I feel like most students who read my column don’t make it past the first three paragraphs. So if it’s okay with you, I’m going to write it bass ackwards this week. Here’s my conclusion:
Republicans want to put the entire responsibility of reducing the nation’s record-setting debt and deficit on the shoulders of the heart and soul of America: the working class. It is a plan that is immoral, unjust and ignorant of the fact that while the middle class continues to shrink, the upper class is experiencing skyrocketing income growth.
There is, however, an alternative path to fiscal responsibility. And if you love me, or if you want to know what the alternative path is, then keep reading.
With a trillion dollar deficit and a $14 trillion debt, the federal government has two ways it can balance the federal budget: tax increases and spending cuts.
But Republicans have made it clear that they oppose any and all tax increases – which means the only way they can balance the budget is by cutting government spending.
So what spending do they want to cut?
Kentucky Senator-elect Rand Paul, who belongs to the Tea Party faction of the Republican Party, said he would “reduce federal employees by 10 percent … [and] … probably reduce their wages by 10 percent.”
Since the federal government has about two million civilian employees, this policy would result in the firing of some 200,000 middle-class workers and force another 200,000 to take pay cuts.
But the fact of the matter is that even if the Republicans were able to pass this policy, they still wouldn’t be anywhere near a balanced budget.
The only way to balance the budget without tax increases is to reform the two biggest contributors to the growth in government spending: Social Security and Medicare. Social Security supports the elderly after retirement, and Medicare provides health insurance to the elderly. Since both programs primarily benefit working class Americans, it would be these Americans who would bear the entire burden of paying off the national debt and deficit.
However, although cuts in Social Security and Medicare benefits are necessary, the burden on the working class could be significantly offset by tax increases on the wealthy. And that’s exactly the type of plan that President Obama and the Democrats have in mind.
At the end of this year, the Bush tax cuts will expire, which means tax rates will go back to where they originally were under President Bill Clinton – i.e. the last time this nation had a balanced budget. This would save some $3 trillion over the next 10 years.
But Obama understands that it’s probably not the best idea to increase taxes during an economic downturn, so he has proposed to make permanent the tax cuts for the 95 percent of Americans making less than $250,000.
As for the five percent of Americans making more than that amount, the top two tax rates would return to where they were in the late 1990s; the 35 percent rate would return to 39.6 percent, and the 33 percent rate would return to 36 percent.
Now those aren’t exactly what I would call job-killing increases, especially when you consider that from 1980 to 2005, four-fifths of the total increase in American incomes went to the richest one percent of Americans.
But even though this plan would still save roughly $2.2 trillion over the next 10 years, the Republicans are having none of it. Virginia Republican Congressman Eric Cantor, who is expected to become House Majority Leader next year, said these modest tax increases would hurt the “job-creators.”
Ah, yes. Protecting the “job-creators” would be much less harmful to the economy than firing 200,000 middle-class workers and forcing another 200,000 to take pay cuts.