Republicans and those in favor of lower taxes for all certainly have something to celebrate if the current tax “framework” comes to fruition. All personal interests aside, this is absolutely the right thing to do for our economy and for all of our citizens. However, House Speaker-to-be Boehner and President Obama should have added one other crucial element to this framework, and not doing so missed a golden opportunity and makes us question seriousness in Washington in both parties, especially the incoming Republicans who exercised such influence. That element is spending cuts.
Depending on who you ask, at current and projected spending levels, extending current tax rates for 2 years will add $500-850 billion to the deficit. In the shadow of the Obama Deficit Commission predicting “financial disaster” if we don’t balance our expenses and revenues, how could either party be comfortable with this deal without reductions in spending?
Some of my more liberal readers will say, “exactly why we needed to increase taxes!”. To you I say balderdash (respectfully). Our government is so fat, so glutenous, so incredibly wasteful, why would you simply feed it more? It needs to go on a diet, and get in shape, and it needs to do so as soon as possible. It does not need more Hershey Bars, it needs Jenny Craig. I cannot imagine anyone making a sound argument on this, or how anyone could justify throwing more money into Washington until they stop burning what we already send them.
So here we are, faced with 9.8% unemployment and a looming disaster if tax rates are significantly increased or if no action is taken (which would automatically increase taxes), and a deal has to be made. The President pragmatically realized he needed to make a deal. He, after all, would be held responsible when the economy and markets collapsed in the first quarter of 2011 if no action is taken (unfairly so, by the way. It’s the Congress that would be mostly responsible if this happened).
But why wouldn’t he and congressional leaders, especially the Republicans who were exerting so much pressure, also take advantage of the opportunity to add spending reductions to the framework? Even a “conceptual” commitment to reduce government spending by an equal amount to that of the effect of the tax rate impact? While specific cuts would have been best, we would have settled for a “commitment to seek 10% reduction in Federal spending”. But instead we got approximately $700 billion in revenue reduction, and zero in spending reduction.
I highly recommend a detailed reading of the report of President Obama’s bi-partisan Deficit Commission, which can be accessed by clicking here. But I warn you, it is not for the faint of heart. It is time for us to face the facts, and they are that our government is far too big, far too wasteful, and has been financially delinquent over many years. To not have addressed this in the latest deal is to continue this delinquency.