Balance the budget as quickly as possible and make sure it’s balanced from here on out, including raising taxes to cover what we spend.
Immediately focus on Social Security and Medicare, including raising taxes and fees to recipients and trimming benefits for recipients down the road.
Keep taxes as low as possible, but reduce the size of government by making major cuts in popular areas such as defense, health care, education and higher education.
The first order of business has to be getting the nation's checkbook in order. We live in a consumption-oriented culture, and the government is leading the spending parade. All our borrowing and spending has gotten out of hand, and we simply cannot continue to run deficits. Every time we run a deficit, the government has to borrow money to make up the difference, and our national debt has reached enormous levels. We should not burden our children and grandchildren with the huge debts we were unwilling to pay.
Unless we act now, Social Security and especially Medicare will end up both breaking the budget and failing to serve the elderly when the baby boomers retire en masse. As Federal Reserve Chairman Ben Bernanke recently told Congress, the best time to get started addressing this problem was "10 years ago." This simply cannot wait any longer. We shouldn’t change the rules for people who are already retired (or about to be), but we really have to make some changes or the programs will become unaffordable.
Federal spending has mushroomed since the 1970s, and government programs are rife with waste and mismanagement. Raising taxes to cover federal spending will just give government more of our hard-earned dollars to spend wastefully. Plus, keeping taxes low helps spur economic growth and allows Americans to keep more of their own money.
Balance the budget as quickly as possible and make sure it’s balanced from here on out, including raising taxes to cover what we spend.
Immediately focus on Social Security and Medicare, including raising taxes and fees to recipients and trimming benefits for recipients down the road.
Keep taxes as low as possible, but reduce the size of government by making major cuts in popular areas such as defense, health care, education and higher education.
What should be done?
Passing "pay-as-you-go" legislation, meaning that if a spending bill is passed, it must be offset by either a spending cut someplace else in the budget or a raise in taxes to cover the new expenses.
Letting all or at least some of the Bush tax cuts expire to help reduce the deficit.
Setting long-term financial goals to pay down the debt.
If we manage to run a surplus, using any extra funds to pay off the debt or bail out entitlement programs.
Passing a balanced budget amendment to the Constitution. Most states have this and it simply makes it illegal to run a deficit and run up debt.
Reducing Social Security benefits for wealthy retirees and set higher fees and co-payments for higher income retirees on Medicare. These programs should provide security for middle-income and lower-income people – not extra spending money for affluent seniors.
Raising the cap on Social Security taxes. Right now, payroll taxes are only collected on incomes up to $102,000 per year. That means that workers who make $200,000 and $300,000 a year are paying the same taxes as people who earn much less.
Gradually pushing back the retirement age and phasing out the policy that lets people start collecting benefits at a lower rate at age 62. When Social Security began in 1935, life expectancy was about 61. Now, a child born in 2005 can expect to live to nearly 78.
Allow Medicare to purchase drugs in bulk (and thus get cheaper rates). This is what the VA does and what other countries do to keep drug prices down.
Extending the Bush tax cuts and reducing taxes on business – they are the engine of our economy.
Cutting growth in government programs and carving out the waste and extra costs, such as outside contractors who charge the government billions of dollars each year.
Eliminating earmarks and other "pork-barrel" add-ons to legislation that allow members of Congress to slip in funding for their pet projects without a vote.
Shifting more domestic policy responsibilities – areas like Medicaid and education -- to states.
Having the private sector take on tasks like air traffic control and safety inspections.. It can handle them more efficiently and at a lower cost.
Arguments For This Approach
If government won't take responsibility for its spending habits, then we need to remove the option of borrowing and creating more debt. Running deficits is irresponsible and dangerous.
Why should the government run its financial house any differently from the way families and businesses run theirs? Your spending has to be in line with your income.
Income taxes are at historically low levels. It’s time to raise taxes to stop the flow of red ink. That’s what we did in 1990, and combined with spending cuts,that's what led to the budget surpluses of the late 1990s.
Social Security can wait. Even after 2040, it will have enough incoming revenues to pay more than 70 percent of promised benefits. But continuing to run deficits is a problem that simply cannot be deferred to another day. The time to act is now.
Now is the best time to reform senior entitlement programs, while many of the baby boomers are still working and the number of seniors covered is relatively small.
It's more fiscally responsible to reduce benefits than to allow the programs to collapse entirely and leave nothing for our children.
Social Security was conceived as a safety net. Reforms will keep the program financially sound so it can be there for future generations. Social Security should not provide extra income to affluent seniors who are fortunate enough to have very comfortable retirements.
Baby boomers are living and working longer, and are in better health than when the entitlement programs began. Social Security is based on outmoded assumptions about who's old. Why should people be encouraged to retire in their early and mid-60s?
By focusing on cutting waste, we'll have a leaner budget to work with that will save money in the long run.
Tax cuts spur the economy and help create jobs. If the economy is struggling, having a balanced budget won’t be all that comforting.
The government should focus on truly national concerns, such as foreign relations and defense. The federal government doesn’t need to be in the health care or education business.
Arguments Against This Approach
Forcing the government to maintain a balanced budget is like a financial straightjacket. There's no wiggle room for wars, national emergencies or recessions, when we would really need extra funds.
Deficits aren't necessarily bad. The U.S. has run on deficits for several generations, and the economy has grown. Plenty of economists say deficits actually help spur economic growth.
Raising taxes just gives government more money to waste. Why should taxpayers dig into their pockets while the budget is still fat with earmarks and unexamined billions in the defense budget?
Balancing the budget is only part of the challenge. Unless we get a grip on the entitlements, particularly Medicare, we'll never have our finances under control.
We promised income and health security to the elderly, and we shouldn't balance the budget on their backs – especially since elected officials borrowed from the Social Security Trust Fund.
If we make wealthier Americans pay higher taxes for Social Security and we reduce the benefits they receive from the program, they may stop supporting it. Social Security needs broad political support.
Focusing on cutting health care costs would be a much more effective strategy. Medicare is in much deeper trouble than Social Security, and that’s because health care costs are soaring.
Ending earmarks and pork-barrel spending is important, but it doesn’t help that much when it comes to balancing the budget. Earmarks cost about $17 billion dollars in 2008. Meanwhile, the 2008 deficit is well over $400 billion.
Over two-thirds of the budget goes to just five areas: defense, Social Security, Medicare, Medicaid and interest on the debt. The first four are broadly supported, and making cuts there will be extremely difficult politically. We have no choice in paying interest on the debt.
Taxes are at historically low levels, and the benefits of the last round of tax cuts have gone disproportionately to very wealthy Americans. This plan means cutting government spending on health care and education to benefit the country’s more affluent taxpayers.
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