Sunday, April 24, 2011

4.24.11: Spending and Taxation

The hype for today's program definitely centered around the joint interview with Senators Tom Coburn (R-OK) and Kent Conrad (D-ND) with regard to the budget plan, but at the top of the program Mr. Gregory spoke with Senator John McCain (R-AZ) who was in Cairo, but had recently visited the rebel-controlled Libyan city of Benghazi. The conflict in Libya does have an effect on our economy and budget considerations, while also bringing a larger point to bear, which is overall defense spending.

For the status, Senator McCain said that the fight has the earmarks of a stalemate, but was glad to see that The United States is engaging the Predator drone into the fight. He also stated that The U.S. should step up its air power presence in the conflict. On the heels of that statement, he unequivocally said that ground troops are out of the question.

Basically what Mr. McCain outlined is the type of strategy/involvement as we had in the Balkans in the mid 1990's. Basically bombing Qaddafi into submission until the rebel can organize enough to overrun the regime. The obvious problem is that we don't know how many of these air attacks it will take for that to happen and how long this conflict will go on.

Additionally, the Senator advised that we help the rebels, giving them the frozen Qaddafi assets so that they have the ability to further arm themselves and relieve the strain on the civilian population, significantly adding that we need to 'take this guy out.' But again, how long and to what full extent will the U.S. be involved?

Another question of how long had to do with Iraq, which Mr. Gregory thoughtfully about which he asked Senator McCain. His answer to this and his suggestions about Libya should induce concern about our military policy and ultimately spending. He said that it is very important that we DO NOT leave Iraq completely. He continued on to say that the American people aren't very concerned about a long-term presence there, but would be if we were taking casualties.

This is the exact kind of thinking that we need to reverse. The United States can no longer establish a 50-year/long-term type of presence in Iraq as we have done in Japan, South Korea, Germany, Saudi Arabia, The Philippines, Italy, Spain, and Turkey to name a few. One could argue that we need these bases so that we can strategically be in place for any potential conflict or threat that involves The United States, but why do we need bases in Spain, Italy, and Germany? In this example, closing out the U.S. Military presence in two of these three countries would not significantly alter our strategic positioning and save us billions of dollars. Stay in South Korea because of a potential threat from the North, but pull out of Japan (if they want us to) or The Philippines. Why aren't these hard choices being made. The American public, as Mr. McCain said, wouldn't be overly concerned if we were not militarily in The Philippines. Our military spending is about $500 billion per year.

Instead, the hard choice remain here at home as to what to do with Medicare/Medicaid and Social Security, which Senator Tom Coburn said have to be on the table for long-term fiscal responsibility. He also said that the 'gang of six' (6 Senators from both sides of the isle working on a budgetary compromise) hasn't even talked taxes increases.

However, Senator Kent Conrad said that they need to work both sides of the budgetary equation, cutting spending and increasing revenue through taxes, but that they shouldn't be raised on the middle class. Mr. Conrad did state that the gang of six will have their proposal out soon, lest they become irrelevant to the debate.

If the United States increased the tax rate for the top 2% of the wealthiest Americans - basically letting the Bush Tax Cut expire and go back to Clinton-era levels at 39%, the revenue would be increased by approximately $700 billion. Couple that with say $100 billion in lowering military costs and you have close to $1 trillion in decreased spending. Or if we do as Senator Conrad said in that we should close the tax loopholes for companies off-shoring for tax purposes instead of having the tax rates expire, you'd get at least the same amount of savings, perhaps more. We could do those things first and then see where we are and go from there. Too practical, too rational, too.. (gulp) naive.

The Ryan plan, which David Brooks again said today, on the program, he liked because it asks the big questions like 'how much government do people want' is not a fair economic plan. This week, Mr. Ryan's own constituents questioned his plan in a town hall meeting that he called. Putting in place a voucher system for Medicare will change it fundamentally and will put a large burden (a burden that will keep growing) of the cost on the senior citizen. In the same budget plan, Mr. Ryan proposes a further cut in taxes for the top 2% of the wealthy.

So when Senator Coburn says that entitlement spending has to be on the table, so does defense spending and taxation. And significantly, Mr. Coburn disagreed with Treasury Secretary Timothy Geithner that not raising the debt limit will not be catastrophic for the United States, because we will still be able to pay the interest on our bonds, is worrisome, but the one thing we can say about Senator Coburn, though we don't agree with him often, is that he is principled, unlike Congressman Paul Ryan. Senator Coburn has rebuffed his pledge (to not ever raise any type of taxes - corporate subsidies and all) to Grover Norquist - Chairman of the organization Americans for Tax Reform. However, on this instance of raising the debt limit, we strongly disagree with him. We have to ask ourselves, do we want to default on our debt for the first time in our history? No.

Republican strategist, Alex Castellanos said that both parties lose in this debate - Republicans for cutting popular programs and Democrats on their spending. He also noted that President Obama has been nothing but divisive in singling out the richest in this country. The latter is simply partisan as 72% of Americans favor raising taxes for the top 2%. As Ms. Dunn pointed out, the last election was about the American people wanting the Congress to work together, but that is not the Republican plan. Paul Ryan's budget proposal, which Republicans is so far to the right that if the Democrats don't answer sensibly, clearly, and decisively, the compromise line will be that American will see Medicare and Social Security changed significantly, when it doesn't really have to be. And lost in all this as was pointed out through the Tweet Deck, where is the discussion about jobs. Congress hasn't done anything on jobs. Forget about gas prices, for the moment because if you don't have a job, you can't pay for gasoline no matter how low the cost.


Round Table: Columnist for the New York Times and author of the new book "The Social Animal," David Brooks; columnist for the Washington Post, Eugene Robinson; Republican strategist, Alex Castellanos; and former communications director for President Obama, Anita Dunn.

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