In honor of November 8 being Deficit Day, meaning our US revenue for the year has run out in covering our expenses, I think it is important to revisit some of the saner voices on these issues. Former Republican Senator Alan Simpson who partnered with former Chief of Staff (for Bill Clinton) Erskine Bowles to lead a committee to address the deficit, has penned an interesting editorial. In essence, he is critical of the various tax plans submitted by GOP candidates for president all of which would materially increase the deficit. He notes they are so poorly conceived, that there are not enough legitimate cuts to overcome the loss of revenue.
Simpson knows of what he speaks. The Simpson-Bowles Deficit Reduction Plan combined strategic spending cuts with revenue increases to reduce the deficit. It was well conceived, but not perfect, as nothing is. People found faults with elements of it, which is a reason it did not move forward. Yet, it was a terrific conversation starter. It was something to work with and modify, as needed. And, it spoke to the need to increase revenue along with spending cuts.
One of the issues conservative folks have with the plan is the revenue increases, but let me state three truisms, two of which are universal, and one that applies to the United States.
- Of course, people don’t want to pay higher taxes, but they do realize a need to pay for expenses.
- Any politician can get elected saying they will reduce taxes. But, that promise should not be confused with good stewardship.
- Per the Paris based Organisation of Economic Cooperation and Development (OECD), the US is one of the least taxed countries of 33 countries who have participated in analyses dating back over forty years. In fact, the US is well beneath the median tax rate of the recurring OECD surveys.
The deficit is important and we need to be smart with what we cut and actually increase spending in some areas. Yet, we must garner more revenue or we will never get there. There is a reason President George W. Bush fired his Treasury secretary as he argued against the Bush tax cuts. It should be noted the budget was balanced by President Clinton the last several years of his presidency, which was handed over to Bush.
While President Obama has done many good things, he is an imperfect president, like they all are. One of my biggest criticisms of the president is not embracing the Simpson-Bowles Deficit Reduction Plan and say let’s start with this. It would have been a great conversation starter and still could be.