The Debt Ceiling Solution

If Republicans and Democrats could put the interests of their biggest campaign contributors aside and do what they both know is right, fixing the debt ceiling issue would be much simpler.  I believe the leaders of both parties KNOW what the right way forward is, they just can’t resist playing politics with it, and twisting the facts and motivations of the other party.  If John Boehner and Barack Obama described their sincere proposals under sodium pentathol, there would be about a 5% difference in their solutions (and it would look mostly like the Republican solutions thus far proposed).

Here’s approximately what such a “right” solution would look like:

1.  Agreement to reduce the debt by $4 trillion over the next 10 years.

2.  Large portions of the reduction would come from Medicare and Medicaid reform.  These reforms would include provisions to exempt current seniors over aged 55, and phased implementation from aged 55 down.  For example, if you are 55 or above your benefits remain the same, if you are 50-55 your benefits are reduced and changed slightly, if you are 45-50 they are reduced and changed more, and more for 40-45, and then anyone below aged 40 is subject to the full new provisions of Medicare.  And yes, these reforms will result in reduction in benefits and increased costs to our citizens (under age 55), but they will have more time to save and plan for such increased expenses.  There is no other viable way to keep these programs solvent, and the President and thinking Democrats all know this to be the case (but again, can’t resist the political upside of saying the Republicans want to throw grandma off the bridge).

3.  Another major source of reductions would come in defense spending.  While I’m always skeptical of proposals that say we can reduce expense significantly by eliminating waste, there are $100’s of billions in savings by eliminating defense spending that is primarily driven by politics and cronyism.  We are building weapons systems we don’t need and keeping certain military bases open simply because a member of Congress fought for an arms program for a constituent, or for a military base in their district.  It’s interesting that the Secretary of Defense and the Joint Chiefs can declare a defense system or base as unnecessary, and somehow a Senator is able to preserve it simply to protect their constituents.  See article here as to what Secretary Gates dealt with.

4.  Increased revenue by “closing tax loopholes”.  I don’t believe there is a lot of money in this, but if for no other reason that the American people believe there is, Republicans should agree to some form of these.  Most Americans don’t want taxes increased, but the deceitful President Obama has convinced them that there is lots of savings in closing these loopholes, and that some form of tax increase needs to be part of a “balanced” approach to reducing debt.  Republicans should relent here and find a few symbolic loopholes to close and they will win the overall war, and will remove the “obstinate” word from their foreheads.  In summary, Republicans can easily make this issue go away without substantively giving in on their philosophy that taxes are too high and shouldn’t be increased.

5.  Repeal of the CLASS act in the Healthcare Reform Bill, as well as a review of the other hidden provisions in the bill that will generate far higher cost than our dishonest President and Democrat Congress have hidden from us.  For now, to get the debt ceiling done, Republicans should demand the CLASS act be repealed.

6.  Agreement, publicly stated by leaders of both parties as well as the President, to implement tax reform by the end of 2011.

7.  Agreement, publicly stated by leaders of both parties as well as the President, to reform and reduce corporate tax rates by a minimum of 10% by the end of 2011. (Yes, even Democrat members of Congress who understand economics KNOW that this would be extremely beneficial to the economy, but they cannot bring themselves to tell their constituents that this is the case).

8.  Finally, agreement publicly stated again to reform Social Security and make it solvent, with a deadline of the end of first quarter 2012.

While some of these issues seem controversial, they are only controversial in a “political” sense.  We all know that Medicare and Medicaid and Social Security are financially bankrupt in any medium or long term view.  We all know (yes, including the President) that raising taxes, especially over the next 5 years as our recovery plays out (hopefully!), does not make economic sense.  We also know that our military strength and leadership position in the world will not be effected one iota by cutting politically-motivated programs and military bases.  Arguments to the contrary on any of these statements are based on unclosed logic, emotion, and/or political self-interest.

Let’s quit playing politics and let’s execute on solutions that level-headed Americans know need to be implemented as soon as possible.

 

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