I'm Halfway There

I'm halfway there, and if that counts as compromise, then I am going to call it that.

With the national deficit skyrocketing, the debt going only up, not down, and statistics saying that soon 40% of all federal spending will just be to pay interest on the debt, I am ready for a change. And I think most Americans are. But most aren't ready for what that looks like.

The ever-present debate has two sides - do you lower spending or raise taxes (or both) and which bad option appears good in a recession? I have always, ALWAYS, been anti-spending, whether in a recession or not, whether we had a "balanced budget" or not. But what about raising taxes?

Let's look at the other side. Barack Obama wants to raise taxes. He does - anyone who listens to him talk can tell. First of all, he campaigned on not raising taxes on people making less than $250,000. However, when he had to sign the extension of the Bush tax rates in 2010, suddenly his promise not to raise taxes on the middle class changed into a (now-broken) promise to RAISE taxes on those making more than $250,000 a year.

Now, if he were wanting to raise taxes to help cut the deficit, I would maybe be a little more understanding. But instead we see a habit in this president of outrageous out of control spending. In addition, he has already come out as critical of Republicans in Congress who wish to cut a lot of domestic spending programs (option 1 above). What he says is that these cuts are a drop in the bucket. But so are taxes raised on the upper-class. So if deficit reduction is his goal with the proposed tax increases, he should be willing to work with the spending cuts the Republicans propose - perhaps they can both get their way if they work together.

But I said I'm halfway there. The reason is, while I support deep spending cuts and generally am opposed to any tax increase, I might be willing to see a combination used to help bring down the deficit, if done right.

First of all, straight tax increases - increasing the rate of tax charged on a given bracket for instance - chill my bones. The rates don't ever seem to go down, and the numbers just depress you. The more you make, the more you pay, and innovation and hard work are repressed. On the other hand, the tax code is incredibly large because of all the deductions (also known as "loopholes") that are offered.

As an accountant, and having been through Tax Indoctrination Class (also known as Income Tax I) in college, I am less opposed to the complexity of the tax code as I would normally be. Much of what is in the tax code is meant to drive social and economic behavior. As someone who doesn't think government should interfere much in life, I can't say I support the tax code being this way. However, it is "closer" to a free-market system than just implementing demands. For instance, isn't it much better to have the government pay you $1,500 if you install an energy efficient appliance than for them to come knocking on your door and say, "We're here to install your new energy appliance. We'll be done in about four hours."

If we were to raise taxes (while reducing spending) one way would be to simply flat line the tax code. I support a "fair" and a "flat" tax, but what I am saying is simply keep the bracket system we have and erase deductions. Some deductions like mortgage interest payments may be hard to get rid of, but the great thing about getting rid of it is that someone else will have to get rid of something they don't want. When everybody hates the idea, it may be close to being a good compromise. (The only deduction I would not get rid of would be charitable contributions - that is because charity and government overlap in so many areas, if you get rid of this deduction, government may need to step in to take over lost charity revenue, which would be counter productive).

Also I think that everyone should have a share in the tax system. That means, heinous as it sounds, I would raise taxes on the lowest income people. Not much. I think if people paid a minimum of 1% income taxes - no matter how little they made - then they would have a more vested interest in where the government spends its money. Cutting social programs would be easier if everyone involved was saying, "My money goes to WHAT?" As it is, almost half of Americans do not pay any income tax.

Late in 2010 Obama had a team come up with ideas to cut the deficit. In my opinion, their ideas were good, and I would be willing to accept some of the proposed tax increases (they suggested getting rid of some tax deductions as well) if they implemented the proposed spending cuts. But realistically, their ideas were too little, too late. The president is right in one regard - spending cuts make up such a small portion of the deficit. Any real reform has to come from social security and medicare.

I think our generation is ready for that. I have been ready since I was eight. George W. Bush tried to get us ready. But I really do think that when we are paying to support retirees who got us in to this mess and never saved a dime for retirement, and our taxes start to go up to make up for the smaller generation, then we will really start to panick.

The deficit commission had ideas that I think should be implemented, and even more dramatically. Namely, raising the retirement age. Social Security was implemented back when most people died soon after retirement. Now people are healthy and able to work when they are in their late sixties. I think the retirement age should be raised one year every five years. That allows people to actually reach retirement but helps stave off our national debt problem. I think people in my generation understand that they would rather retire as old as 72 than to pay 14% of all their income and never get that money back.

The point is, I'm to the point that I'm willing to compromise and accept a little bit of both: spending cuts and tax increases to help the deficit go down. And if I'm halfway there, that means a lot more people are there because I'm not exactly what you would call a moderate. Also, if I can come up with ways to decrease the deficit, certainly people in Washington can do it.