Fixing America needs contributions from everybody

October 02, 2011|Jay Hancock

Your country is in trouble and needs your help. What are you going to give?

Should "shared sacrifice" really be shared by everybody? Or are you conveniently in one of those groups that somebody believes should be exempt from helping America eventually balance its budget? For all the right reasons, of course?

Naturally, we can't raise taxes on high-income households. Not even years from now, after the economic slump is over. Not even when the top marginal income-tax rate is at its second-lowest level in 80 years.

That's class warfare on the job creators, says Rep. Paul Ryan, the Wisconsin Republican who chairs the House Budget Committee.

Matter of fact, we can't raise taxes on anybody else, either. Ever. That would hurt the economy, too.

"The federal budget problem is an excess of spending, not a dearth of revenues," writes the Heritage Foundation's J.D. Foster.

As if it could only be one or the other. Meanwhile, federal tax receipts as a portion of the economy are at their lowest level in more than half a century. (Part of this has to do with the economy; slow growth equals slow tax collections. But part of it also has to do with the low tax rates mentioned above.)

We certainly can't ask for even small givebacks from Social Security recipients, such as raising the age at which recipients can receive full benefits by a year.

This wonderful country will give the average baby boomer about five more years of life — and five more years of retirement — than the average 65-year-old a few decades ago. That means if Social Security isn't tweaked, its spending eventually will surpass its resources.

But some people think future retirees should have it all: extra years on God's good Earth, plus full Social Security benefits for every one of them — even though the program was designed for people who die earlier.

"Social Security must be defended," Vermont independent Sen. Bernie Sanders told reporters last month. "Social Security must not be cut."

Medicare, the health care program for seniors, is a bigger threat to the nation's budget than Social Security. It's growing at a faster pace. The gap between revenue and liabilities is much wider.

But organizations such as the Medicare Rights Center oppose changes to make the program solvent, arguing that the "root cause" of Medicare's problems is soaring health costs generally.

"My heart medication isn't some political game," an earnest senior says in an AARP ad opposing Medicare cuts. "I worked hard. I paid into my Medicare …"

Yeah, the average worker retiring at 65 today and his employers did pay in — about a third of what he'll eventually cost the program, according to the calculations of scholars at the Urban Institute. An argument that says "Don't touch Medicare until you solve health care inflation" is basically an argument to do nothing.

What about you, Pentagon? In inflation-adjusted dollars, defense spending is greater than at any time since World War II. It's almost twice as high as it was during the Vietnam War. (As a percentage of the economy, however, it's lower because the economy has grown so much since the 1960s.)

But here's Sen. John Kyl, an Arizona Republican, at a recent confab sponsored by the American Enterprise Institute and the Heritage Foundation: "Defense should not have any additional cuts."

This country's problem is an excess of spending and a dearth of revenues. The congressional "super-committee" meeting between now and Thanksgiving obviously needs to address both.

But generals don't want to give up their war toys. Seniors seem to want Medicare to grow until it consumes the entire federal budget. President Barack Obama's "shared sacrifice" plan asks no sacrifices of Social Security beneficiaries. Public employees don't want adjustments to their pensions.

Hardly anybody other than Warren Buffett is urging Congress to raise income taxes. The auto industry opposes raising gas taxes. The National Retail Federation hates the idea of a national sales tax, even as part of a grand solution that would also cut corporate and income taxes.

Psychologists and game-theory economists know that the best group solutions often come when all members agree to contribute. The opposite is also true. When nobody wants to give up anything, everybody loses.

So, if you think you're exempt from an obligation to make even a small sacrifice, you're part of the problem.

jay.hancock@baltsun.com

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