The Spectacle Blog

Obama: Class Warfare Over Mathematical Reality

By on 10.19.12 | 2:48PM

In Tuesday's debate, President Obama said if we as a nation take deficit reduction seriously, it would have to combine "tough spending cuts" with making sure "the wealthy do a little bit more."

Ignoring the fact that the President's most recent budget proposal makes few such "tough cuts," an interesting new factoid on government spending in America shows raising taxes on the wealthy to shrink the deficit is not only inefficient, but simply won't do the job.

Earlier this week, the think tank Just Facts showed in a chart that total government spending is consuming more of our economy than in the history of the country, including during World War II. Liberals like Paul Krugman, of course, simply laugh off concerns about this spending and its correspnding debt. According to them, our debt dropped significantly after World War II, so why should we worry about the long-term effects of today's debt? Those liberals, of course, ignore the fact that today's fiscal problems are very different from the fiscal situation faced right after World War II -- namely, that we won't have the same worldwide economic dominance, and we will have huge entitlement obligations that weren't present in the 1940s.

While more tax revenue is part of the solution to balance the budget quickly (though we could also do it through aggressive budget cuts), it should not come from raising taxes. Instead, it should come from increased economic growth and/or simplification of the tax code. As a January IRS study showed, nearly one-seventh of taxes were lost to noncompliance in 2006, showing yet again that our tax system is too complicated and requires simplification.

But the real problem is spending. Very soon -- heck, this should have happened years ago -- the following steps must be taken to begin the process of reducing spending both immediately and in the long-term:

First, get rid of the low-hanging fruit, including $25 billion a year spent on unused federal property, $17 billion spent on agricultural subsidies, over $20 billion spent on energy subsidies, and $100 billion in corporate welfare, respectively.

Second, look at ways to eliminate as much fraud, waste, abuse, and duplication as possible. At least ten percent of the federal budget is wasted on this every year. While most politicians talk about fraud and waste but never do anything about it due to the complexity of the federal bureaucracy, it would be a fairly simple process to implement changes to grant processes and general oversight to save several tens of billions of dollars annually. Senator Tom Carper (D-DE), for example, has introduced legislation that would diminish a substantial portion of the improper payments made every year, in the Improper Payments Elimination and Recovery Improvement Act of 2011.

Third, diminish defense spending through efficiencies (the Government Accountability Office considers the Department of Defense ripe for fraud and other waste) and reformation of the defense contracting system. We should also begin reducing our military footprint in Europe, as well as leave Iraq and Afghanistan entirely.

Fourth, reform all social welfare programs, from food stamps to Medicaid to Social Security and Medicare. Social Security and Medicare should be made solvent for the next century, and food stamps, Medicaid, and other non-retirement social programs should be changed so people are incentivized to get off the programs, and so they only help the very poor and destitute. These changes should obviously be phased in, but that phasing should start ASAP.

Fifth and finally, begin consolidating and/or chopping whole programs and bureaucracies, starting with the Department of Education, Head Start, and DARE.

Regardless of who wins the Presidential race in November, or which party holds each chamber of Congress next year, the deficit and debt are going to be the top issues facing Washington in 2013 and beyond. It is imperative that both are dealt with as soon as possible, and given the level of spending and debt in this country, it is clear that class warfare plans on taxes won't work, and they aren't even a very good method to address these massive national challenges.

 

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