In a speech on Wednesday 13th April, President Obama took up a topic that is as difficult to talk in public as sex and flatulence! America has to raise taxes. Raise Taxes in America? Yes! This is the harsh reality looming over budget discussion. But politicians have so far tried to bury their heads under the sand like the proverbial ostrich. In that respect the speech was full of boldness not only in its substance, but because it gave respect to our intelligence.
The budget is in a mess and there is no one reason for it. It is well to recall at this juncture that the last instance of the budget going red was during the time of Clinton. It is a clear hint that the only sensible way to tide over present problems would be to allow the tax rates to revert back approximately to the Clinton days. That one step would solve three fourths of the deficit problem for the coming five years tentatively.
Ironically the pressing need for budget increases has become clear from the budget proposals drafted by the Republicans. Rep Paul Ryan has suggested the slashing of spending to unacceptable levels. The public will never take it. It even wants to dismantle Medicare relying on assumptions that are not only wild but preposterous. Even then the Republicans contend that the budget deficits will hang on till the 30’s. In short even dreams cannot take America back to stand on a solid fiscal base. More revenue is needed.
Obama needs to be applauded for bluntly getting to the core point even though he harped on taxes for the very rich. He wanted cuts in defense spending – something many would agree to. Obama did not say it in so many words but the military spending of USA is equal to the combined militaryspending by the rest of the world.
There are three main fallacies in analyzing the causes of this financial mess. Firstly it is not true that the Republicans are responsible for it – both parties have had their contributing share in cyclical order; lately the Republicans have become reckless however.
Secondly it is a misconception to think that low taxes are essential for economic growth and that increase in tax would choke the economy. The tax increase by Clinton government in ’93 led to economic growth.
Thirdly another misconception is that Medicare is unaffordable. The Republicans have no positive plan except to stop payment of bills. Administration of Medicare is cheaper than managing private health insurance. The real challenge is to control inflation in health care.
Julie Thompson, has been working on ForeclosureDataOnline.com studying the foreclosures market, helping buyers on the finer points of Martinez foreclosed homes for sale.