By David Morgan
The Norman Transcript
NORMAN — Well, the country dodged a bullet with the agreement between President Barack Obama and the Congress to avert the so-called “fiscal cliff.” It would be nice to breath a sigh of relief that such nonsense is over. Alas, it’s not.
The next fiscal mess comes up in less than two months — the battle over lifting the debt ceiling. Expect another donnybrook as congressional Republicans attempt to force the president into accepting further cuts in federal spending in exchange for accepting a higher debt limit.
We may not need reminding that lifting the debt ceiling in the past was noncontroversial. It is basically a step to permit the treasury to pay bills the U.S. owes. It has no effect on future spending.
Regardless, the GOP plans to use this routine action to compel the president to accept more spending reductions. It really is a form of blackmail.
So what do the Republicans in Congress want to cut? Certainly not the defense budget, although that should be an obvious target. Reducing domestic discretionary spending would not be nearly enough to make a difference in the debt.
All of this means that the search clearly leads to where the big money is — in so- called entitlement spending. The two largest such programs — Social Security and Medicare — are ones that most Americans have invested in for decades. Nonetheless, they remain (along with Medicaid) as the only real source of the enormous amount needed to put a dent in the government’s debt.
We can identify several compelling alternatives to cutting programs that provide popular and even indispensible benefits for mostly older citizens. All involve raising more revenue. Take Social Security first.
A major first step in improving the fiscal viability of this trust fund is to lift the earnings cap on high-income taxpayers. (Currently, wage earners pay no Social Security tax above the level of $113,700.) Such a step would raise an immense sum.
Second, Medicare’s funding problems are frighteningly overwhelming, but there is one obvious place to start improving its financial plight. Get rid of the Bush-era law prohibiting the program from bargaining with drug companies over prices. That’s the American way — allow drug companies to compete to sell to Medicare providers.
To put this information in context, compared to other developed countries, the U.S. has very low tax rates. The federal government now taxes its wealthy citizens at some of the lowest rates in history. And current federal revenue as a percentage of Gross Domestic Product is the lowest it’s been in more than 50 years.
All the polls confirm that people do not want to cut any of these “entitlement” programs. They much prefer making the well-off pay a larger share of these popular and essential public endeavors.
The major problem with these rational solutions is the country’s dysfunctional political system. Republican senators would filibuster such legislation, while the right-wingers in the House would block any such progressive action. So, unfortunately, we’ll end up with more fiscal cliffs.
Retired OU professor David R. Morgan lives in Norman.
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