Our nation’s economy is struggling and Congress needs to put partisan politics aside and develop a credible plan that will reduce our budget deficit while ensuring future growth and prosperity.
We can achieve these goals. We did it in the 1990s under President Clinton and we can do it again, but we need a credible budget plan that involves cuts to military and domestic spending, control of entitlement spending and reform of our tax code.
Republicans have proposed cuts only to domestic programs, which account for only 12 percent of our budget. Cuts to domestic spending alone will not balance the budget and they jeopardize our recovery. In fact, Goldman Sachs has stated that Republican proposals to slash spending by $61 billion in 2011 could reduce U.S. economic growth by 1.5 to 2 percentage points in the second and third quarters of the year. Economist Mark Zandi says such cuts would result in a loss of more than 700,000 jobs nationwide, and 13,500 jobs in Maryland.
I believe we should look to the President’s Debt Commission as a model for getting control of our budget deficit. The bipartisan Commission recognizes that cuts to domestic spending alone will not balance the budget. Instead we need a comprehensive plan that looks at all spending – including entitlements and defense – along with revenues.
President Obama has begun to deal with our budget deficit with a five-year spending freeze on domestic discretionary spending, and by identifying billions of dollars in cuts to defense spending over five years. We also have moved forward in reducing entitlement spending with the passage of the Affordable Care Act (ACA), which the Congressional Budget Office estimates will save $210 billion over 10 years.
But we also need to look at tax reform. Today, loopholes, shelters, tax breaks, subsidies and other special provisions are causing us to hemorrhage more revenue than we collect. If we eliminated all the tax breaks, corporate loopholes and special provisions, we could cut the tax rate in half.
As a member of the Senate Finance Committee, I have proposed that we consider a progressive, consumption-based tax, one that is a fairer, more efficient way to raise revenue. It also would not have the loopholes, shelters or special provisions that riddle our current income tax system.
With a consumption tax, we could decide how much revenue we need to raise and adjust it accordingly. It would replace some existing income taxes and it can be structured to ensure that low-income individuals are exempt. Additionally, it would help American businesses in a global economy. Most other developed nations rely on a consumption tax and U.S. manufacturers are penalized because of our corporate income tax.
The challenges facing the U.S. economy are great, but we can overcome them if we put all options on the table and balance smart cuts with smart investments that will help move our economy forward.
Tony Weir says
While in a general sense I admire what Senator Cardin proposes, and certinly agree on closing most of the tax loopholes, I would offer the following thoughts:
1. It’s worthwhile to see what Rep. Paul Ryan offers in his forthcoming budget proposal. In my opinion, he is the most talented and experienced person in Washington when it comes to intelligent, reasonable and realistic ideas for reducing the deficit. He’s been doing this for several years now, although the administration has ignored him.
2. Mr. Obama’s “spending freeze is a bit of a hoax insofar as he jacked up those budgets by inordinate amounts (something like 20% I believe) prior to instituting the so-called freeze. Those budgets need to be cut back, then frozen.
3. To me, no tax should be increased until the budget cuts have been made. Why? It’s obvious that no politician wants to cut programs that might concern his constituents, so if taxes are raised first, then there is less incentive to make the difficult cuts that must be made to set the budget right .
MBTroup says
“As a member of the Senate Finance Committee, I have proposed that we consider a progressive, consumption-based tax, one that is a fairer, more efficient way to raise revenue. It also would not have the loopholes, shelters or special provisions that riddle our current income tax system.”
It’s generally agreed that sales taxes are regressive. I’m all for restructuring an existing sales tax into a VAT model (e.g. our 6% becoming 2 or 3% and applied across all industries).
“…passage of the Affordable Care Act (ACA), which the Congressional Budget Office estimates will save $210 billion over 10 years.”
This seems to depend on the day of the week we ask the CBO.
BILL PARKS says
In the past twenty years, the federal government increased our national debt to $13.56 trillion by borrowing $9.9 trillion. In that same period, from 1991 to 2010, the U.S. paid more than $7.5 trillion in interest on that debt.
The United States is a sovereign nation, having the full authority that is inherent in nationhood, including the authority and power to issue our nation’s money. When congress faces a budget deficit, it has the option of borrowing money or simply issuing it — as President Lincoln did during the civil war.
Borrowing Federal Reserve money is expensive, issuing American currency is free.
Interest on the national debt cost the U.S. $7,500,000,000,000 in the past twenty years. Interest payments made up 75% of the added debt in that period. This year, 2011, the interest on the debt is expected to add an addition $500,000,000 to the debt. If the government continues borrowing money, we will pay more than $5 trillion for interest in the coming decade.
The U.S. government can issue all the money we need or want debt and interest free.
The government is our only hope of stability. It is the only institution that has the authority, power, and flexibility to create a stable currency necessary to generate a sustainable economy. It can create money by fiat, lend money like commercial banks, pass laws to regulate the value of our currency, and it can fine-tune the money supply with taxes. No privately owned institution can do that job.
When government reassume its responsibility to issue the nation’s currency, prohibiting fractional reserve lending as a form of counterfeiting, the United States will prosper as never before. If it operated the banking system as a public utility, with the profits going to the treasury as revenue, the government could to pay off the national debt and eliminate almost all taxes, while proving abundant funds for economic development, social programs, rebuilding our nation’s infrastructures and converting our energy system to renewable fuels.
America has an able work force, tremendous resources, and there is work to be done – but we have a severe shortage of small pieces of green paper with the pictures of dead men on them. Our government can print our own money for us.
MBTroup says
“Our government can print our own money for us.”
Why haven’t they thought of this?
https://articles.cnn.com/2009-01-16/world/zimbawe.currency_1_zimbabwe-dollar-south-african-rand-dollar-note?_s=PM:WORLD
Ah!