Posted by Shyam Moondra
If we had a law that automatically suspended the Congressional members without pay on grounds that they irritated the citizens beyond what would be considered normal, then this would be that moment. The failure of the Super Committee to come up with a paltry $1.2 trillion deficit reduction plan would be considered a valid trigger for putting the entire Congress on temporary suspension until they came to their senses.
It’s shocking to see how bad things have really gotten in the Congress. Democracy is about finding common ground; if elected officials can't engage in give-and-take, then the government would be at stand still, the problems wouldn’t get solved, and the people would be forced to suffer unnecessarily. The bi-partisan Super Committee knew that it was important to reach an agreement on a deficit reduction plan to avoid economic fallout that could lead us into another recession. Since their announcement last Monday on lack of agreement, the stock market has already declined by 5%. The Super Committee’s colossal failure has dampened the confidence of the investors in the government’s ability to solve major economic problems. Simply put, the Super Committee, and by extension the entire Congress, failed to fulfill its duty to the nation.
The House and Senate members need to put their own re-election or party interests aside and focus on doing what's right for the country. Rich people benefited the most under President George W. Bush, so what’s wrong in asking them to pay more in taxes to help reduce deficit? The deficit is too large to be fixed just by spending cuts; it's imperative that we also raise revenues. We can't cut spending too much at a time when economy is struggling; if we did, it would undoubtedly slowdown the economy and push the unemployment rate into double digits.
President Barack Obama and House Speaker John Boehner must go back to their original $4.5 trillion plan and take it from there. The market and country are looking for a big plan to inspire confidence. A $1.2 trillion plan would not make much difference and it will in fact send a negative message to the markets. I don’t think we can wait for another year to do this after the 2012 election; this issue must be tackled by the current Congress right now.
Here is my 10-point plan that should be considered:
1. Let the Bush tax cuts for the rich people (those who make more than $500,000 a year) expire at the end of 2012, but extend the Bush tax cuts for the rest of the people for four more years. A special temporary income tax surcharge for millionaires and billionaires should also be on the table.
2. Reform the tax code. First, eliminate most deductions for those who are making $500,000 or more. Second, eliminate all tax subsidies given to oil companies, hedge fund managers, drug companies, and rich farmers. Third, close all corporate tax loop-holes and shut-down tax-havens that make it possible for corporations to escape paying their fair share of taxes (when GE pays 0% or Google pays only 2% in taxes, that's not right).
3. Cut the defense budget by at least 10%.
4. Medicaid program is largely wasteful and there is a lot of fraud perpetrated by the service providers and patients. Just give a fixed lump-sum amount to the states and let them manage medical care for the poor. We need to ration this benefit rather than making it an open-ended entitlement.
5. Social Security and Medicare are like insurance polices; the government should not change the terms of those polices mid-stream. If we want to reform these programs, it should be done for those who are just entering the work-force and not for those who already paid into the plans. These programs didn't add to the deficit, so there is no need to make drastic changes for those who are already receiving benefits or those who have already paid the premiums but haven’t yet started receiving benefits. We can make some minor adjustments such as modifying the formula for calculating COLA for SS and slightly increasing the premiums and deductibles for Medicare. However, the eligibility age for benefits for these programs should not be increased.
6. Streamline government structure. Texas Gov. Rick Perry's suggestion to eliminate some agencies is a serious proposal worth exploring. For example, Interior, Energy, and EPA could be combined into one Department.
7. We are falling behind in education, so we need to invest more in that area to remain competitive in the global market place. It's ironic that we are spending more money on building prisons but reducing funding for education; that doesn’t sound like the right prescription for a promising future.
8. Cut down foreign aid budget to bare minimum. We can't afford to keep giving tens of billions of dollars of aid every year to Egypt, Pakistan, Israel, and others, especially at a time of financial crisis at home.
9. Ban pork-barrel spending, earmarks, etc. Most of this spending is wasteful and often done to benefit big campaign contributors, which breeds corruption.
10. Cut salaries and benefits of members/staff of Congress that are way too generous. The country is going through a rough time, so everybody should make sacrifices.
If Obama and Boehner hammer out a plan to reduce deficit by around $4.5 trillion over ten years, it would be viewed as very positive by the financial markets, it would remove uncertainty and thus facilitate new capital spending by corporations, and in a short period of two or three years we would see a vibrant economy with significant job creation. The American people are anxious to see strong leadership from Obama and Boehner and others in the Congress to get this done quickly.
