WE CAN’T TAX OUR WAY OUT OF A SPENDING PROBLEM…

Robin Elackatt

On the most fundamental of levels, the United States has three major governing bodies, which is the Executive (led by the President); the Judicial (the Supreme Court) and the Legislative (the House of Representatives & Senate). These three bodies ensure the overall accountability of each body, without directly impacting the day to day decisions of each.  In a complex, yet very ingenious way, the Founding Fathers established this system to ensure that no one can unilaterally make decisions for the nation without involving one or both of the independent bodies previously mentioned.  Thus, the President appoints judges or justices to the Supreme Court, yet the Justices do not in any way answer to the President.

Similarly, the Legislators must approve funding for the Executive Branch.  As such, they rely on each other to accomplish their independent mandates.  One of those mandates was the idea that for the United States to recover from this global financial crisis, it was necessary to reduce spending and raise taxes; two fundamentally different political views.  On one hand, the Republican Party support spending cuts, but are against increasing taxes on the wealthy.  On the other hand, the Democratic Party is interested in raising taxes and expanding government. 

As a result of a self imposed negotiated agreement, both parties decided several months ago as part of the negotiations to raise the debt ceiling, which ultimately resulted in the creation of what we know today as the Budget Control Act of 2011.  The solution at that time was a pact that stated in essence, if both parties cannot reach an agreement on how much to spend and how much to tax citizens, then the country would fall off a cliff and force spending cuts and tax increases.  This basically means that the country would be forced to increase taxes on everyone, and significantly reduce spending.  This spending reduction is known as “sequestration,” which an automatic $1.2 trillion reduction in spending over the next 10 years – including an estimated $500 billion in Defense spending. Bottom line, no one would get what they want, but the nation would either get better financially or go back into a recession. Unless, the Republicans (in charge of the Senate) can come up with a new agreement with the President (in charge of the Executive Branch) taxes will go up in January 2013 and the nation will be forced to reduce spending drastically, thereby hurting people who may need some of the benefits the spending support.  At the head of the negotiations for the Republicans is John Boehner, Speaker of the House; President Obama as the Head of the Executive Branch must design a plan that will ensure what some call a “balanced approach” to resolving the issue.

Now They Are Talking!

According to published reports, President Obama and House Speaker John Boehner met for the first time in nearly a month this past Sunday to begin what is anticipated to be a long, drawn out and rather difficult negotiation to avoid falling off the fiscal cliff.

One could argue that the most difficult issue they will have to talk about and ultimately resolve is the issue of taxes and entitlement spending.  The Democratic Party, who by virtue of winning the most recent Presidential election argue that the American People voted for the President who ran a campaign pledging to raise taxes on the rich and therefore they should have it their way. Republicans on the other hand argue, and rightfully so, that they also have senators and governors who won during the recent elections.  These senators and governors mainly ran on a platform of fiscal responsibility, controlled spending, smaller government and reducing entitlement (Medicare, Social Security, Medicaid, etc…) both sides argue that they are right and have the mandate from the “PEOPLE.”

Democrats insist that the parameters of any deal must include raising the tax rate on the wealthy.  Based on the early talks, which I must highlight is very early in the negotiations, it appears Speaker Boehner is open to tax increase the President wants, but only if the President agrees to lowering spending on programs such as Medicare and Medicaid.  Other critical issues and key to reaching an agreement includes the Payroll Tax "holiday" which will expire on December 31, 2012.  Historically, the payroll tax rate is 6.2%.  However, President Gorge W. Bush implemented a tax cut, (known as the Bush-Era-Tax Cut, or Payroll Holiday), which President Obama extended in 2010, reduces payroll taxes by 2 percentage points on the portion paid by the worker.  This cut saves American workers an average of $1,000 per year.

The Presidential election is now over.  The people have made their choice for President, Senators and Governors in many states. I would argue that the President and Legislators have the right, the duty and the responsibility to find common ground and work towards a solution that is in the best interest of the nation.  It is not enough to simply express compassion for struggling families or to create more government programs that offer promise that simply don’t work or we can’t afford.  We must look at this negotiation as an opportunity to reduce the out-of control spending that is common place in Washington DC, and work towards giving our children and grandchildren a fiscally sound, small, effective and efficient government.  It is the least we can do…

The so-called "fiscal cliff" which if not avoided will force our nation into an automatic $560 billion tax increase and a self imposed spending cut that has the potential of  pushing the national and global economy into another recession.  It is time for leadership and I am hopeful that President Obama will push for a solution that is workable for all.  Republicans, seeking smaller government, want the reduction of federal spending on social programs must also come to the table with an open mind and prepared to meet the needs of the nation, above political ideology.  At the end of the day, we must ask ourselves… What is the most impart thing to do, for whom and why?

There is a simple way to fix this issue… It is called… STOP SPENDING MONEY WE DON’T HAVE.  I do it at home, at work and encourage my friends and constituents to ask themselves, how much sense does it make to spend money you don’t have or to borrow money to spend more?  Would it not make more common sense to simply stop spending, live within our financial means like we do in our homes each day?  I am hopeful that President Obama will show leadership and come to realize that spending money we don’t have puts us all on the cliff and if they don’t reduce spending the entire economy will go off the cliff.  Taxing the rich is not a solution, it sound good because it will make them pay for the out-of-control spending the nation practices under Democratic leadership. Bottom line, we can’t tax our way out of a spending problem. 

The author is a City Councilman for City of Missouri City, Texas.  The views expressed here are his own.  For comments and/or suggestions, email:  RobinElackatt@gmail.com