(ThyBlackMan.com) America has spending diarrhea and its leaders appear unwilling to address the nation’s festering fiscal woes with long-term cures. A liberal minded friend emailed me a thought provoking article on the country’s diseased state, written by former Reagan Office of Management and Budget Director David Stockman. He thought it would resonate with me and it did.
I emailed him an article about bailing on Obama and Democrats because of their relentless assault on Wall Street and the president’s inability to govern from the center. Instead they are pouring their campaign dollars into Republicans coffers. Change isn’t what they hoped. This led to my arguing 
hedge funds are high risk, high stress jobs and Democrats failed efforts to raise their capital gains taxes when a hedge fund is sold was crap.
My friend argued hedge funds don’t contribute to economic growth and their jobs are more akin to highly educated gamblers with the same stress level of perhaps a doctor. He referred me back to Stockman’s article, discussing the merits of raising the capital gains tax. Stockman reminds readers the 1978 Republican inspired capital gains tax movement made sense in an a climate of double digit inflation but now amounts to a tax subsidy to the rich. This is an argument worth considering.
My friend also gently reminded me of America’s corporate welfare program, which allows companies like GE to earn a stunning $14 billion in 2010 and pay NO taxes by dancing circles around the IRS in navigating a maze of tax shelters, like parking it’s profits overseas. For all these tax breaks, GE cut 1/5 of jobs in the US.
When President Reagan learned of GE’s accounting tricks to avoid paying taxes, he changed it under the 1986 Tax Reform Act. But under President Clinton in the late 1990’s, corporate tax laws weakened, allowing companies like GE to avoid paying taxes on income abroad. And Bushed rolled them back even more in 2004, giving corporations, including GE more than $13 billion in tax breaks.
The loopholes, tax breaks, and subsidies must be eliminated and replaced with a simplified the tax code, which was proposed by President Obama’s bi-partisan debt commission. Making corporations pay their fair share is a better remedy than taxing the so called rich, earning over $250,000, many of whom are small business owners, who make up 80% of the economy and create jobs.
The meat of Stockman’s article dissects the problem with both Obama and Rep. Paul Ryan’s budget: class warfare and their reluctance to touch entitlements in a meaningful way. Stockman casts Obama as protector of the poor and Ryan defender of the rich, noting “Washington’s feckless drift into class ware is based on the illusion that we have an endless time to put our fiscal house in order.”
Stockman is right both parties are afraid of substantive, long-term reform to Medicaid, Medicare and Social Security, which along with Defense make up 50% of the federal budget. Medicaid puts state budgets in the red every year. Governor’s come to Washington each year begging Congress for money to patch their gaping Medicaid holes. You can’t find dentists who take Medicaid, anymore because of states below cost reimbursements.
Medicare is equally broken. Paying rock bottom rates to physicians as if they all give the same level of care, encourages waste (doctors underpaid, perform more procedures to bill Medicare more) and bad doctors are rewarded. Ryan proposed a starting point for reform with his $15,000 subsidy plan so beneficiaries can choose their own insurance.
Social Security is literally on its last legs. Younger generations like me don’t even expect it to be around by the time they retire. It should be privatized. I’m certain many Americans could invest their Social Security taxes better than the government. Not every American believes in the power of the nanny state.
Stockman is right all Americans should be equally subject to tax increases not one class. Nearly 50% of Americans pay NO federal taxes. When you don’t have skin in the game whether that be taxes, zero down payment on a loan, no-Medicaid co-payments, even nominal, you aren’t paying your fair burden into our country and you think the government is always going to be there to pick up the pieces. Our government is bankrupt.
There is so much waste in federal government, employee bloat and duplication of efforts across multiple agencies including Congress. America is in fiscal madness. My friend noted, if conservatives like myself “truly believe in fiscal discipline, then perhaps we need to acknowledge there is a revenue side to government” in addition to spending cuts.
“We raised taxes during the Clinton years and we had a budget surplus when George W. Bush became President,” he added. Bush borrowed heavily for two wars while cutting taxes and doubled the debt under Clinton from $5 trillion to $10 trillion. Obama’s spending in two short years has increased the debt by $4 trillion. This story of debt demonstrates America needs to start balancing its budget and take a hard look at tax reform and REAL spending cuts, from which no agency or Congress should be immune.
But Obama’s unrelenting tax assault on top earners is a mad solution to which Republicans should not bow or bend their fiscal discipline.
Written By Crystal Wright
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