For every $2.30 we raise in taxes, we borrow $1.50. To end the deficit without raising taxes, we would have to cut spending by 40 percent. Is that politically possible?
Medicare, Medicaid and Social Security make up 43 percent of our spending yet they are largely paid for by their own payroll and not income taxes. Defense makes up 20 percent of the budget and more than 50 percent of what is called discretionary spending.
You may have heard the political theater line, "We don't have a revenue problem we have a spending problem." It's not true; we could actually cut defense spending in half and eliminate all other "discretionary spending" like the departments of Transportation, Education and Interior, we'd still have to borrow money to balance the budget.
Nondefense related discretionary spending programs all-together make up $660 billion. This is about half of what we borrow yearly.
Our national credit card is about to max out and if we don't make the payment, the interest rate is going to go up. Of course, it's not literally a credit card, but if we default on payments borrowing money will involve higher interest rates. Those higher interest rates could be costlier to the economy than raising taxes. At present, 6 percent of our budget is paying interest on the debt.
Concerning balancing our budget, President Barack Obama is asking that the Bush tax cuts expire on those making over $200,000 so that revenues will increase by $1 trillion. In exchange, he is willing to support $3 trillion in spending cuts. Both of these numbers are over 10 to 12 years as our yearly expenditures are about $3.8 trillion, with $1.5 trillion of that being borrowed.
When put into the 10-year perspective, we can see that Obama's proposals, though a step toward reigning in the deficit, isn't massive cuts or a major change in government. So are the fiscally conservative Republicans demanding more serious cuts? Are they saying, "Mr. President, let's get real about this spending. We owe $14.46 trillion, about as much as our nation's entire yearly GDP. Our total tax revenues are only $2.3 trillion yearly. For every $2.30 we raise in taxes, we borrow $1.50. We've delayed long enough; let's be adults and pay this down."
No, instead they are saying, "We don't want to actually raise the money to pay what we owe. So let's not raise taxes and only cut the size of government by $1.5 trillion over 10 years instead."
That's right; the Republicans' first answer to Obama was to not cut the government by as much as the president would have liked to, which really wasn't that much in the grand scheme of things anyway. It's as if the Republicans didn't want to cut government and would rather continue to mooch off future generations to pay the bills today and blame a Democratic president. Realizing Obama wouldn't cave, they finally compromised.
The House then engaged in more political theater by passing a bill they called "Cut, Cap and Balance." This bill is theater because it won't pass the Senate and makes it difficult to raise taxes, which would be necessary to balance the budget.
Our nation has spent more money than it has brought in with taxes for decades. Since well before the recession, taxes have continually gone down. Obama even passed $404 billion in tax cuts and credits in 2009.
We have a president willing to reform Social Security, Medicare, Medicaid and defense. That is the only way to fix the budget. This president has shown a willingness to make very unpopular decisions. Agree with those decisions or not, that trait is necessary to get spending reforms passed.
This is a golden opportunity to make some serious reforms. Instead our Republican representatives are playing political theater with regard to taxes. Fixing the budget without raising taxes would require either the ability to defy the laws of physics or politically impossible cuts, like eliminating all discretionary spending and cutting defense by 75 percent.
Brandon Givens is a Hall County resident and frequent columnist.