Face it. Someone is going to have to eat cat food!
For 30 years the U.S. federal government has spent on ever higher levels of both guns and butter financed by an ever larger deficit. It started during the Reagan years with the military buildup to win the Cold War at the same time that entitlement costs were exploding.
Now we are so far underwater that there is a very real change that the Feds could default on their debt. All it would take is a refusal on the part of foreigners to buy Treasury paper that would force interest rates much higher. This would trigger a crushing debt service payment that simply could not be paid. The first time the U.S. government failed to pay, the next financial dark ages will begin. This is exactly what is at stake.
Are the entitlement, defense, discretionary programs in our budget worth taking that risk? Once the feces hits the fan will these programs still be paid for in the aftermath? Are there not reasonable things we can do to step back from the edge?
There are only two ways to do it. Cut spending or raising taxes. Or I guess you could do both.
If we raise taxes, on whom would we raise them? The rich already pay nearly all the non-payroll (FICA) taxes. Could we saddle them with a 70 percent tax rate and pay for everything? Of course not, they would emigrate, retire early, or simply refuse to produce wealth. They are the brains as well as the engines of our economy. If the rich quit, we are all out of work.
Can we tax the middle and lower classes at a level to cover the true cost of their entitlements? Many of them are already strapped. They are already revising their standards of living down in this economic malaise.
Given the unlikely ability to raise significantly higher taxes, massive spending cuts is the best bet we have. Below I have listed common sense cuts that I think are viable if we are willing to put the country’s long-term future ahead of our personal short-term interests.
1. Realize the post-Cold War peace dividend. Cut the military way back. Keep the nukes, the Special Forces, and the Marines. The rest of the defense budget should be cut way back. Also get the hell out of the Middle East; we have spent a trillion dollars there. Let the Europeans and Asians do their own heavy lifting. They’re the ones who get their oil from the Muslims. The Defense budget should only be about $150 billion a year. One day we may need to spend more on defense to counter the Chinese threat, but let’s save while we can.
2. Raise the retirement age for entitlements. When Social Security started, the average life expectancy was about 61. The retirement age is still set at the original 65. Set it to 70 or whatever age makes the numbers balance.
3. Use Paul Ryan’s voucher system or a life-time cap on benefits to control Medicare and Medicaid costs. You can’t promise an unlimited benefit to retirees paid for by limited payroll taxes. Duh! Also, our people need to get off the couch and get healthy. Fitness is the best way to keep down healthcare costs.
4. Stop the corporate subsidies and special tax treatments. Don’t subsidize ethanol and other agricultural products. Cut corporate income taxes, estate taxes, and capital gains taxes to zero in order to grow the economy. Better yet, switch to the Fair Tax or other transparent tax schemes that would cut corruption and compliance costs way down.
5. Get rid of the Department of Energy which provides no energy, the Department of Education that teaches no children, the Department of Commerce, and cut the EPA way back. The EPA needs to stop Love Canals or Cuyahoga River fires, not regulate cow farts. Get the feds and their red tape off the backs of the business community.
6. I think we could fire three-quarters of the federal workforce and never miss them. Change government benefits and retirement plans to mirror the private sector, i.e., 401k’s and higher contributions and deductibles on their health plans. Change the Civil Service work rules to make it as easy to fire slackers and incompetents like in the real world
7. Repeal all unfunded mandates by the federal government that have been imposed on the states and the people.
8. Allow state nullification of all federal laws that they deem unconstitutional. Especially use a Tenth Amendment test on big programs like Social Security, Medicare, and welfare programs.
Use the 18th century definition of the words in the Constitution for interpretation purposes, not the 21st century progressive definition.
9. Raise tariffs on imports from countries that have high trade surpluses with us. We need to bring the factories back home and become much more self-reliant.
That is all I can think of at this sitting. Let’s put the country first and save the future while we still can.