bill, the current system is horrible. i do my own taxes and i loath it. every year i wait until the last minute even though i may get some of my money back (rarely, though ;-)
anyway, revenues must = expenditures first - not for the short term, but for the long term. that is step one. actually, now that we have a couple $100,000,000,000,000 in debt, revs actually have to be much higher than exps. we must look at both sides of the equation.
looking at reducing revs w/o focusing on exps reminds me of when kip bedard of micron said "demand for dram continues to be strong" in the middle of dram pricing collapsing from $8.25 to $2. his stock also collapsed from $60 to $22 after he made the statement. the point is that demand, in and of itself, is meaningless. you must consider supply, too. surprise, many people aren't that sophisticated yet and that is why a week or so after kip made his tout mu went from $49 to $60 while pricing eroded at faster and faster rates due to excess supply over that strong demand.
imho, certain politicians and wealthy individuals have equated "simplify" with "flat." of course, the end result is they would marginally keep much, much, much more money each year. how convenient. ;-) much of the middle class has bought into this idea w/o thinking it all the way through. sure, i'd like to save $1-2 grand in taxes a year. not as much as some wealthy individuals would like to save $100 million, though - and that is w/o them working ;-)
i also know that the math doesn't allow for everyone to get a break. someone has to pay given exps being the same.
with revs less than exps, how can you reduce revs (this is a tax cut) and make it stick? you can't unless you reduce exps.
but, just like those people that rushed out to spend their own money on micron b/c dram demand was strong, many people believe that reducing everyones taxes is the way to go, without studying the whole picture.
a standard graduated tax rate is as simple as a standard flat tax. look up your gross on a chart and then pay the amount of tax. but the big boys don't want a graduated tax. they want a decrease. they can't sell it by saying the middle class will pay for it. so they don't sell it that way.
i'm in the process of buying a house. if you take away the interest deduction then property values will plummet. i would have to sell the home i'm bidding on if they changed that. so would many people.
my plan would be to take a long term perspective and set up a long term plan. every year i would set targets to shrink uncle sugar. i wouldn't go after the 1% of the budget that gets 99% of the emotional value (welfare, foodstamps, etc). i'd go after those programs that america loves. social security would become literally welfare for the poor and expenditure would be cut well over 50% - probably closer to 70-80%. all those not poor wouldn't get it. so would medicaid. all the workfare programs under whatever name they want to call them would disappear. that congresschump in virginia (i think) would have to stop paving those roads three and four times so that all those people in those workfare jobs will vote for him. ;-)
i'd hurt joe blow america with my cuts a little each year - maybe 2% across the board. reduce expenses. i'd tell people the truth so they could plan for their future accordingly.
uncle sugar jobs would be hard to get and if you had one you might lose it.
i'd leave revs alone until we could get exps down and pay off the debt - we'd probably all be dead by then b/c it would take so long. it needs to happen and people need to suffer over the short term (this is unacceptable to joe blow america). any significant change now would hurt certain groups and help others. once people know they can manipulate the system then they focus their energies on that instead of maximizing the current system.
ss would go into the gen'l fund officially. it is there now, but the politicians won't fess up.
once epenses are under control (10-20+ years, maybe) then i would focus on relieving the burden on the american public. i'd probably set up a graduated tax system with as few deductions as possible. one form for everything.
it would be painful. people would hurt. housing values would be hurt. unemployment would go up. inflation down (maybe deflation for a while). some companies would have hard times. the stock market would get crunched.
but the debt would get paid off.
of course, the information learned as this process wears on would be used to minimize the impact of the "day of wreckoning" (sp?). the purpose isn't to destroy the economy. the purpose is to take dollars out of the economy and paying of yesterdays party with the least economic impact - though it will be big.
the american public doesn't want this and it will never happen. i bet that the debt is as small today as it will ever be. i bet it will go higher and higher. during the next tough times it will balloon.
nobody wants pain now for the greater good later.
even so, just messing with reducing revs before reducing exps is not fiscally prudent for the nation, imho. now matter how much we wish it could happen. it is very prudent for those that would save $50 mil - several billion a year in taxes. but not for the nation.
this suggestion might have horrible results. the problem is you don't know b4 you try. this is a complex problem and the solution will be complex and painful. if a $1,000,000,000,000 goes to pay off the debt then it won't go into the economy. that hurts. it must be done somehow, though. |
