This is pretty much where I’m at as well. We need to look at some tax increases as well, but tax increases are only going to get us so far. There is no ‘I’ll take a chainsaw to the Pentagon’ or ‘Let’s just raise taxes on “The Rich”’ type quick fixes here. We are going to need to raise taxes across the board, including on the dreaded capital gains, but we are also going to need to look at spending cuts (and to more than The Pentagon™).
No one is going to like it…and both parties are going to resist their sacred cows getting used for hamburger.
Our best hope is they just kick the can down the road. As long as they don’t do something stupid, like raising taxes and cutting spending, the economy will have recovered within the next two years and the deficit will take care of itself. Given the partisan deadlock, I think it’s a reasonably likely alternative.
Total Medicare spending is projected at $7.7 trillion for 2012-2022. That’s $300 billion more annually than we’re spending now, and that’s only one of three healthcare time-bombs (the others being Medicaid and VA health coverage). And it only gets worse for 2022-2032. Much worse.
We can’t grow our way out of that. To cover the Medicare increases alone, we’d need to increase income tax revenue by 25%. That just ain’t gonna happen.
Obamacare’s cost controls are a start, but they’re only a start. There’s a lot more than we need to do.
There was a deficit before the economy tanked. The economy made it much worse, and so did the wars and the tax cuts, and those are not going to be fully reversed). You’re right that the worst-case scenario is the cuts to government spending (which are not immediately necessary) end up hurting the economy and things go back to square one.
More than willing. I just mentioned the pentagon, because many “deficit hawks” want to increase defense spending. I figure there’s probably a few hundred billion in bureaucracy and waste that could be eliminated, and still leave us with the most powerful defense on the planet.
I don’t think there are any Democrats who have taken spending cuts off the table, but most Republicans have taken a pledge against any tax rate increases. Who needs more attitude adjustment here?
I’ve seen what happens with tax increases. The baseline just increases. I’d like to see for once, real cuts leading the way. After real cuts have been made, I’m willing to visit tax increases.
Actually, nondefense discretionary spending has been quite stable as a proportion of GDP. With the exception of blips for recessions and temporary spending on things like war and stimulus, the growing debt is basically a taxes, defense, and entitlement problem. In other words, it’s not really that Congress is actively deciding to spend more. It is more that Congress cut taxes while failing to reform medical spending. So I think you’re wrong to think of taxes as increasing a spending baseline.
How about if spending cuts are are simultaneous with tax rate increases? You don’t seem to trust Congress to cut spending later in return for tax increases today; why should I trust Congress to increase tax rates later in return for spending cuts today?
Because it’s your turn. I waited for the spending cuts Reagan was promised after he agreed to raise taxes. they never happened, intead spending increased causing deficits. Same with the Bush tax cuts.
Your turn to have faith.
Everyone in politics thinks it’s their turn to be in charge and the other guy has to do what they want. That’s more or less why there is a fiscal cliff: everybody wants someone else to take the first step toward the middle.
Not by the government it wasn’t. By some bizarre coincidence the tax cuts coincided with bigger government deficits, and that’s even before you include the two wars that started a couple of years later.