Please note: the views expressed in this article are not necessarily those of the primary authors of Shifting the Balance, however, we think it is important to encourage the free flow of ideas in order to promote collective action and compromise. In order to keep the country “in balance,” we believe we should all work together, and that means sharing and respecting ideas! Including those that may be different from our own.
Since starting their blog, Meg & Ann have asked me to consider authoring some guest articles. However, given the stipulation that they be absolutely non-partisan and the fact that my world is finance, I have to date been a reluctant participant. However, an excellent opinion article in New York Times on Monday April 16, 2012 by Bill Keller has pulled me out of my shell. The article (http://www.nytimes.com/2012/04/16/opinion/keller-the-sweet-spot.html ) focuses on the 15% of Americans who comprise the “independent” segment of the voting population. In this article, Mr. Keller notes that independents get so little attention because “The politics of the center… do not quicken the pulse,” and goes on to say that “the middle is not the home of bland, split-the-difference politics” but rather they are “just not views that all come from one party’s menu.” I am also mindful that while our friends and family often vote differently, we all share many common beliefs, including the importance of a healthy economy.
Mr. Keller identifies several characteristics he believes are associated with independent voters. In reviewing those characteristics, I quickly noted that almost all fit me. While Ann and I sometimes vote differently, we are seldom very far apart when considering practical solutions to either economic or political problems. For example, a couple of years ago, when the New York Times offered a chart that provided readers an opportunity to make their own choices in balancing the budget, Ann’s choices and mine were amazingly close.
The U.S. is now facing what many describe as fiscal Armageddon (The New York Times and others have labeled this “Taxmageddon”). This coming crisis is because Congress, as usual, has “kicked the can down the road”. Unless Congress and the President agree on changes to laws currently in place, on January 1, 2013, tax rates on capital gains, dividends, the alternative minimum tax (AMT) and payroll withholding rates will increase dramatically resulting in large tax increases for almost all tax payers. At the same time, extended unemployment, Medicare reimbursement rates, many entitlement programs, national defense and other programs will all be subject to significant reductions. This combination would in all likelihood send the U.S. economy back into recession.
To address our country’s fiscal issues, President Obama created the bipartisan National Commission on Fiscal Responsibility on February 18, 2010. The Commission was charged with identifying policies to improve the fiscal situation in the medium term, and to achieve fiscal sustainability over the long run. Specifically, the Commission was to propose recommendations designed to balance the budget, excluding interest payments on the debt, (“primary balance”) by 2015. The Commission was composed of 18 members drawn from both political parties and co-chaired by Alan Simpson, Former Republican Senator from Wyoming and Erskine Bowles, Chief of Staff to President Clinton (and thus came to be known as the “Simpson-Bowles Commission”). The Commission worked diligently to come up with a workable bi-partisan plan to meet its objectives. The Commission provided its report, entitled “The Moment of Truth” on December 1, 2010. The Commission’s plan included a combination of spending cuts and tax increases that would bring the budget into primary balance by 2015.
This group really did their homework and I would encourage all to read the full 66 page report which is available at http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents. While I am reasonably knowledgeable regarding tax matters and government programs, this report recommended the elimination of numerous tax breaks and billions of dollars in reductions of entitlement programs, many of which I was completely unaware. I say this only to point out that this was not a broad brush effort, but a very detailed, well thought out plan based on thousands of hours of work by bi-partisan commission members and their staff. There are many recommendations in the report that I disagree with and would change if I were “king for a day.” I am sure each member of the commission felt the same way.
America’s future under our current policies (today’s existing tax rates and expenditures), the current law (assumes tax increases and spending cuts due to be implemented at future dates under current law all take place and remain in force) and the Commission’s recommendations are shown below. Which option would you choose?
American business must contend with global competition. The uncertainly of our country’s fiscal policy and changing regulations are crippling U.S. businesses ability to return to growth and global competitiveness. Competition with lower cost countries is difficult in the best of circumstances. It is difficult enough when lower cost countries undercut us on wages, dump government subsides products on our shores or impose unreasonable tariffs on our goods, but even worse when we, as a nation, shoot ourselves in the foot economically with the uncertainty created by warring factions in Washington.
Business is desperate for a plan! (Probably why Herman Cain got initial support for his ill-conceived 9-9-9 plan: at least it was a plan.) Simpson Bowles is also a plan! It is a well-researched, well thought out, bi-partisan plan to put our country on sound fiscal footing. Yet subsequent to its submission, the Commission’s report has been virtually “swept under the table” by the Administration and Congress alike.
What do Mr. Keller’s article and the Simpson-Bowles plan have to do with each other? A lot, I think. I believe it is time for independent thinking voters-whether they consider themselves Independents, Democrats or Republicans-to take lessons from the far left and the far right and “shift the balance” of politics by making our voices heard. Implementing a well researched and well thought out plan should be a priority. We need to come together now by immediately passing legislation implementing the Simpson-Bowles plan or a similar well thought out plan.
Failure to act now will almost certainly mean nothing will be done as we get closer to this year’s presidential election. Failure to act now will also mean that actions after the election, no matter which party’s candidate is successful, will be taken in the approximately six-week period between the election and year-end, resulting in “kick it down the road” or “cram it through Congress” legislation that is likely to be ill-conceived and poorly drafted.