Federal budget poses future threat to economy
By By Tray Smith
As Americans bemoan their deepening economic woes, they should not allow current trends to obfuscate future challenges. The fiscal dangers posed by entitlements, taxes, and infrastructure represent a much greater threat to long-term U.S. prosperity than do sub prime mortgages and housing values. The American Society of Civil Engineers estimates that the nation will need to spend $1.6 trillion over a five year period to restore its infrastructure alone. Medicare is already paying out more in benefits than it collects in payroll tax revenues, and Medicare Trustees expect that the program will run a deficit of nearly 3 trillion dollars over the next ten years unless current laws are changed. Social Security’s problems, although much less significant, are still substantial: Social Security Trustees project the system will begin paying more in benefits than it receives in revenues by 2017, and run out of reserve funds altogether by 2041.
If left unaddressed by Congress, Medicare, Social Security, and infrastructure needs together will become an unwieldy fiscal troika, burdening the federal budget well into the foreseeable future. These upward pressures come as the U.S. is already groping with the cost of its continued presence in Iraq, its slowing economy, and the stimulus package Congress passed earlier this year. Those expenses are projected to push the budget deficit over 400 billion dollars this fiscal year.
Yet, if members of Congress do address these problems; they may well do more harm than good. If long-term economic growth remains substantial, many of these challenges will become manageable. However, if Congress adopts a solution to these fiscal obstacles that undermines the economic growth needed to sustain federal programs, the result will be counterproductive.
Therefore, policy makers must develop creative ways to sustain government programs without raising taxes. But creativity is a rare commodity in Washington, where Senators run for President on a false premise of “change” based on unoriginal ideas and recycled white papers.
Senator McCain, whose reputation for straight talk has been undermined by his campaign’s dependence on spin, was correct when he said tax cuts are more critical than deficit reduction during this current period of economic anxiety. Tax cuts alone, however, will not be sufficient to address our long-term budget and economic needs. In order to enhance our competitiveness in the global market, the U.S. must fundamentally reform its economic policies to attract new business, new capital, and more jobs.
The most logical place to start is not by cutting tax rates, but by fixing the tax code. If Congress radically simplified the income tax regime, it could collect more revenue through more effective enforcement and more rampant economic growth. Congress could even raise tax rates and lower the tax burden simultaneously by eliminating the resources Americans are forced to expend on tax preparation software, accountants, and lengthy tax forms. Such reforms would provide the government with the revenues it needs to support federal programs without forcing individuals and businesses to yield excessive amounts of their income to Uncle Sam.
Tray Smith is a political columnist for the Atmore Advance. He is a student at Escambia County High School and can be reached at tsmith_90@ hotmail.com.