A Compromise We Can Live With…

Democratic leaders have told their Republican counterparts that Democrats will let the Bush Tax cuts expire and allow the automatic Defense cuts to occur unless Republicans agree to raise taxes on those earning above $250,000.  This a sound compromise but is fraught with potential adverse consequences.   It’s the economy stupid.

The compromise goes not nearly far enough towards reducing the deficit.  On the Positive side, it is a start and would result in higher tax revenues and lower government expenditures.  The compromise would also address in part the “fairness” issue with regards to those who have more, paying a larger share.

Republicans have their own plan.  Lower taxes and cut spending, just not defense spending or any other government program that helps their constituents.  That leaves Medicare, Medicaid, Social Security, and a myriad of other government safety net and basic social infrastructure programs open to big cuts.

Hmmm.  Guess who loses on this approach?

There is actually so much middle ground that it boggles the mind why a genuinely fair compromise cannot be struck.


  • Healthcare costs are out of control.  This drives up the expenditure side of the Medicare and Medicaid equation.  Add to that the reality that Medicare and Medicaid do not collect enough revenues.  They are serving a population where baby boomers and the poor are swelling demand.
  • Defense spending is a joke.  The US spends almost 10 times as much as the next country and about as much as all other countries combined.  With a debt approaching $16 trillion, isn’t it time we reassessed our nation priorities?
  • The spread between the rich and everyone else is reminiscent of the Gilded Age.  The national debt is our national debt.   Like it or not, all Americans own that obligation.  You cannot tax “everyone else” enough, nor can you tax the rich enough to eliminate the debt.  These tax increase must be paired with serious expenditure decreases.   The debt is everyone’s.

In most of the recent budgets, Government proposes spending almost $1 trillion more than it receives in taxes.  How bright does one have to be to see that spending must be reduced and taxes must be increased?

Enter the real world.

The US economy is putting along and may actually be slowing down from an already slow pace.  What do you think might happen if consumers must pay higher taxes, or if large numbers of defense industry workers are laid off if the Defense Department’s budget is trimmed?  Now is not a great time for austerity…

The grand solution must involve across the board reforms, phased in over time, encompassing entitlements, defense, and taxes.  The grand solution, to be effective, must also include a reform of the overall health care delivery systems getting employers out of the equation and shining a light upon where medical costs really are.

This grand solution is not going to happen for matters of principle as well as the pettiest of reasons any time soon.

So, back we come to the train that is already on the tracks.  Raise taxes on everyone (by allowing the Bush cuts to expire), and allow cuts in Defense Spending to take place.

What about the economy?   Hymm.   Unless, unless… there is a son of this compromise.

What about raising taxes on those earning above $250,000 and not cutting defense spending.  Cut someplace else.  Both parties could cry about their sacrifices, both parties could claim victories too.  The impact on the economy would be negligible.  America would still be in a fix but we would have lived to die another day.

Explore posts in the same categories: Barack Obama, Democratic Party, Politics, Republican Party

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