A READER POINTED OUT the Times puzzle on fixing the deficit to me, a week or two ago, and since then I've been exploring the choices before us.
It's rather discouraging that the problem seems so simple to fix, even while addressing the recession at the same time, and that the politicians seem intent on keeping the system broken anyway.
Here are the next nine recommendations, in a plan which would not only eliminate the deficit and create a surplus, but which would strengthen our economy and the middle class at the same time:
- I refused to increase the Medicare eligibility age. (Savings: $0)
The low-income workers in America work the hardest and live the shortest lives.
Those same people often find medical expenses becoming a big share of their budget as they get older.
Many are faced with having to forego needed care, because they simply can't afford it.
Also, since they can't afford to save, any money they end up with in their budgets gets spent, and goes to fuel the economy.
It just makes sense, both economically and as a matter of fairness, that we make certain they are covered.
The boost to the economy this represents will help to pay down the deficit.
And, as an added bonus, the mere option of Medicare is a great boon to the peace of mind, and therefore the stability, of the middle class. - I refused to reduce the tax break for employer-provided health insurance. (Savings: $0)
This just makes good sense—for the employer, for the employee, and for the economy.
Making sure health care is available to the middle class (and working lower class) which does the work in this country is essential. - I didn't cap Medicare growth. (Savings: $0)
This one is problematic.
The argument for it is to force the most expensive hospitals and doctors to take less—not a bad idea in the abstract.
But the method seems questionable to me.
We would need to be sure that we weren't simply removing care from people who needed it.
I ended up deciding against the cap, partly because it wasn't necessary to eliminate the deficit. - I refused to raise the Social Security retirement age. (Savings: $0)
On the face of it, this cut was attractive to me—an upper middle class person who spends his time in research, writing, thinking, and teaching.
I hope to continue working past 70, or even past 90.
But the people who do the hard physical work that keeps this country going—those that all of us, and the economy, depend upon daily—don't tend to be as healthy as I am, or to live as long.
They also have less savings to fall back on, and their support systems are not as good.
Asking them to wait until 68 or 70 to start collecting their social security is not only unfair, but—for reasons I've outlined above—bad economic policy. - I reluctantly reduced Social Security benefits for those with high incomes. (Savings: $54 billion)
I'd rather not, but those with higher incomes can afford it, and the whole idea of Social Security is a kind of insurance against poverty in old age—so if you have a higher income, you shouldn't need it as much.
A better approach to this would be based on the assets and income people actually have at the time they are collecting. - I refused to tighten eligibility for disability. (Savings: $0)
If there are people gaming the system, we should target them specifically, but to simply tighten the system in general is just another way to save money, at the expense of those among us who need and deserve the help, in order to spend it elsewhere.
Once again, security is the issue here—middle and lower class people need to know that if something goes horribly wrong they will not be destitute. - I refused to "use an alternate measure for inflation". (Savings: $0)
This is simply a way to reduce Social Security payments over time, and they are already lower than they should be for many recipients. - I returned the estate tax to Clinton era levels. (Savings: $104 billion)
A fundamental problem with our economic system is the fact that the more money you have, the easier it is to arrange things so that you get even more while contributing less.
The net effect of this is that the entire wealth of this country—created by all of us working together—is rapidly being concentrated in the hands of the top 1%.
This is bad, of course, for the bottom 99%.
But it is also bad for the top 1%, because this concentration of wealth undermines our democracy (wealth is power), and undermines our economy.
In the long run, this distorted distribution of wealth creates the conditions that lead to lower productivity, more crime, more violence, worse infrastructure, and less profit for everyone.
On the other hand, the so-called "death tax" only applies to the top three-tenths of one percent (.3%) of American families—people who already have so much money that the only time they'll notice the difference is in a meeting with their team of accountants. - I returned capital gains rates to Clinton era levels. (Savings: $46 billion)
Much of what I said above applies here as well—but I'll make another point here which applies there as well.
Capital gains, like inherited money, is unearned income—income which the recipient didn't do a lick of work for, or make the slightest contribution to our society for.
And it goes only to those who already have money—and therefore need it less than others.
Shouldn't it be taxed at at least the same rate as income which was earned by hard work, by a contribution to the economy as a whole?
It's unfair that those who make their money by trading stocks should make so much more than those who actually contribute something tangible by their work—whether plumbers or teachers or doctors or firemen or gardeners or accountants or waitresses or...
It's doubly unfair that they should make so much more, and then be taxed at lower rates.
Low taxes on capital gains, like low taxes on wealthy estates, is simply welfare for the wealthy.
In the next installment:
The Rest of the Taxes...
