Cool interactive feature on the Times website today: You get to implement various pieces of the deficit-reduction plan proposed earlier this week. Frankly, we don't see what's so tricky. We plugged the $1.4 trillion gap with a fairly balanced combination of tax increases (53%) and spending cuts (47%). Admittedly, we probably cut more than some would like from the military, and we realize that anything that puts the words 'raise' and 'taxes' together in the same sentence is a political non-starter, but still this could work.
We find it hard to believe that people still argue over such common-sense measures as raising the social-security age and/or increasing the amount of income subject to social-security taxes. We also have never understood the logic behind the whole mortgage-interest deduction. Sure, we don't own our own home, so we have no real stake in that one, but it's always struck us as a ludicrous loophole. Even if you accept the argument that home-ownership promotes strong communities, and therefore has "positive externalities" that a government should support, does anyone think people choose to buy a house because they get a mortgage interest deduction? That is, isn't the federal government simply rewarding people for behavior they would likely engage in anyway? It's like paying a 10-year-old to eat ice cream.
(DIGRESSION: And, while we're on the subject, if the government believes the best way to stimulate the economy is for citizens to spend spend spend--see President Beavis' exhortation after 9/11 that the most patriotic thing Americans could do would be to go shopping--why isn't credit-card interest afforded similar preferential tax consideration? EOD)
We had an idea for reducing the deficit that the Times doesn't even allow you to plug in: The federal government should conduct a national survey to find out how many people identify themselves as members of a "Tea Party." Let's say 10% of the country claims membership. Well, then, simply cut federal spending by that amount and make sure that not one dime of "evil" federal largesse goes to those folks. In fairness, we would allow them to stop paying federal income taxes. But since "Tea-Party" states tend to receive federal services far in excess of what they pay in taxes, overall this should result in a tidy net sum to the Feds. In 2005, for example, Alaska received $1.84 in federal spending for every dollar paid in taxes; Kentucky, home of Tea Party Senator Rand Paul, got $1.51; and militia favorite Idaho raked in $1.21. On the other hand, "big-spending," liberal bastions like Massachusetts ($0.82), New York ($0.79), and California ($0.78) receive significantly less federal aid proportionally.
Anyway, try the Times's budget-balancing app. Let Solipsist Nation know how you would solve the country's financial woes.
O.K., a couple of things: First: The two dingbats who made these proposals are BOTH conservatives, so we can understand the same old Republican line from them... but YOU? Yes, the FICA deductions should be extended. That's true. Yes, the Tea Partiers who don't want ANY gov't spending shouldn't get any. BUT, as has been pointed out by Paul Krugman, raising the retirement age may be okay for white collar workers, but the vast majority of workers in heavily physical jobs is another story indeed. As to the whole home mortgage thing; on the one hand it is arguable that the "article of faith" that is home ownership may be challenged. HOWEVER, if we subscribe to it, it should be noted that, while you are correct in that no one buys a home in order to get the deduction, many, many, people could not afford to buy a home without it. Finally, to accuse Republicans/Tea Partiers of rampant hypocrisy is SUCH a waste of time. It's like pointing out that basketball players are tall. It's a REQUIREMENT!
ReplyDeleteWe fail to see how a plan that relies on a majority of tax increases over spending cuts--and whose spending cuts involve large military cutbacks--qualifies as "conservative." As for raising the retirement age, we're perfectly willing to accept modifications for those who do heavy physical labor, but, let's face it, America's is a service economy these days. The Soc. Sec. retirement age was set when life expectancies were lower than they are now. Realistically--and in light of budgetary realities--if COLA is indexed to fiscal inflation, so should a government-supported retirement age be indexed to demographic inflation. Also, we're not convinced that the majority of homeowners couldn't afford their homes without the mortgage-interest deduction.
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