A staggeringly high federal budget deficit. An anemic economic recovery from the worst recession in 75 years. Two — or is it three? — wars. Government spending as the only antidote to an economy teetering on the edge may have made sense two years ago, but now, the red ink is frightening to many.
As the debate over raising the debt ceiling approaches a deadline, the tough questions are in sharp focus.
Congress and the president have three options: raise taxes, cut spending or both. Join us here from 10 a.m. to noon on Tuesday, July 5 (and beyond) for The Maine Debate, a discussion of the questions that have Republicans and Democrats at a stand-off.
The dispassionate, non-partisan and deceptively easy answer is that both cutting spending and increasing taxes should be pursued. But politically, that course is a minefield.
President Barack Obama, since his campaign days, has drawn a sharp line between those individuals who earn $200,000 or more and households that earn $250,000 and more and those who earn less. That group of higher-earners — and it is a small group, perhaps less than 2 percent — benefited greatly through two tax cuts enacted by the Bush administration. Shouldn’t they, in response to the concerns about budget deficits and the federal debt, be asked to again shoulder some of the burden?
After all, the argument can be made, the current tax system was not handed down from Mount Sinai to the Founding Fathers; the top income tax rate has declined from 94 percent in the 1940s to 35 percent today. A return to, say, 38 percent for those earning above the $200,000 and $250,000 thresholds is hardly unprecedented.
On the other side, Republicans respond that federal spending must be reined in. Few would disagree. And if any real savings are to be realized, some important programs must be on the table, programs such as Medicare, Medicaid and Social Security, programs the Democrats win points in defending. Means testing for Social Security — making it available based on the financial need of seniors — is an obvious place to start. Medicaid and Medicare also must not be seen as sacred cows.
And speaking of sacred cows, shouldn’t the defense budget, which makes up the largest single segment of the federal budget when pensions and Veterans Administration spending are included, be on the chopping block?
The president has proposed $400 billion in tax increases; in addition to hitting the higher earners, he wants to close tax loopholes for oil and gas and for the purchase of corporate jets.
It seems possible, if political considerations were removed from the debate, that a trade-off of sorts could be managed. At the very least, the discussion must not degenerate into a zero-sum contest. Cuts and new taxes are likely the only way out. Or can the case be made for one and not the other?
Join us at The Maine Debate.