Let’s suppose Rep. Paul Ryan, so far the only serious person on the budget in DC, proposed to cut my Social Security benefits by 75%. Question: How much is he cutting from my Social Security benefits?
Answer: Nothing. The Social Security Administration already admits that if nothing changes, I can only hope for 75 cents on the dollar when I retire.
Starting with that as a baseline, all cuts and allocations should be framed relative to the money we will actually have in the future. That means that anyone who proposes the radical idea of actually balancing the budget isn’t cutting anything. He’s only putting on paper what everyone already knows will happen in real life.
We are so far removed from reality in the federal government that no one even talks about the fact that our balance sheet is maybe more than a hundred trillion dollars in the red. That means that we are flat out broke, and anyone who loans the US government a dollar is a fool. We can’t borrow more money, and we must accept the fact that we are flat out broke.
When you realize you are in a financial hole, the answer isn’t to keep on digging to maintain the status quo. The answer is to give up expenditures, the sooner the better, and to stop digging. The answer is to restructure your debt, or to find new avenues of revenue.
In the case of the Federal Government, at no point in history did we ever collect more than about 20% of GDP. It just can’t happen. That’s an economic fact. No matter how high we rose the tax rates, tax revenues did not necessarily increase. People who propose raising tax rates, it doesn’t matter on who, are ignoring this reality, and live in some fantasy land where rich people are begging the federal government to take their money.
Today, more than ever, now that we have the highest income tax rate of any country for corporations, raising them even further would completely destroy our economy. What few corporations out of charity or obligation remain in our country will either fail or leave entirely.
If anything, any budget must take into account a dramatic tax rate cut, designed to show the world that (a) we’re serious about balancing the budget by cutting spending, not raising taxes, and (b) America is always the safest economic zone, and we intend to keep it that way even at the cost of cutting government expenditures.
Such a one-two punch would make the United States, once again, the economic center of the world.
Yes, that means giving up my future Medicare and Social Security benefits. But you know what? I don’t expect to see them anyway. So a cut would mean accepting reality.