Do the math. It’s a fairy tale to believe that just increasing taxes on rich people will solve our deficit problems. It’s also a fairy tale to believe that reducing taxes will solve our deficit problems.

Incredible as it sounds though, these are the two big lies American politicians want citizens to believe.  One side says that all we have to do is tax the rich, which is anyone making more than $200,000 annually, and we’ll be OK. We don’t have to cut any programs, well maybe defense, but no social programs. Basic arithmetic aside, that’s what the party with the donkeys want us to believe. The other side, the party with the elephant, want us to believe that if we reduce taxes, huge amounts of dollars will flow into government coffers because, in some mysterious way the economy will soar and there will be more tax dollars without increasing tax rates. That’s magical. The elephant guys also want us to slash government spending, but most of then are really vague about which programs should get slashed. They wouldn’t want to piss-off any voters.

There’s  a theory that government spending can’t be cut while an economy is in recovery. The theory says that reducing government spending will worsen the situation by increasing unemployment and further reducing tax revenues. Economists argue about this constantly. There is really no proof that adjusting government spending will affect the economy. What there is proof of is that government spending of funds we don’t have will increase the public debt.

There’s also a theory that says taxes can’t be increased during recovery from recession, because that will reduce growth and subsequently further reduce tax receipts. In fact, taxes have been both raised and lowered during economically tough times. There’s no proof that one works better than the other. There is plenty of evidence however that if we don’t raise enough money to meet our debts, it will have a very negative effect on the country’s future.

It’s pretty evident that people in favor of less government control are not going to vote for higher taxes and people in favor of more government subsidies and wealth transfer are not going to vote for reducing spending. Both groups can point to historical situations where implementing their program (or not implementing the opposing program) achieved desirable results.  Both sides will put their own spin on not implementing their programs: citizens starving in the dark for example , or conversely, total economic collapse and Armageddon.

Both sides seem to believe that if you talk long enough and loud enough the fairy tales will come true.

SRBAC

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There…I said all the things that almost all politicians hate in one headline. Okay…republicans hate taxes and democrats hate spending cuts, but they all hate stuff like campaign finance reform. And to a greater or lesser degree reforming the tax code, taking a serious swag at balancing the budget and doing away with the lifetime careers for congressmen and senators. As you might expect politicians want no part of it.

Flat Tax.  Well maybe not flat exactly but certainly different than what we struggle with today. People really can’t get a handle on equitable tax distribution if all these shelters and deductions obscure the outcome. If your income puts you in the 27% bracket or the 34% bracket then the tax you pay should be about uhmmm…27% or 34%.  I don’t think we can institute a single tax bracket for everyone, even though that is itself somewhat progressive. For example, if the single flat tax is 25% and taxpayer A makes $25,000 and taxpayer B else makes  $1,000,000, taxpayer B is going to pay a lot more than A, but  a 25% tax is going to hurt A more than the bigger tax bill will hurt B. A lot of voters are in favor of tax reform, mostly because they think their taxes will be lower (and conversely someone else will have higher taxes). Tax reform will do a lot to help Americans understand and even agree about a fair tax burden.

Term Limits. Incumbent politicians, unless they’re caught taking money or fooling around usually find it easier to get re-elected than a challenger finds it to get elected the first time. Their office is a platform on which they can reward those who support them and punish those who do not.  In Congress, powerful committee chairs are dispensed by seniority. Partisan party policies continue, not because they’re good, but because the familiar officeholders keep getting re-elected. This built in bias for the office holder is contrary to the original “rotation of office” thinking common during the nation’s founding. Politicians don’t like it for obvious reasons.

Campaign Finance. The enormous amount of money spent in election campaigns in the United States propagates the two party system. The tidal wave of money raised and spent by the two dominant parties effectively freezes out third part voices. Corporations and unions are totally connected to the dominant parties and completely focused on promoting their agendas. Spending by political action committee’s  makes a farce of the election process. Elections decided because the candidate has the most money to spend is not what the democratic process is envisioned to be. Since the vast majority of politicians holding office today belong to one of the dominant parties it is unlikely they will support real significant reform.

Substantially reducing the amount of money a candidate can spend would promote the ability of candidates representing other points of view to be heard. Corporate and Union participation must be eliminated.  The media will be absolutely against this option since it provides fewer opportunities for their profound comment.

Balanced Budget. In theory a balanced budget rule is more of a hindrance than an aid. Why should we have a rule that curtails flexibility in emergencies or limits  strategic options for government in general? The problem of course is spending, or more specifically: politicians and spending. Balancing the budget means that annually we will not spend more than we have in revenues. This won’t cure the huge deficit already created by the politicians from both sides, but it would help in making sure it doesn’t get bigger.

It’s hardly a revolutionary idea since almost all the states have some type of legal requirement for budget balancing.  A major effect of an enforceable balanced budget amendment will  be to shift the politicians focus from finding ways to raise taxes or spend money, to finding ways to live within the budget constraints. Something we haven’t done for a long time.

 

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