I’m not interested in arguing about who got us into this mess. The fact is we are on an unsustainable trajectory. We have to do something about our debt and deficit because if we continue on our current course we will be unable to borrow money or worse yet we will be unable to meet our obligations.
Many will say that we need to increase taxes, specifically on the wealthy. The argument is that we need to increase the revenue to offset spending increases. This is a very logical argument taken in the abstract, just a simple mathematical calculation. Increasing the incoming revenue while holding spending steady should result in a decrease in the deficit. However we are not dealing in the abstract. We have empirical information available to examine and based on that information we can predict what is likely to happen if we raised taxes and increased revenues. I will set aside the supply side argument that raising taxes will decrease revenue and assume for discussion sake that revenues will actually increase.
What we know about our Federal government is that is has an insatiable appetite. Our government never decreases in size, it only grows larger and larger. I have no doubt that if every citizen contributed every single dollar they earned to the government that it would spend it all and still run a deficit. This is the problem with raising taxes, spending will not be held steady, it will grow as it always has. How often have we heard cries about how one party wants to ‘slash’ funding to a program only to learn that in fact the actual ‘slashing’ was only a decrease in the planned increase for the fiscal year. Rarely do we see a zero increase let alone an actual decrease in funding to a program. For this reason, I am opposed to tax increases.
That leaves us with the other alternative for addressing the deficit problem, cutting spending. Many will argue that this can’t be done because our politicians primary objective is to get re-elected and none of them want to touch entitlements. I think there is a simple solution to this problem. Cut everything across the board (including defense) by whatever amount is necessary to balance the budget. It will be painful and everyone will feel the pain. This approach eliminates the discussion about what is fair and what isn’t. We also need to address medicare and social security, but that is an issue for another post.