should be cut across the board. Why? Because the rates are too high, and lower taxes will stimulate the economy by letting people and business do what they do best. Spending should be cut. Why? Because government is too big and too costly and doing too many tasks that it was not intended to do.
If we reduce the size of government and promote ways to grow our economy, then we can get out of this mess. However, it will take a debate, not on what and where to cut, but rather on the fundamental role of government. In this past election, the American people gave their first response to that question. Now the real work must begin.