Friday, March 15, 2013

Saving the Middle Class ... Not Whether We Should But How We Can is the Right Question to Answer

Plain talk from politicians is not what we get.

And the fact that We the People continue to put up with this happy talk from both sides of the political aisle is either an indication of our inattention to, or ignorance of, the relationship of taxes to entitlements.

But whichever it is, it needs to be rectified. So let's get educated.

President Obama wants to save the middle class. Well, we definitely need to do that, but how will it be done? By higher taxes or lower entitlements, that is the question.

Baby Steps on Deficit Fix says this about the connection between taxes paid and government benefits received:

"Can elected politicians pass laws that reduce future budget deficits?

Yes, they can.

The deficit is shrinking. This year will be the first year in five that the deficit comes in below $1 trillion, mostly because the economy is healing.

Can political leaders walk and chew gum at the same time?

That remains to be seen.

The U.S. confronts two big economic problems: Unemployment today, deficits tomorrow. Congress can't seem to figure out how to tackle them both. . . .



(Regarding) fixing Social Security and Medicare, the (oldest of the baby boomers) turn 67 years old this year, and neither program is fixed. When you hear promises to protect those already age 55 from benefit cuts, remember this: About 59% of the boomers already are older than that. . . .

Can the leaders do the hard stuff?

No sign of that yet.

They have raised taxes on the rich, which is popular with nearly everyone except the rich. . . .

With a few exceptions, though, politicians are protecting most Americans from the truth about the next steps.

Here is how Douglas Elmendorf, director of the Congressional Budget Office, put it the other day: "Putting the debt on a sustainable path will ultimately require increases in taxes or cuts in government benefits or services for people who consider themselves to be in the middle class."

You don't hear that sort of blunt talk from elected politicians."

Summing Up

To repeat, the head of the government's Congressional Budget Office says, "Putting the debt on a sustainable path will ultimately require increases in taxes or cuts in government benefits or services for people who consider themselves to be in the middle class."

For too long now, Republicans and Democrats have played a silly political game which says that We the People can have it all -- low taxes and generous entitlement benefits provided by government.

That all we have to do is vote for them and they will take good care of us. That somehow they have the ability and the power to provide a better future for us than we can provide for ourselves. That they're the experts and that OPM government knows best decision making is superior to self reliant MOM based decision making.

But that's simply untrue.  Pure fantasy and fiction.

Meanwhile, the economy is weak, our fiscal deficits and national debts have soared, baby boomers are retiring in record numbers, and the rapidly increasing but unfunded costs of Medicare and Social Security are largely ignored.

And even though we've decided to raise taxes on the so-called rich, even if we raise them even more in the future, there simply aren't enough rich people to pay all the bills that are coming due.

There are simply too few in numbers of rich people in relationship to the far greater in numbers that belong to the vast middle class.

So which will it be, Mr. President and We the People? Will it be higher taxes for all or entitlement cuts for all?

And if it's to be higher taxes, are we ready for the inevitable slower growth and lower standard of living society that will be the result for our kids and grandkids?

And if we choose the high tax route, who's going to tell them why we chose to take care of the baby boomers instead of providing to them the same opportunities that we had?

In the end, the choice is clear.

Big government and broadly shared prosperity don't go together any better than do low taxes and generous entitlements.

That's my take.

Thanks. Bob.


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