Blog: A Fair Way to Address the Debt?

Today, President Obama and Vice President Biden will meet separately with Senators Reid and McConnell. Over the last several weeks, the Biden group has made progress in coming to a plan to avoid defaulting on the debt. But all the compromises have been in increasing the number and amount of areas to be cut. Representatives Eric Cantor and Jon Kyle walked out of the negotiations. 

Representative Boehner and other Republican members of the House have dug in their heels:

• Everything has to be on the table – except taxes! 
• Whatever the amount of the debt limit increase – it must be surpassed in the amount of spending cuts.

$2 trillion as a down payment on debt reduction is being discussed. Perhaps as much as $400 billion might be taken from the military. If this is the end agreement, that would leave $1.6 trillion to come from cuts to discretionary programs, Medicaid, Medicare, food assistance, elder care – and Social Security. There are no other places from which to cut.

No new taxes! That is the mantra. It is good to remember:

• The tax cuts established in 2001 and 2003 were temporary – giving back to the people because we had such a surplus!  They were set to expire in 2009. So, eliminating these temporary tax benefits to the wealthiest in our nation would NOT be a tax increase, and certainly not a NEW TAX!
• The Mortgage Interest Deduction was established to assist middle class families to become homeowners. However, the most expensive homes receive the greatest deduction – certainly not of the greatest benefit to the middle class attempting to purchase a modest home of their own.
• Many of us benefit from employer health insurance, which is a tax break.  However, some of the plans are the highly criticized “Cadillac” healthcare plans covering far more than keeping workers healthy enough to continue in the workforce.  Perhaps some cap on the types of plans / the amount covered would be a just savings, and not truly a new tax.

The Biden group has already agreed to reductions in funding to Medicare and to discretionary programs.  However, there has been no give on the Republican side in terms of bringing in more revenue.

• Revenue, right now, equals 14.8% of GDP.
• Expenditures equal approximately 24%. 

Expenditures include the billions of dollars in tax loopholes used by corporations, SNAP, WIC and other nutrition benefits, Pell grants and education for special needs students, nursing home care for the elderly and infirm, and unemployment benefits for those whose jobs have disappeared. 

If we as a nation succumb to a debt relief package without revenue increases, we need to be very certain we understand the pain this will cause to those already suffering.