Wednesday, March 23, 2011

You Want to Balance the Budget; It's Really Not Too Hard

Hey Republican Tea Party, so you want to balance the budget? Are you serious or just using your new found disdain for deficits as an excuse to cut tiny and budgetarily insignificant programs with which you have a partisan disagreement like Pell Grants, Planned Parenthood or school lunches. If you are serious about balancing the budget, you are going to have to make HUGE changes to expenditures and revenue. That means raising taxes AND cutting discretionary spending.

Here are some ideas that would actually make a difference:
  1. When you or I go to a Las Vegas casino and place a bet, a portion of our bet goes toward taxes. When a giant hedge fund or bank goes to the Wall Street casino and places multi-billion dollar bets, the bets are tax free. Here's an idea; place a tiny one tenth of one percent tax on the 500 trillion dollar Wall Street casino handle. The result would bring in $500 billion to the treasury and put us on a trajectory to a balanced budget within the decade.
  1. Most workers and tax payers pay 12.4% for Social Security taxes yet Bill Gates and other extreme high earners only pay a tiny fraction of one percent. So here is a dose of common sense: Have everyone, rich and poor alike, pay the same 12.4% tax. This would make Social Security solvent into the far future so it would be there for all our kids.
  1. The lion's share of discretionary spending is found in our military budget. Do we really need a gigantic world girdling military? Do we need 1000 plus military bases stationed all over the world? Are the vast Canadian hordes poised to sweep down on us the minute we let our guard down? Over the course of the decade we can phase out about 90% of our foreign military bases which will still leave us with about 100 military bases outside our country. For comparison, do you know how many military bases China has outside its country? Zero.
  1. Raise taxes on income over $500,000 to levels comparable to what we had in the 1950s, 60s and 70s. After World War 2, we had a bigger debt than we have now as a percent of the economy and we didn't go broke. We raised taxes on the wealthy to over 90% and guess what? The rich prospered along with the middle class. As it turns out the rich heavily invested in business creation in order to avoid the high taxes, and in the process created millions of new jobs resulting in increased tax revenue. A win-win-win scenario that resulted in decades of robust growth and low deficits.

Our current fiscal problems are solvable. We just have to overcome 30 years of Republican propaganda that has convinced most Americans, liberal and conservative alike, that low taxes on the wealthy creates jobs. It does not; it is just the opposite. Our country has been in similar circumstances before; the playbook has been written and it has worked before. All we have to do is open our eyes and see the obvious truth that taxes must be in line with our spending.

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