EDITORIALS

Cut spending, then look at taxes to reduce deficit

Posted July 18, 2011, at 6:27 p.m.

When talking about the budget deficit and debt ceiling, the president has said that Republicans need to “grow up.” He should direct that message to the American people.

Americans want to pay ever-declining taxes yet expect a huge array of government services. The math simply doesn’t work.

Hence, the government again has pushed up against its borrowing limit and debate rages in Washington over whether the solution is to raise taxes or cut spending.

Clearly, the answer is both.

A focus on spending cuts must come first. As the state has had to do for years to align spending with revenue, the federal government must realize that it can’t keep doing everything it is doing. Americans, too, must accept this.

An easy way to save money is to stop spending it on military operations in Iraq and Afghanistan, which have added more than $1 trillion to the deficit. President Barack Obama is winding down U.S. involvement in both countries, but the process is slow and massive bills continue to mount.

To make meaningful long-term reductions in federal spending, entitlement programs must be on the table. Small changes — such as an income ceiling and a higher retirement age — in Medicare, Medicaid and Social Security will have big consequences years down the road.

Americans have said they don’t want any changes to these programs. A May poll by The Associated Press found that 54 percent of respondents said Medicare didn’t need to be cut to balance the budget. Fifty-nine percent said this about Social Security.

A real leader would tell them this isn’t possible — unless they want to pay higher taxes.

The biggest contributor to the national deficit, according to a recent Washington Post analysis, is the tax cuts enacted under the Bush administration and the economic downturn that came in late 2007. Those cuts and the recession are responsible for half the borrowing since 2000 — when the country had a large budget surplus — according to the paper.

As a result of these reductions, federal tax collections are at their lowest level in six decades. And for all the talk of the need to make things in America to return the country to its economic heyday, tax policy rewards accumulating wealth more than earning money. Dividends and interest are taxed at a lower rate than wages. This makes no sense at a time when the United States needs to rebuild its middle class — the economic engine that drives spending.

For all the political theater on display in Washington, the answer to the “debt crisis” is really quite simple — prioritize and cut spending and then consider raising taxes, especially on the wealthy.

If all of this sounds familiar, they are, in very simplified form, the recommendations of the deficit reduction commission put together by President Barack Obama. He and congressional leaders should re-read the commission’s report and act on its suggestions.

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