Convergence Convergence

The on-again, off-again Congressional Fiscal Cliff discussions represent the worst side of American politics.  They simply make no sense and Americans know it.  Worse, the mindless talk from Senate and House leaders is taking the nation’s eye off the real problems.

For example, the real problem is not Americans paying more in taxes.  With a deficit as large as the one we have, someone will have to pay more, either out of their own pocket or via a payroll or sales tax.  And the resistance to the top 2% paying more in taxes, it is completely ludicrous that increasing tax rates to Clinton era levels for some cut of the top 2% is somehow wrong or would hurt the economy.

Just as real is the proposition that raising taxes alone will cure the deficit dilemma.  Spending must be addressed, or all Americans must agree to across the board higher taxes.  Spending includes entitlements for sure.  Spending also includes Defense expenditures, farm subsidies, homeland security, and some portion of a wide range of other government programs.

The main casualty of current Congressional behavior are the real underlying drivers of the deficit.  For example, why are politicians content to avoid changing laws even though they know full well that the programs are either partially of fully unfunded?  Why are politicians unwilling to discuss the high cost of American health care in the face of the rest of the modern world spending about one half.  And in the world of the 21 century where more populous countries (China, India, and Southeast Asia) will present as much economic competition as the US can handle and more, why aren’t we considering the role of government in assisting American businesses to become more competitive?

Instead it looks like our leaders will deliver nothing or close to nothing and simply delay the needed decisions to a later date (as usual), or they will deliver what most of the outside government world see as obvious (about $1.5 trillion combination of tax increases and spending decreases).

Strangely, reforming health care, the source of 50% of the deficit, seems not an issue.  Even more strange, the competitiveness of American businesses on the global stage seems to many not a place for government policy.  Rather, government policy should instead create conditions where anyone could make money if the government were to award them a franchise.

 

 

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