Facing America’s Budget And Debt Problems Takes Courage
– By Lisa Rutherford –
Let’s face it! We live in what is considered by many to be the greatest nation on Earth. People are risking life and limb and what meager financial resources they have, traveling months in terrible conditions to get here for more opportunity. People and nations throughout the world invest in this country because of the safety it offers. And, yet, there are those on both sides of politics who feel despair over the state of our nation, particularly our economic situation, as has been reflected in President Biden’s poll numbers. At present, President Biden is being blamed for all of these problems. Amazing how much one human can get done in just three years, right? But, there’s enough blame to spread around.
Republicans always want to make it sound as if Democrats are the bane of all existence due to woke ways and overspending while Democrats complain that tight-fisted Republicans are putting those in need in harm’s way and shutting them out of opportunities. Currently, on the right, there’s a lot of complaining about the $1.4 trillion federal budget deficit. Admittedly that is not chump change, but it is nowhere near the $2.77 trillion in 2021, second highest on record, and not even close to the $3.13 trillion of 2020! Prior to 2020 and 2021, $1.4 trillion was the biggest budget deficit. That was in 2009 and associated with the 2008 financial crisis and subsequent recession. The latest projection as of May is a $1.5 trillion deficit for 2023 mostly due to the student loan forgiveness program – still down from $2.77 trillion (2021) and $3.13 trillion (2020). Omitting some of these relevant facts skews the issue. Let’s at least admit that things have improved since 2020.
So, things are not as good as we would like but better than have been in the recent past. We do, however, need to do something about the deficit, and I admit that we have a spending problem. We cannot maintain our status as the greatest nation on Earth if our profligate spending drags us down. How to solve the deficit problem is the question, but we must or we may condemn those who follow to an unreasonable debt burden. The debt created by this over-exuberant spending is projected to rise in relation to the size of the economy each year and will reach 118 percent of GDP (Gross Domestic Product) by 2033 – highest level recorded – and continue beyond if unabated.
Democrats say that raising taxes would help while Republicans say the rich are already paying their fair share. Republicans say we need to cut social program spending while recently on 60 Minutes it was made clear how much money we waste on military spending due to gouging by military supply companies like Raytheon, Northrop and Boeing that are raking American taxpayers over the coals with prices to support our military. It doesn’t have to be and should not! We need a strong military but not at the expense of other important needs and not with wasteful spending practices. What’s the good of a strong military if we have nothing left to protect?
As for taxes, I have always questioned why those who earn above a certain level – currently $160,200 – should not have to pay Social Security taxes. Some think that making everyone pay this tax would go a long way to helping deal with our deficit. In fact, a majority of those questioned in a 2022 survey conducted by Seven Kull, director at the Program for Public Consultation at the University of Maryland, were in favor of such a move. 88% of Democrats and 79% of Republicans were in support of raising the payroll tax cap. Increasing the income level for the tax to more than $400,000 would eliminate 61% of the shortfall as estimated by researchers.
Those who earn more than the current $160,200 and certainly those earning more than $400,000 are benefiting greatly from this nation in which we live. Why should they not have to pay these important taxes when others who make far less do? It certainly impacts those at the lower end of the income level more than it would them. It’s interesting to note that no income cap exists for the Medicare tax. Perhaps the fact that Social Security does have a cap has to do with the fact that the FICA tax, which includes both Medicare and Social Security, is split between employer and employee with each party paying half. It’s not difficult to imagine that employers – a strong political lobby group – don’t want to bear more of the burden by paying more. And, those who earn more than $160,200 don’t want to pay more either. They’d rather have the guys who earn less bear the burden. And, I’m sure that includes a large number of those working for military contractors Raytheon, Northrop, and Boeing who are making big bucks and not having to pay into Social Security while their companies take it to Americans through price gouging.
When my husband and I were both working it always irked me that while I continued paying the tax during the whole year, he stopped about half way through. Now, admittedly, having him continue to be taxed would have come out of our joint income, but I would have been willing because it just didn’t seem fair and would not have impacted our life style one bit!
Social Security is not the only tax issue that should be addressed. Although some assert there is no real economic inequality in this nation, according to a study by The Brookings Institution, a nonprofit public policy organization, “economic inequality – whether measured by income of wealth – has grown in the United States.” They found the tax code has played a key role in this trend. A child’s economic future is substantially determined by “inherited income” – income that “is taxed at less than one-seventh the average tax rate on income from work and savings.” Taxing individuals who receive inheritances above very high exemption levels would raise much-needed revenue and provide a more equitable allocation of taxes. The Urban-Brookings Tax Policy Center estimated “The proposal would raise $1.4 trillion over the next decade if the lifetime exemption were set at $500,000 and $340 billion if the exemption were $2.5 million.”
Add changes to current tax law that raises too little corporate tax revenue while also creating incentives for multinational corporations to avoid paying U.S. taxes and it’s clear there are opportunities for making changes to help lighten the debt burden and help our budgetary process. But, along with additional revenue must come changes in how it’s spent starting with military waste.
President Biden and Congress have us wondering at this point when they will make a final decision before June 1 after which many of our country’s bills will not be paid, putting this nation at risk of being downgraded. What options their discussions behind closed doors include I don’t know, but it will be interesting to see what comes of this wrangling and showmanship that leaves many biting our nails. I can only hope that they have the courage to do what’s right for this nation and for the Americans who will have to live with their decisions.
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