The most crippling aspect of American politics is that policy proposals are treated as negotiations rather than as rational plans for a road forward. For example, both political parties claim they are championing a "balanced" approach to deficit reduction because both have adopted mutually disagreeable policy concessions. This view neglects the fact that policy is not an "either-or" situation and that there is a multitude of other options on the table that are not even part of the discussion.
First off, cuts to Social Security should not even be part of the discussion. Although income tax rates have fallen to historic lows over the past few decades, for many middle and low income workers the payroll tax (which funds Social Security) has made up the difference in their tax burden. As a result of the increased payroll tax, Social Security is financially sound until 2033, even after factoring in the stagnant world economy and sluggish recovery. Social Security may make up a large portion of government spending, but it is not a driver of the deficit or the debt. The people have paid for this program, and it should not be cut. Deficit hawks who propose cuts to Social Security would turn it into a Ponzi scheme and rob future retirees of their benefits.
Therefore, if Republicans want to bargain with Social Security cuts, they must advance a rational position as to why slashing Social Security spending would be good for the country as a whole. If the program is paid for, it is not a driver of long term debt, and should not be on the negotiating table. Democrats should ignore this red herring and hold strong to their positions. Abandoning an irrational policy proposal should not count as a concession; it is simply what reasonable lawmakers should do. It is what they are elected to do.
On the other side, raising the top marginal tax rate is something that Republican lawmakers will not accept. The idea that the rich are the job creators and the drivers of our economy is an idea that I detest and thoroughly disagree with. Nevertheless, it is a foundational tenet of conservative economics, and is not a position they will retreat from. Grover Norquist's despicable pledge and the reelection hopes of Republican Congressmen further complicate the issue. The fact of the matter is that Republicans will not retreat from a tax policy that favors the wealthy, because they fervently believe that such a tax policy is best for all Americans.
And this is where the talking heads and politicians are stuck. Democrats will not give up cuts to Social Security, and Republicans will not give up historically low tax rates for high-income individuals. Because of the myopic view that politics is a dichotomy, politicians claim that a balanced approach must involve concessions on both of those points. That view is consigning ourselves to a policy that no person will fully support, and that will likely fail.
There are other options on the table that both conservatives and liberals should agree upon that would lead us out of the financial crisis, but they are not being discussed. For instance, the tax code is horribly complicated and biased toward special interest groups and lobbyists. We now have a bipartisan consensus that removing loopholes and simplifying the tax code would be good for the country, and in the process could raise revenues. Opt for tax reform rather than raising the tax rates. Although most liberals would prefer the latter approach, political reality makes that move impossible. So take the next best thing and remove the many tax breaks that only the wealthy can enjoy, like carried interest, off-shore hiring incentives, and tax havens like the Cayman islands and Delaware. (Many large corporations claim their center of operation is in Delaware because of the preferential tax code there, even though their stated address is most often only a PO box. This policy robs every other state of valuable tax revenue and is just plain stupid. Corporations should pay the taxes of the state in which they operate, not where they collect their mail.)
As for ways to cut spending, there are many. First, prison reform would save billions of dollars every year. Literally billions. Currently there is a major push, especially in the south, to privatize prisons, which leads to worse conditions for prisoners and higher costs for taxpayers. Imprisonment is not a profitable enterprise, and should not be subject to free market pressures. It is immoral to make money off of another's incarceration; doing so is simply modern slavery. America is the most incarcerated country in the world, home to only 5% of the world's population, but 25% of its prisoners. That does not sound like the "land of the free" to me.
A second, related strategy would be to end the war on drugs. Federal law currently classifies marijuana as a schedule 1 drug, which lumps it in with meth and heroin. When questioned on whether marijuana is as dangerous as other schedule 1 drugs, the DEA chief could only respond with the line "We believe that all illegal drugs are dangerous." This is stupid, and leads to hundreds of thousands of drug arrests a year - destroying the future employment chances of many otherwise-successful individuals. Many employers will not hire a felon, regardless of how qualified he or she may be. The fact of the matter is that marijuana is not a dangerous substance, has medical benefits, and is not a gateway drug. Legalization (or at least decriminalization) would save billions of dollars a year in law enforcement costs. It would also help to curb the power of Mexican drug cartels, because marijuana could be purchased through safer, legal channels. Legalization also creates another taxable commodity, rather than leaving all of the profit in the black market. The reality is that people will smoke pot regardless of its legal status, so failing to tax it is just leaving money on the table. I see no benefit in marijuana prohibition, and I see great gains in its legalization and taxation.
Another avenue to save money is to reduce America's imperial footprint abroad. We have over 150 active military bases worldwide, while no foreign country boasts such a privilege inside our borders. This costs taxpayers billions of dollars annually in operational costs and does not make us any safer. We can begin the process of closing these bases and finally realize that the Cold War ended 20 years ago. It's time to come home, and start some nation building in the USA.
There are many other proposals that I have read that do not involve raising marginal tax rates or deep cuts to entitlement programs, but the conversation is stuck on that one point. What needs to occur is public pressure to change the discussion, because both sides have dug their heels in so far on this particular issue that no progress can be made. Take the modest concession of tax reform and run with it, then cut federal spending in ways that do not impact the elderly, the disabled, the poor, or the infirm. To me, prison and drug reform is a no-brainer that saves millions of dollars and keeps families and communities more stable. Similarly, reducing the imperial presence of America abroad reduces our negative image and saves billions of dollars. It is hard to characterize America as the "Great Satan" if we turn our sights inward and work to build a better country. There is perhaps no move that would improve homeland security so much as bringing the troops home - and there is a lot of nation building to be done stateside. Let's get out of this ridiculous back and forth on tax rates and start discussing a path forward. The tax code isn't everything, and there is a lot of other work to be done.
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