The U.S. Federal Government is not a family household. The U.S. Federal Government should not “tighten its belt” during a recession. This is because, unlike the average family household, the Federal Government has obligations — like every American’s health over the age of 65 (Medicare). This commitment to protect America’s seniors from illness cannot be voided regardless of revenue levels.
Speaking of revenue, the family household cannot unilaterally increase its income (in family vernacular). On the other hand, the U.S. Federal Government can increase its revenue by increasing taxes for the top one percent of income earners. This top one percent has benefited from a 120 percent increase in income during the last 30 years. Meanwhile, their tax rate has drastically dropped over the same period.
These obligations and unilateral capabilities starkly distinguish the Federal Government from the “family-household”. But there is one more significant distinction. In a recession the Federal Government is the last line of monetary lending. We should want the Federal Government to run a deficit to create jobs because banks and individuals are not infusing sufficient capital into the economy for job hiring. The Federal Government can constitutionally (unlike the states) and realistically (unlike families) run a deficit in order to stop the vicious cycle of the economy. Americans believe job creation is more important than deficit reduction by 56 to 40 margins in the latest NBC/WSJ poll, but they haven’t yet connected job-creation with government spending.
Although the same tools can fix both fiscal imbalances, debt is accumulated unlike deficits, which is annual. Increasing revenue by closing tax-code loopholes or selectively increasing taxes on dividends (currently 15 percent tax) will fix both fiscal imbalances. Cutting military spending by redeploying troops out of Iraq or not funding two engines for the F-35 fighter (the most expensive defense program ever) will fix both fiscal imbalances. I support all four of the above reductions because they cut America’s annual deficit and long-term debt. However, House Republican’s budget composed by Paul Ryan (R-WI) does not include any revenue increases or defense-spending reductions.
Instead, the House Republican’s Budget decreases revenue from the top income tax bracket by 10 percent (I have not heard a cogent reason why) and does not reduce exorbitant military defense spending. The House Republican Budget only cuts the deficit by privatizing Medicare and other social entitlements. The majority of Americans (50 to 44 in the latest NBC/WSJ poll) oppose turning Medicare into a voucher “here’s-a-check,-go-deal-with-your-HMO” program. So to reiterate, the U.S. Federal Government should not act like a “household,” especially during a recession. The House Republican Budget is not serious, courageous or comprehensive.
My conservative counterpart has argued that “[Ryan’s budget] is an attempt to save this nation from the fiscal disaster …” However, the biggest causes of the debt are the Iraq/Afghanistan Wars and Bush Tax Cuts. You can have differing opinions on the necessity of the Iraq/Afghanistan war or the Bush’s tax cuts, but you cannot create your own facts. It is a fact that the Bush’s tax cuts and the Iraq/Afghanistan wars are the largest causes of American debt. These are the legislative products of the same House Republicans who now demand that we privatize social entitlements while ignoring the wars and tax cuts.
President Obama’s fiscal budget speech last Wednesday reflected a better understanding of how to honestly work towards budget balance. The President refused to support a House Republican budget that would impoverish elderly Americans so his own income taxes could be cut from 25 to 35 percent. America must look at defense, social entitlements and revenue increases to honestly correct the fiscal imbalance. President Obama overall agreed with the first Republican President, Abraham Lincoln, that “the legitimate object of government is to do for a community … whatever they need to have done, but cannot do … for themselves.”
Daily Nexus liberal columnist David Kornahrens will not throw Granny under the bus while giving larger tax breaks to the rich.