Posted on 10/21/2004 11:32:08 AM PDT by OESY
Last May, this page called on the presidential candidates to engage in a serious debate on the federal budget deficit, now $415 billion, compared with the $236 billion surplus when President Bush took office four years ago. What has emerged instead is a pair of dueling tax plans, each of them inadequate to support its candidate's vision of government.
President Bush is fixated on making his ill-conceived tax cuts permanent and creating new tax shelters for affluent investors. Senator John Kerry's tax agenda raises money for the government by repealing Mr. Bush's tax cuts for high-income earners, an idea we applaud. But he has promised away everything he'd save for worthy, but expensive, new initiatives. The Concord Coalition, a nonpartisan group, estimates that the stated policies for a second Bush term would result in a slightly larger deficit over 10 years than Mr. Kerry's plan.
Both candidates, unfortunately, are operating on a similar premise: that nothing need be done now to avert the looming dangers of the nation's huge financial imbalances. As long as Social Security and Medicare aren't belly up, the dollar isn't plummeting, interest rates aren't spiking, and economic growth isn't tanking - that is, as long as any consequences of mushrooming deficits have not yet materialized - each candidate seems determined to push forward with an agenda that avoids asking Americans to pay for what the government provides.
That neatly avoids annoying voters during the campaign season, but it's perilously shortsighted. The United States carries the biggest deficit and debt loads among the world's advanced economies, borrowing a daily $1.7 billion from abroad, mainly from China and Japan. As a result, the economy, which is increasingly viewed by outsiders as cooling off and hobbled by deficits, runs the ever greater risk that foreigners may decide they are not willing to lend or, worse, may decide to sell off large chunks of their $10 trillion in United States assets.
Either could provoke a crisis by causing interest rates and prices to rise sharply and the economy to falter.
Economic doomsaying? Hardly. This week, the Treasury Department reported that in August, monthly investment in the United States from the rest of the world fell for the sixth time this year, with private investment falling by half and financing by central banks rising just enough to cover the American trade imbalance. Even without a sudden deterioration, the continued accumulation of foreign debt will erode prosperity over time. To grasp the problem, consider that the child credits or other tax breaks you enjoy today are in effect a loan from, say, China, through the United States Treasury to you. Your progeny will pay the interest forever.
The fundamental fix for all this is deficit reduction. A substantial amount of revenue can - and should - be raised by reversing Mr. Bush's tax cuts for the wealthy, generally defined as the top 2 percent of taxpayers, as well as by retaining and reforming the estate tax. But that won't be enough to make real progress, especially if, as Mr. Kerry proposes, the money is used to provide health insurance and other benefits. Thus, a serious attempt to tame the deficit must put on the table the option of reversing the Bush tax-rate cuts further down the income ladder. If the pre-Bush tax rates were restored for the top 25 percent of taxpayers, a vast majority of filers - in the 15 percent tax bracket and below - would still be shielded from an increased burden.
The next president and Congress should also raise money from alternative sources so income taxes and spending cuts are not the only way to reduce the deficit. A good place to start would be an increased federal gasoline tax and a new tax on industrial carbon emissions, greenhouse gases that lead to global warming. Each tax change would pull triple duty by raising revenue, reducing dependence on foreign oil and helping the environment.
Of the two candidates, Mr. Kerry is more credible on deficit reduction. The tax breaks he contemplates are not as grandiose as Mr. Bush's. More important, unlike Mr. Bush, he has said that he will require Congress to pay for new tax cuts and spending increases by saving money elsewhere in the budget.
These are no small matters. The greater the president's fiscal credibility, the greater the confidence of lenders and financial markets. Still, the leader who restores the nation's fiscal health will need to do more than has been put forth during this campaign, or risk being forced to act by circumstances beyond his control.
Here's a novel idea that unfortunately even W hasn't embraced:
CUT SPENDING!!!
"compared with the $236 billion surplus when President Bush took office "
Total bull.
That was a PROJECTED (10 year) figure that went out the window with the dot.com bust.
Kerry should immediately adopt this sensible program and tout it at every opportunity. :)
Actually, W has tried to push through spending cuts.
The problem is getting it through Congress, and getting them to give up on their favorite 'pork' projects.
Actually, we should bring back war bonds to pay for the war on terror. I'm sure quite a few people would buy them.
Yeah, I know. But he hasn't emphasised it IMHO.
Color me skeptical. Bush twisted arms to get that massive medicare increase passed, largest education budget in history, etc., etc.
If Bush were a real fiscal conversative, he'd put that veto to good use.
I'm tired of Leftists being so generous with my money.
Oh no, the nyt gets it wrong again. Neither candidate has any cred on this particular issue (nor does congress). The only hope is that Bush will start privatizing programs in term II (t2). Not holding my breath on that one, though. I'm voting for Bush because of the court appointments, not the economy.
Hey NYT: How about a tax on newspapers? Think of all the trees that could be saved, or replanted with all that extra revenue.
These leftist morons don't have a clue about increasing government revenue. They seem to grasp basic economics when it comes to their product, but go deaf, dumb and blind when it comes to taxes.
If government could be considered to have a "product" to sell, it would be "Taxable Income". How does a normal business increase its revenue? Decrease the unit sales price. For example, if Widgets Are Us sells 10,000 widgets for $1 they gross $10,000. If they reduce the sale price a mere 5% to $.95 (cents) they could sell 15,000 units (basic supply and demand you dumbass marxists), which results in gross income of $14,250 an increase of over 42%!
If government cuts tax rates total revenue will go up--not down, like the left's static analysis assumes. The truth of the matter is the left is not really concerned about eliminating deficits--they want to control our lives through the tax code. If you doubt this look back over the last 40 years they were in charge and see if you can find anything more than a feigned concern about deficits.
"...leader who restores the nation's fiscal health..."
You don't improve the fiscal health of a capitalist economy by taking more money from the public sector, whether it is used for new programs or paying down debt.
A family can earn it's way out of debt without increasing the pecentage of their income devoted to paying down debt as long as they keep stepping up the income ladder and control spending.
A strong capitalist economy will grow it's way out of debt as long as the polititians stop finding new ways to spend money faster than the GNP can go up.
Crippling the economy by socializing an entire sector like medical care is the path to ruin.
We have way too much debt for a socialised economy, just as a person on a fixed income has no business taking on further debt. But in an open market economy with low relative tax burden, the debt we carry is trivial.
What this article is suggesting would be like a medical student cutting back on the classes he is taking and getting a burger flipping job to decrease the accumulation of student loan debt.
The faster he gets out of school and starts making real money the better, and soon the debt will be an after-thought.
The sooner an economy gets itself out of recession the better. Cutting taxes and controlling is the real long term answer to "the nations fiscal health".
Cutting taxes and controlling SPENDING is the real long term answer to "the nations fiscal health".
Why even read on past the "ill conceived tax cuts" line. It is a poorly conceived article.
Who wrote this communist trash?
"Actually, W has tried to push through spending cuts."
There is really no excuse. A Republican Congress and a Republican President have NOT cut spending. If he doens't cut it next term I will leave the Republican party forever. (don't worry I'm going to the libertarians not the dems) :)
Idiots! These are the people who create jobs and sign paychecks.
Ditto. National security and the judicial appointments are at stake.
each candidate seems determined to push forward with an agenda that avoids asking Americans to pay for what the government provides.
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