Our president and our Congress (and past presidents and Congresses) have gotten us into a tough financial situation.
They are taxing and spending beyond all reason, increasing debt that already is far too high, and thus hindering economic recovery.
So what are they going to do about it?
Congress is scheduled to begin Monday to make some hard decisions, including a “test vote” on Senate support for a rather fluid tax deal worked out between the president and Republicans. Nobody is happy about the prospects.
Some want to cut spending – but others insist we mustn’t do that.
Some want to avoid higher taxes. But to do that, quick action will be needed to avoid expiration at the end of this year of tax relief that began under the administration of President George W. Bush.
Some want to “soak the rich” with higher taxes. The problem is that taxes already are disproportionately high on those earning in the higher ranges, hindering growth. It would be counterproductive to impose higher taxes on those already paying the most.
Some suggest it might be economically advantageous if there were a one-year cut in Social Security taxes, while others say that would increase the national debt.
If the economic crisis continues, there will certainly be less tax revenue. But since there is no strong push to reduce unnecessary spending, it appears we are headed into deeper debt, on which we must pay more interest, which will make the crisis worse.
It’s a bad situation, created over many years by irresponsibly excessive spending, penalizing productivity and subsidizing bad economics. It’s uncomfortable to face that reality.
Since unemployment is still high – too close to 10 percent – it is evident that millions of Americans who want to work are hurting. And for many of them, unemployment benefits are running out. So some are proposing to keep jobless benefit checks coming an additional 13 months. That would help a great many people, of course – but it would add to the nearly $14 trillion national debt. A better way to help the unemployed would be to pull back billions of dollars in unspent funds from the wasteful “stimulus” and apply them to jobless benefits.
There is no quick fix and no easy way out of the problem overall, though. Higher taxes and increased red-ink spending are clearly no way to inspire economic activity and create more jobs, hire more people, generate economic expansion and bring in more taxes from a thriving economy.
The trouble is this: We have excessive and unnecessary federal government spending, and too many people think the way to deal with that is just to tax more. But that recipe got us into the predicament in the first place over a period of decades! How can it be the solution?
We are living in a time when demagoguery is on the rise and when sound economic policies are ignored. Watch out for what Congress may try to do – beginning Monday.