Budget Crisis

Every economist, and every person who has tried to balance their own personal budget, agrees that there are only two ways to cut a deficit:

1. Cut spending
2. Increase funding (in the case of gov't, increase taxes)

Often a government can do one or the other. Sometimes it has to do both. When you are looking at a 14.3 trillion dollar deficit, you have to consider both, as there simply aren't enough places where you can cut to make up that mind-blowing figure.

The Republicans have said outright that raising taxes if "off the table" (John Boehner, among others). So, although there is literally and factually no way to cut spending enough to make up the difference in the budget, one half of all of the solutions to solve the budget crisis is off the table. This makes no sense, especially as you consider the fundamentals of the conservatives throughout the years (a good article calling this and other recent decisions into focus was published by Time recently). Why take any option off the table, unless you have an ulterior motive?

It seems like the Republicans want this crisis to grow and deepen for political reasons. While I did not condone or agree with the way the Democrats tried to throw their weight around when they won both the Presidency and control of Congress, it seems really petty and, frankly, dangerous how the Republicans are now doing the same thing back again. By making a bold declaration like raising taxes is off the table, they put the entire country at risk of financial collapse just so they can turn around and say, "See the President screwed up. He can't lead the country." And, unfortunately, most Americans appear to be stupid or ignorant enough to agree with them without ever looking at the facts.

Former Labor Secretary Robert Reich makes some very interesting points about the economy in 2 minutes and 15 seconds in this video. Yet our current Republican leadership wants to ignore those facts and figures and continue to give tax breaks to those who don't need it, screw those that do need it, and further the gap between the wealthiest few and the majority. The problem with trickle-down economics, as we learned in the 1980s and 1990s and are rehashing today is that those that have the money will do everything within their power to keep that money FROM trickling down (a good video explaining this, in part (about 10 minutes)). Business would much rather have free labor than pay for it, the rich would much rather keep their riches than have it flow to the government or trickle down to those who work for them.

And I don't blame them. I want to keep every red cent that I get from my own paycheck. I do everything I can to make sure my expenses are less than the paycheck each month so I can a) afford to save some money and b) afford to do or get the things I want and need. That is true of every person on the planet, and is doubly true for governments, businesses, and the wealthiest few.

I'm not blaming the Republicans for this impasse solely. The Democrats are too quick with the raising taxes philosophy. We should and do need to cut many gov't jobs and bureaucracies. Over the last 10-15 years, gov't has become a bloated entity with a lot of fat it could stand to lose. In this, the Republicans are right. But the Democrats are right also in that, following the advice of nearly all economists (from both sides of the argument), cutting is not enough and some way must be found to bring in more money -- and the only way a gov't can do that is through taxes. Even a 1% flat federal tax would make a significant difference to the deficit. Of course, as Robert Reich mentions in the link (above) and many economists have been arguing, getting more money into the hands of the majority of people means the majority of people will spend it, which improves the businesses, improves the economy, and also eats into the deficit. Getting the 150 million + people in the middle class spending $100 a month more into the economy helps a whole lot more than giving the wealthiest 10 million people another a tax break. If anything, we need to try a trickle UP economic theory, as that is precisely what made America great over the last 100 years -- the ability for more and more people to become a part of the middle class, and that middle class buying stuff, trickles the money up through the businesses to the wealthiest individuals and into the gov't coffers (through taxes to both people and businesses).

So, the Republicans need to stop throwing the baby out with the bathwater and start looking at ALL solutions to this economic crisis. While most of our leaders probably think they are in that wealthiest group and won't be affected by this budget crisis, they have another think coming. And the Democrats need to understand that the Repubs are right -- many gov't agencies and budgets could stand to be cut into, and deeply, and they should choose their battles over what to keep.

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Oh, and one more thing: the Repubs are going after two long-time "social" agencies, Social Security and Medicare. President Bush more than once went on record as saying that the money in SS was "ours" (meaning, each individual's). If the Repubs are successful in getting rid of that agency and "bloat," I'm going to be contacting them for a check for the 20 years worth of money I have invested in it -- their own most recent leadership agreed it was mine and that I should be able to invest it any way I see fit for retirement. Oh, wait, did you think I was just going to let you keep it to help with the budget crisis? No, I don't think so. Just like them, I want to keep every cent I have earned, including those that the gov't forced me to give them.

As to Medicare, it could stand to be trimmed and retooled, but doesn't have to go away. Why can't America look at any one of the dozens of other nations that do universal health care successfully and cheaply and model our agencies and services after those? It doesn't have to be a bloated mess and it doesn't have to use more than 1% of GDP. People don't seem to realize that, since the 1960s, America has steadily declined in per capita comparisons with all other industrialized nations in health care provided, costs, death rates, infant mortality, number of uninsured, and other key stats. So, since America privatized the medical business, people's health has steadily declined and profits for insurance, pharmacy, and medical business have increased (just one source, but you can find many that come to the same conclusions). Coincidence?