“You can’t be strong around the world unless you’re strong at home“. That’s the message of Lawrence Korb, former Reagan Assistant Secretary of Defense. That’s the message of a growing number of bi-partisan and non-partisan economists. And that was the message last Thursday from over 80 Chief executives of major U.S. corporations, ranging from Aetna to Weyerhaeuser. In the a statement the CEOs called for Congress and the President to take action to reduce the deficit with tax revenue increases as well as spending cuts. The statement specifically states that any fiscal plan “that can succeed both financially and politically has to limit the growth of health-care spending, make Social Security solvent and “include comprehensive and pro-growth tax reform, which broadens the base, lowers rates, raises revenues and reduces the deficit. ”
“There is no possible way to avoid raising taxes“, said Mark Bertolini, CEO of Aetna. “You can’t tax your way to fix this problem, and you can’t cut entitlements enough to fix this problem.”
“You can’t tax your way to fix this problem, and you can’t cut entitlements enough to fix this problem”. Spending cuts alone can’t fix our deficits and long term federal debt. And yes, we can’t just tax our way out. And we sure as heck can’t just tax cut our way to long term financial strength. But tell that to this guy:
That would be Mitt Romney, 4th from the left, raising his hand along with every other candidate in a Republican Presidential candidates debate when asked the question: Would you reject a deficit reduction plan with a ratio of 10 to 1 of spending cuts to new tax revenue? Not a single Republican Presidential candidate, including Mitt Romney, would accept even one single dollar of new tax revenue coupled with ten dollars of spending cuts to help reduce the deficit. That’s not a Path to Prosperity, that’s a Recipe for Disaster.
“When you talk about a $15 trillion debt, I don’t see how you avoid addressing both sides – spending cuts and tax increases” – AT&T CEO Randall Stephenson.
Mr. Stephenson also said heads of capital-intensive companies, now making spending plans for next year, are particularly alarmed by the looming fiscal cliff, the spending cuts and tax increases set for Dec. 31 unless there is agreement on an alternative road to deficit reduction. “It is already having a direct and immediate effect on us“.
The letter signed by the CEOs specified that any deficit reduction plan should:
- Reform Medicare and Medicaid, improve efficiency in the overall health care system and limit future cost growth.
The Affordable Care Act was a significant first step to improving efficiency in our healthcare system and future cost growth by negotiating with healthcare providers and getting them to agree to lower reimbursement rates that will save Medicare over $700 billion over the next 10 years. No, not the Republican lie that it cuts over $700 billion from Medicare, saves Medicare that money, money that stays in the Medicare Trust Fund and extends its solvency.
- Strengthen Social Security, so that it is solvent and will be there for future beneficiaries.
Simple, minor tweaks to the Medicare tax can completely eliminate any projected shortfall. Currently the Social Security tax is capped at the first $110,100 of a worker’s wages. Apply the Social Security tax to all wages, with no cap. This alone would eliminate 72% of the projected shortfall. The Social Security tax rate is currently12.4%, workers pay half and their employers pay the other half. Gradually increase the tax by 0.1% a year until it reaches 14.4 percent in 20 years – 2032. This alone would eliminate 53%of the projected shortfall.
- Include comprehensive and pro-growth tax reform, which broadens the base, lowers rates, raises revenues and reduces the deficit.
Broaden the base. A lot of attention has been focused recently on the 53% who don’t earn enough to pay federal income taxes. Folks like retirees living off Social Security and retirement savings who often don’t reach the income level at which they’re liable for federal income taxes. The combat pay earned by soldiers serving in active war zones is not liable for federal income taxes. Broadening the tax base to them is pocket change, and they earned what they have. But there is a lot of millionaires who also don’t pay income taxes. Eliminate offshore tax shelters and institute a minimum tax rate. And how about corporations? Exxon Mobil made $19 billion in profits in 2009. Exxon not only paid no federal income taxes, it actually received a $156 million rebate from the IRS. Bank of America received a $1.9 billion tax refund from the IRS last year, although it made $4.4 billion in profits and received a bailout from the Federal Reserve and the Treasury Department of nearly $1 trillion.Citigroup last year made more than $4 billion in profits but paid no federal income taxes. It received a $2.5 trillion bailout from the Federal Reserve and U.S. Treasury. Broaden the tax base indeed.
The CEO statement was organized by the Fix the Debt organization, a bipartisan effort largely inspired by Republican Alan Simpson and Democrat Erskine Bowles, who chaired a 2010 deficit panel appointed by President Obama. The deficit reduction plan that was killed by Republican votes in Congress, including the vote of Congressman Paul Ryan.
In reaction to the CEOs’ letter, Obama campaign spokesman Ben LaBolt said, “There’s a strong and growing consensus that the only way to reduce the deficit while also growing the economy is through a balanced approach that includes both tough spending cuts and increased revenue”. The President and Democrats in Congress are ready to roll up their sleeves and get to work on a responsible path the deficit reduction through a mix of pro-growth tax policies, broadening the tax base, increased tax revenue, and targeted spending cuts. President Obama already nearly reached a $4.5 trillion deficit reduction plan with a responsible mix of spending cuts and increased tax revenue. But House Speaker John Boehner had to walk away from the deal when his knucklehead my-way-or-the-highway Tea Party base refused to accept any tax increases. We need responsible, moderate, and independent thinking people in Congress with whom we can work. Like Congressman Ron Barber who has already demonstrated his independent approach to problem solving. And Senator Rich Carmona, who has always been an independent thinker.
Vote for President Barack Obama, vote for Rich Carmona for U.S. Senate, vote for Ann Kirkpatrick in CD1, Ron Barber in CD2, Raul Grijalva in CD3, and Kyrsten Sinema in CD9, and let’s get to work.
Think Democrats aren’t serious about addressing and fixing the lack of tax revenue and excess spending structural problems causing our deficits and national debt? Remember the last time we not only had a balanced budget but actually had a budget surplus repaying our debt? It was under this guy:
And remember the guy who squandered that budget surplus and turned it into 8 years of deficits and $5 trillion added to our national debt? It was this guy: