The Big Questions

There are a lot of voices saying things like Obamacare is going to wreck the economy, or that the taxes are too high, the deficit is too large, and we have to cut spending. These voice, however, do not offer any idea how to accomplish this, or what the consequences might be.

Healthcare impacts the budget in too ways. First, employer provided health care (which most Americans have) is not taxed. As a result, the employer pays less tax on his profits and the employee pays less income tax. Second, the government has recently extended financial support so that most Americans can purchase coverage and join those already covered under Medicare and Medicaid. This is now a larger tax payer covered expense.

So the first set of big questions is if we are going to reduce government costs, should all Americans lose their tax break? Should some Americans also lose any type of government health care financial support? (This would include Medicare, Medicaid, and the recently enacted provisions to help those denied coverage for a pre-existing condition find coverage.) How should we decide who should lose?

With respect to the overall budget, if you simply exclude the entitlements (social security and Medicare/Medicaid) and the payroll taxes that go with them, the rest of the 2010 budget is unbalanced by almost $1 trillion.

Surprise, surprise, a similar picture unfolds with the non-healthcare portions. There must be more tax revenue or there must be substantial cuts in government spending, or both.

The defense budget, by itself, is more than $ 900 billion, and is 10 times larger than the next largest defense budget (Russia) and in total equals all other countries combined. Why? What does a budget this size provide?

The second batch of big questions goes like this. Why does the US need to be financing two major wars? If maintaining a large defense capability is necessary to ensure American businesses are able to compete globally, why do large globally operating businesses (and doing business in the US) not pay more taxes? Why can not the government find a much lower costing combination of State Department and Defense Department funding that provides significant reductions to the overall budget? Why cannot the marginal tax rates return to those that were in place during the Clinton years? And finally, with 47% of American taxpayers not paying any tax (because they earn too little), why does the implementation of value added tax (national sales tax) not make sense?

The heated rhetoric we hear every day now from the Tea Baggers and other conservative groups are truly a disservice unless they begin to add an explanation on who and how.

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