House and Senate budget conferees have begun meeting in an attempt to head off another potential government shutdown when the latest continuing resolution expires, on January 15. In theory, the committee is supposed to report no later than December 13, but few on Capitol Hill expect them to come up with a deal by that deadline. As usual, the two parties are at loggerheads over taxes and spending. The Democrats want more of the former and none of the latter; for Republicans, it’s the reverse. Another crisis looms.
But there is a way that the two parties can come together to solve this problem, if members are willing to compromise.
It is important to understand that a compromise doesn’t require new taxes. According to the Congressional Budget Office, revenues will return to their historic average without any new tax hikes. And, between the new taxes in Obamacare and the fiscal-cliff deal last December, Democrats have already pushed through more than $2.8 trillion in new taxes over the next ten years. The basis for any budget compromise must come on the spending side.
And there’s reason to believe that this can be done. Over the last few years, both Democrats and Republicans have suggested ways to cut spending, only to be blocked by the other party. Now, however, is the time for both parties to cut programs even if they are championed by special interests in their parties. There can be no more “sacred cows.”
To show how this could be done, scholars at the Cato Institute have put together a plan that balances the budget without tax increases and reduces our dangerously high debt burden, by cutting $3 trillion over the next ten years. It builds on good ideas from both Republicans and Democrats, liberals and conservatives, to expand individual freedom and reduce the burden of government.
Cut Corporate Welfare: For too long both parties have endorsed giveaways to major corporate interests. This is not even a question of dubious tax breaks — which, it can at least be argued, allow people to keep more of their own money, even if the tax breaks are distortionary — but rather of direct payments and subsidies. Such corporate welfare has nothing to do with capitalism or free markets. Among the worst examples are agricultural subsidies, included in the “farm bill” currently making its way through a conference committee, and energy subsidies, including such notorious boondoggles as Solyndra. Phasing out farm and energy subsidies would save $160 billion over the next ten years.
Michael D. Tanner is a senior fellow at the Cato Institute, heading research into a variety of domestic policies with particular emphasis on health care reform, welfare policy, and Social Security. His most recent white paper, "Bad Medicine: A Guide to the Real Costs and Consequences of the New Health Care Law," provides a detailed examination of the Patient Protection and Affordable Care Act (Obamacare) and what it means to taxpayers, workers, physicians, and patients.
NEW TIME Today, at 9:30 AM PT: Get the Market Movements in Advance: William's Edge Webinar for January 30th, 2014 | John Ransom
NEW TIME Today, at 9:30 AM PT: Get the Market Movements in Advance; Williams Edge Webinar for January 26th, 2014 | John Ransom