Tuesday, December 23, 2014

Cut Spending First

     The Republicans have always maintained, since Reagan, that we need tax reform The reform takes many forms and has many faces. There is the old guard that wants to cut the marginal rates. There is the crowd that wants to consolidate the brackets into a two. Then there is folks, like me, who feel that a flat tax is the best way to reform our tax code. Any of these method are preferable to the current state of affairs. However, I feel that there is a much more fundamental challenge that needs to be surmounted. We have to reduce spending. Now you may say that we can do both at the same time. I disagree. Here's why.
     In the last 75 years we have seen three major tax reforms. John F. Kennedy reduced taxes in the early 1960's. Ronald Reagan reduced and reformed the tax code in the 1980's. George W. Bush reduced tax rates in 2002. Each time we saw economic growth, and increased revenues. Also, each time we saw dramatic increases in government expenditures. Each of these Presidents did the right thing, but failed to stop the expense of the balance sheet from going out of kilter. We can go 12 rounds and point fingers, but the system is broken and it needs fixing.
     Until we reform Social Security, Medicare, and other entitlements the balance sheet will never get balanced. I feel strongly that the GOP can seize the moment with a positive agenda. 

          a) Social Security
              1. Guarantee Benefits for existing retirees. 
              2. Transition those 35 and younger into a voucher based system.
          b) Medicare
              1. Guarantee Benefits for existing beneficiaries. 
              2. Transition those 35 and younger into a voucher, privatized system.
          c) Medicaid
              1. Block grant medicaid dollars to the states. This will ensure maximum help and minimal                       fraud and abuse. It will also allow the states to come up with plans that are more efficient                     and cost effective.
          d) Defund Obamacare
          e) Cut spending back to 2008 levels and then cap them.
          f) Pass a Constitutional Amendment that would require a balanced budget, except in cases of                   national emergency or war.
     These are common sense reform that can set us on a path to fiscal responsibility. After these steps are taken, than we can pursue tax reform. I personally favor a flat tax but there are several other options out there. My only point is this, taxes have gone down and up over the last several decades, but spending has continued to rise. We need to cut spending first. 

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