Monday, May 10, 2010

Could Britain Inspire Our Congress?

The Brits have a hung Parliament. With European debt woes threatening a new round of economic chaos, the English left and right are seeing if they can find some common ground to form a governing coalition. It won't be easy, but at least they're talking about it.

Maybe we could do the same here. Recently, the Washington Post noted a rare outbreak of working bipartisanship in the Senate to get something done on financial regulatory reform.

Perhaps we could extend that spirit to true work on the deficit. In the U.S., both sides bear plenty of blame for the bulging, and ultimately unsustainable flood of red ink.

During the Clinton administration--with a Republican Congress--we made real progress on the deficit. By the time Clinton left office, we had had three consecutive years of balanced or surplus budgets. When W. Bush took office, the ten-year projected surplus was $5 trillion.

It didn't take Bush--and a mostly Republican Congress--long to squander those gains. By the time Bush left office, the cumulative deficit had instead ballooned by $5 trillion--a swing of $10 trillion from the surplus he inherited.

Faced with a potential economic catastrophe, Pres. Obama further expanded the deficit to unheard of record amounts.

Now, it's up to BOTH parties to show that they can govern the nation, not just snipe at each other about who is worse.

The ONLY WAY to seriously tackle the deficit the is to engage in true reform of the major entitlement programs--particularly social security and medicare. Pentagon spending needs to be reigned in as well, and the tax system needs a major overhaul. All these things could get done if the men and women in Congress would show a little maturity, put aside their bickering and figure out how to ignore the lobbyists and spread the pain around.

On the entitlements side, we need consensus that unrealistic retirement ages need to be raised, and some benefits trimmed.

On the tax side, if we erased most of the inequitable tax goodies won by business lobbyists over the years, we could actually lower overall tax rates and increase productivity. We would also, inadvertently, address the climate change issue--if we simply eliminated all the government subsidies for oil, gas and coal we would make a huge stride in having these fuels reflect their true costs.

Many other parts of the economy--notably housing and agriculture--are distorted by tax subsidies as well. Cleaning up the tax code would generate billions in new revenue, while actually lowering taxes for most Americans.

Sadly, we're not counting on any such breakout of maturity. It's much easier to point fingers than to take leadership on tough choices.


Rico said...

Yes, but are they well-hung?

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Thank you for sharing! Cleaning up the tax code would generate billions in new revenue while actually lowering taxes for most Americans.