A Balanced Approach to Deficit Reduction
In their efforts to reduce looming federal deficits, President Obama and Congress must take a balanced approach to deficit reduction. Under a balanced approach, everything is on the table, including revenue savings.
The alternative means massive cuts in Medicaid, Medicare, and other programs – and possibly even Social Security — that provide economic security for millions of Americans. It also means cutting investments in education, student aid, medical research, food safety, road and bridge construction and repair, law enforcement and many other areas that help all Americans, especially the middle class.
To be sure, the nation’s leaders need to reduce projected budget deficits. Left unaddressed, they will weaken the economy over time and could cause another serious economic crisis.
But, there’s no reason why they cannot address the problem by adopting a balanced approach that protects the middle class, critical investments and our most vulnerable citizens.
Consider the alternative.
A plan that relies solely on spending cuts would protect tax cuts for millionaires and tax breaks for powerful corporations and others who can afford to hire high-priced lobbyists.
Those tax breaks include the following:
- Partners in private equity firms can take much of their compensation as capital gains instead of regular income, which means they enjoy lower tax rates than many middle-income Americans.
- Companies do not have to pay taxes on their overseas earnings each year and can deduct some of the expenses tied to their overseas investments,
- Oil companies enjoy huge tax breaks that go only to them – despite record profits and the need to shift from fossil fuels to alternative energy sources over time.
Unfortunately, some proposals under discussion in Washington don’t even consider recovering these revenues and ensuring the wealthiest and big corporations pay their fair share of taxes. Instead, they would force only the middle class and other struggling Americans to make sacrifices in the name of deficit reduction.
The budget plan adopted by the House of Representatives hits seniors, children and families particularly hard. Nearly two-thirds of its $4.5 trillion in budget cuts comes from programs that serve people of limited means.
This plan, from House Budget Committee Chairman Paul Ryan, would slash funding for state Medicaid programs, which could lead to seniors in nursing homes, low-income children, and people with disabilities losing their health insurance.
This would, in turn, add to the ranks of the uninsured and reverse the nation’s great progress over the last decade accomplished through Medicaid and the Children’s Health Insurance Program (CHIP) in reducing the number of children without health insurance.
Average Americans would be hurt by cuts in funding for education, medical research, food safety, and for road and bridge repair.
The Ryan plan would also transform Medicare into something unrecognizable and ineffective. When people become eligible for Medicare, they would receive vouchers to buy private insurance, and those vouchers would not keep pace with rising health care costs.
As a result, seniors would face dramatically higher health care expenses. Many seniors in Wisconsin simply cannot afford higher medical bills, and they would have no choice but to forego some needed health services.
We can reduce the deficit while protecting our neediest citizens because we have done it before. In 1990 and 1993, for instance, Presidents and lawmakers of both parties recognized both that we needed a balanced approach that included more revenues and that we should not cut core programs on which vulnerable Americans rely the most to meet basic needs or to secure an education or get a decent job.
In fact the major deficit reduction agreements of those years, as well as of 1997, included features that actually reduced poverty and income inequality.
Everybody recognizes that we have to make difficult choices to put the budget on a sound long-term course, but we must pursue a balanced approach that protects the middle class and does not harm the most vulnerable citizens in Wisconsin and elsewhere.