A Modest Proposal to Ease the Debt Crisis

Remember 2007?  Was Government too small by 40%?

For several days the establishment media hyped the majestic arrival of President Obama to the debt ceiling debate.  But after several urgent, crucial, Oval Office Meetings no agreement is even close.

Republicans want major spending cuts in exchange for their votes for a debt ceiling increase.  Obama and the Democrats want to increase spending – “targeted investments” – but might agree to some token cuts and accounting flim flam that can be portrayed as cuts in exchange for a tax hike on “the rich,” earning over $200,000 including 2 million small business employers.

Liberty Works humbly offers this chart to put the problem in perspective and suggest a strategy.

We’ve published the chart at the bottom of this article several times.  It shows the origin of the current crisis.

Spending is up 105% since 2001 and up a whopping 40% just since 2007!

Few if any Americans would remember 2007 as a year of national suffering because the federal government spent 40% less than it does now.  Barack Obama’s campaign began in 2007 and he did not run on a promise to increase federal spending by 40%

Cutting back to 2007 spending levels would still leave significant deficits.  But if the deficit had shrunk from $1.3 Trillion in 2010 to $500 – $600 billion this year, financial markets would have been calmed and the world would not be looking for an alternative reserve currency to the dollar.  We would not be living through the threat of another wrenching financial crisis, again manufactured by politicians in Washington.

Even though the crisis was caused by reckless, audacious spending increases, the President, the Democrats and the media insist that:

Revenues must be part of the solution.

OK, fine.  Hard working, tax payers have already done the revenue part.  Because the economy has improved slightly, revenue this year is already up 8% over 2010 without any tax rate increases, even with a temporary, one year discount in the Social Security payroll tax. Revenue will likely go up even more in 2012.

Since the government-caused recession began in 2008 most Americans have had to cut their household and business budgets and reduce their standard of living even as government spending exploded.  Many now wish they still lived as well as they did in 2007 when unemployment was at 4.7% (Vs 9.1% today) and the deficit was $161 Billion.  This year the government borrows $161 billion every five weeks!

Let’s launch a major, “GIT-R-DONE” email campaign targeting Congress.  Revenues are already up. Now it’s time for the spending cut part.  This is not mission impossible.  Congress and the President can consider 2007 the baseline.  Any increases above 2007 levels can be offset by reductions below 2007 levels elsewhere. No more commissions.  No more news conferences.  No more dramatic announcements of grandees meeting in mahogany conference rooms.  Just do it!

 

6 Comments so far

  1. SammyT on June 28th, 2011

    Cut spending by 40%? Ask nothing from millionaires? It would crush the economy, throw millions more out of work. And where would the unemployment benefits come from?

    You gotta be crazy.

  2. JustPlainBob on June 28th, 2011

    SammyT

    There aren’t enough millionaires to cut the deficit by a trillion dollars even if you took all their income. Not even close. Besides, if you read this blog you’ll see that half the rich they want to take higher taxes from are small businesses. What an idiotic idea.

    No matter what the problem is liberals like Obama ALWAYS ALWAYS ALWAYS say tax the rich more. It’s their trick to distract people like you from the truth.

  3. Drew on June 29th, 2011

    ….and it doesn’t take much to distract the likes of SammyT….

    But BoomerJeff is spot on. The notion that a government 40% larger than just 5 years ago must be rectified through tax increases is just ludicrous. Are there any private individuals out there that have increased their spending by that much? I don’t think so. Try 2-3% per year increases.

  4. VotingFemale on June 29th, 2011

    Slashing our budgets by 40% is impossible. No serious person would even think of this irrational idea.

    Republicans get mad when we point out that their plan is to deprive our seniors and our at risk children of vital medical care in order to pay for tax cuts for the rich. But what other explanation can there be for this blogger’s idea of cutting investments in people almost in half?

    The non-partisan Congressional Budget Office says taxes must go up to close the deficit.

    I agree with one thing he said “just do it.” The rich had a decade long party. But now its time to send the orchestra home, cork up the champagne bottles and call cops to stop the noise. The Bush tax cuts for the wealthy have to be repealed. Corporate tax loopholes have to be closed. No more subsidies for Big oil. Just do it!

    Do we have to have corporate jet tax breaks instead of health care for our kids? Is that really the kind of society we want?

  5. Ancient War Horse on June 29th, 2011

    Why not cut back to 2007? The shocker is that spending has increased 40% in only four years, not the idea that it should be cut down to where it was then.

    Questions for SammyT: Do you athink the country is 40% better than it was in 2007? Are you 40% better off?

    I’m just an old retired trigger puller. But even I can see the insanity in all this uncontrolled spending.

  6. Drew on June 30th, 2011

    VotingFemale is obviously innumerate.

    Corportate jet taxes couldn’t pay for a day’s worth of spending. The number of senior’s hasn’t jumped by 40% in 5 years. The reviled Bush tax cuts are only a small part of the issue. After all, they were implemented in 2003, and spending is up 40% (40%!!!) in the last five years. And the amount of taxation required to keep up with spending would simply bring the economy to its knees.

    Why don’t you think about that and get back to us when you have a coherent and quantitative argument.