Focus on Spending and Solutions, Not Taxes and Blame
By Rep. Tom Reed
The edge of the fiscal cliff is in sight. Unless action is taken, all Americans – from those in the lowest tax bracket to those in the highest tax bracket – will see income rate tax increases. Much attention is being paid to tax rates, but changing tax rates as proposed does nothing but throw pennies at the multiple crises upon us. Increasing taxes is not a long-term solution and it gives Americans a false sense of security that somehow the crises have been resolved.
In 2011, the federal government spent $3.6 trillion and raised $2.4 trillion through taxes and other means. Thus we had to borrow approximately $1.2 trillion to pay the bills. That rate of borrowing equates to approximately $12 trillion of additional debt over ten years. Raising tax rates on the top two percent will generate approximately $80 billion of revenue per year or $800 billion over 10 years. Raising taxes on the top two percent actually generates just enough additional money to operate the federal government for eight days.
In Washington, the words “trillions”, "billions” and “millions” are used so often that perspective is lost on what the words and numbers really mean. To bring it into focus, the federal government’s yearly finances are the same as a household which has $72,000 of expenses per year but yet has $48,000 in income. On top of that this household also has an outstanding credit card balance of $324,000. If this household could increase its income by the equivalent of taxing the top two percent, it would generate only $1,700 of additional income per year.
Therefore it is irresponsible that our nation’s leaders seem to be arguing about whether or not to raise taxes ($1,700 in our example) while little attention is given to discussing what to do about the remaining annual debt that must be paid ($22,300), or the adoption of the long term plan to pay off the $324,000 credit balance that will have the additional $22,300 added to it.
The problem is not that Washington doesn’t take enough from taxpayers. The problem is that it spends too much in the names of current and future taxpayers. Our annual trillion-dollar plus deficits and the underlying $16 trillion national debt, coupled with the growing threat of rising interest rates, are not just pushing us over a fiscal cliff, but jeopardize our future as a free and vibrant country.
We need to break out of the gridlock in Washington by stopping the blame game and unite as a nation to address this clear and present danger to us all. Both parties caused the debt problem over forty years of spending far more than the government could afford. I focus not on who to blame in the past, but rather solutions for our future.
Since the 2012 elections resulted in a continuation of split government, revenues must be considered to achieve the compromise that will lead to our survival. We need a firm commitment that any such new tax increases will go toward reducing our annual deficits. Allowing new revenue to go toward increased government spending keeps us on the same road to bankruptcy that we are currently on.
We need to accept the fact that Social Security and Medicare will collapse within the next generation (2024 for Medicare, 2033 for Social Security) if reforms are not adopted now. Ten thousand people qualify for these programs each day, but there are certainly not ten thousand new people paying into the funds each day to cover the liabilities for these new people in the programs. Ignoring this problem only makes the crisis worse and threatens both current and future recipients.
As such, I am committed to ensuring these programs are preserved. I do not support any proposal which impacts individuals currently receiving Social Security or Medicare or those who will become eligible in the next ten years. However, we are rapidly approaching the point when arithmetically such a solutions will be impossible. The longer we wait, the worse it gets.
As a woman at our town hall meeting in Watkins Glen on Saturday said so plainly, “We need to quit shouting at each other and move forward.” I agree and my hope is that 2013 will go down in history as the year when we came together as the great nation we are to implement the long-term solutions to our debt and borrowing crisis, our entitlement crisis, our fiscal crisis and our growing currency crisis. We owe our children and grandchildren no less.
My sincere hope is we will join together to ensure that we do not become a nation saddled with debt, doubt and despair, but one of opportunity and optimism for all.