The Bigger Picture
Published on August 15th 2011 in Metro Éireann By Charles Laffiteau
In my last column I accused Republicans of ‘kicking the can down the road’ by using a bit of legislative sleight of hand to allow an increase in America’s debt ceiling without agreeing to a plan to address the deficit.
While I applaud the fact that cooler heads within the Republican ranks were able to come up with a way to raise the debt ceiling and avoid a bond default, I nonetheless condemn Republicans for their failure to embrace a plan to take action on the ballooning federal budget deficit in conjunction with raising America’s debt ceiling. By failing to act responsibly to address the budget deficit Republicans in the US House of Representatives have shown that their real priority is getting re-elected rather than doing what is best for their country.
On the other hand, in the US Senate a coalition of conservative Republicans and liberal Democrats put partisan politics aside and drafted a very pragmatic agreement which used a combination of tax increases and spending cuts to cut the current 14 trillion dollar deficit by more than 4 trillion dollars over the next decade. The Senators used the recommendations of President Obama’s bi-partisan deficit reduction panel as a blueprint for developing their own plan to address the nation’s budget deficit while protecting America’s social welfare programs.
In contrast to the uncompromising ‘no tax increases’ stance of House Republicans, Republican Senators agreed with their Democratic Party counterparts that an increase in taxes was an essential part of any practical plan to cut the nation’s deficit. However, the Senate Republicans did not endorse President Obama’s proposal to let the Bush tax cuts for wealthier Americans making over $250,000 per year expire in 2013. Instead they proposed to raise over one trillion dollars in new tax revenues by drastically changing the US tax code.
The US Senate plan proposes to raise tax revenues by eliminating almost all of the current tax deductions and subsidies and then lowering tax rates for all levels of household income. In turn, middle class and lower income households would see their taxes reduced or remain the same while wealthier Americans would see their taxes rise even though their tax rate was lowered because they are the primary beneficiaries of the current tax deductions.
The Senate plan also addresses the deficiencies in the America’s entitlement programs which are the biggest contributor to the budget deficit. The Senators would shore up America’s retiree healthcare program by using means tests and other cost saving measures to cut Medicare costs and would change the way cost of living increases are computed, increase contributions and raise the retirement age in order to ensure that the Social Security program remains self supporting for the next 75 years. The plan would also cut spending by eliminating agricultural and ethanol subsidies and by trimming the budgets of all federal agencies including the budget of the Republican Party’s most sacred cow; the US Defense Department.
Both the Senate and President Obama’s proposals to reduce America’s budget deficit rightly spread the pain of spending cuts and tax increases across all segments of American society. But both plans also lean heavily on spending cuts rather than tax increases to close the budget gap with roughly 85% of the measures reducing expenditures and only 15% raising taxes. As such one would think Republicans would be happy to accept such a tax friendly compromise.
So why do House Republicans refuse to compromise and accept some small tax increases as part of a deal to cut the budget deficit and raise the debt ceiling? Do they really think Republicans will win both the 2012 Presidential election and the 60 seats in the Senate they need so they will no longer have to compromise with Democrats after 2012? No. Congressional Republicans are putting their selfish personal political interests ahead of their country by pandering to no-compromise Tea Party activists in order to get re-elected.