Monday, July 18, 2011

Five ideas that can help settle the nation's debt

Resolving the debt crisis needn't take away benefits to those requiring them

The current debate in Washington is centered upon ways to lower our national debt. Democrats want to raise taxes, but Republicans refuse to move forward without severe cuts to social programs designed to help the disadvantaged.

For what it's worth, I'm not an economist. I understand what people are talking about when they have these discussions, but I'm not one to sit around with a calculator by my side, endlessly figuring ways out that we can change things for the better in our country. Still, with that caveat in mind, I did want to present just a few ideas that I believe could make our country financially solvent again -- or at the very least on the path towards that goal.

1. PERMANENTLY LOWER Social Security tax rates to 4 percent, ELIMINATE the Social Security cap altogether.
As it stands right now, you only pay 6.2 percent of your Social Security taxes on the first $106,000 you earn (though that’s temporarily at 4.2 percent due to a deal struck by Obama and Republicans in late 2010). That means everyone who earns under that amount pays a full tab, but millionaires and billionaires only pay 6.2 percent on the first $100K -- everything else is tax-free as far as Social Security goes. But if you want to make sure that Social Security is solvent, if you want to make sure the program doesn’t go bankrupt in the next half-century or less, you need a way to fund it. Eliminating the cap completely would do just that.

There are some who would argue that an elimination is unfair, that millionaires and billionaires shouldn’t have to pay into a retirement program they themselves won’t be taking part in. I counter that notion with this: Social Security isn’t simply a retirement program for the poor, its an investment in our nation’s elderly. It’s a moral program set up to help those who couldn’t afford luxurious retirement plans while they worked themselves hard supporting families of their own. Eliminating the Social Security cap altogether (while making the 4 percent rate permanent) is the way to keep the program funded indefinitely while still allowing the wealthiest among us to live a luxurious lifestyle by paying four percent of their paycheck annually towards this treasured pillar of the 20th century.

2. CUT FUNDING towards defense. This seems like a terrible idea on its surface. But when you consider the fact that we spend more on military spending than the next highest 14 countries COMBINED, it’s clear to anyone that our national priorities are unaligned with what challenges our country truly faces. In 2010, the entire planet spent almost $1,600,000,000,000 in military spending -- the United States accounted for 43 percent of that total. The next highest spender, China, was responsible for only 7.3 percent, and Russia held only 3.6 percent of that total. Our nation’s defense is important, critical as any other aspect to the future of America -- but is it necessary to outspend our next highest contender by nearly six times as much?

3. PUT AN END to the wars in Afghanistan and Iraq. The time has come for our troops to come home. The cost of human life (Americans, as well as those that reside in the countries we’re currently in) during these two wars is enough reason to put an end to the wars.

But if that’s not enough for you, consider the financial costs as well. As of right now, the two wars have cost the country more than $1.2 trillion since 2001. Iraq alone has cost us nearly $800 billion, and the cost of Afghanistan is growing too, to just under $450 billion. We should either get out of both countries altogether or present a more financially stable, internationally cooperative plan that will alleviate the costs to our nation.

4. PUT A STOP to the Bush-era Tax Cuts. Estimates for the loss in revenue for the Bush tax cuts for the rich show that more than $2.5 trillion was lost (PDF). That’s a huge chunk of change -- to put it in perspective, the plan for health care that Democrats passed during the last Congressional session was less than half that, around $1 trillion. The top 1 percent of income earners reaped nearly 40 percent of the benefits of those tax cuts, while the bottom 60 percent saw less than a quarter of the cuts (even adding the next quintile of the income-earning population does little to change things: the bottom 80 percent saw less than half of the benefits as well, while the top 20 percent saw more than 52 percent of the total benefits).

Twenty-five years ago, the top 1 percent of wage earners took in 12 percent of all income and controlled 33 percent of the nation’s wealth. Today, they earn 25 percent of all income and control 40 percent of the wealth. That income disparity is due partially (but nominally) to the Bush tax cuts -- over the past decade, the top 1 percent saw their incomes grow by 18 percent, while the middle class actually lost income. Those that will tell you that trickle-down economics work are lying to you.

5. END THE LOOPHOLES that financial giants currently take advantage of. Presidential candidate Mitt Romney recently touted the American tax rates on corporations as being the highest the industrial world has to offer. On paper, this is true: American tax rates for corporations are the highest. But when all is said and done, when these financial titans file their taxes with all of the loopholes they are offered, the effective tax rates for corporations are actually the second-lowest of all nations within the OECD. To believe that corporations have it rough in our country is a belief that is shrouded in falsehoods, an omission of information meant to delude the American public.

If we closed these loopholes, we could lower taxes on corporations and still receive more revenue. That’s a compromise that both liberals and conservatives could get behind, one that we should be giving strong consideration towards.


These ideas may not create a surplus, may not even break us even within a decade's time. But they are ideas that should be put to the test, alongside responsible spending that doesn't hurt the people of America, that doesn't burden the working class people who depend upon programs like Social Security.

This nation is a country of "do'ers," of people who have constantly strove for being the best in the world. But we're also a nation of helpers, of people that recognize we're ultimately judged on how strong the weakest members of our society are. We can help those looking for help realize the American dream while simultaneously raising the bar on ingenuity. If any country in the world can set out to prove it's possible, our nation, the United States of America, is precisely the place to do it.

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