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- Trump and the immigration issue (03/23/16)
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A hybrid approach to solving our economic troubles
I am becoming increasingly convinced that the nation's economic troubles are beyond our ability to solve.
The two sides of this financial issue both pose radically different solutions. Unfortunately, both approaches lack the substance to affect long-term improvements.
The Democrats portray the problem as one of revenue. If only we would tax the rich among us, we would generate enough new revenue to fight our way out of this mess. But that argument ignores the math of the equation. Yet it's an effective emotional argument leading to an election year.
The Republicans believe the solution revolves around massive spending cuts without the need for new revenue. But that argument ignores the massive uprising from the entitlement recipients that would shake the very foundations of our fragile society.
Thus, it appears to me that a hybrid of these two approaches is the only solution that is viable from a financial standpoint. However, financial viability is far distant from public acceptance.
And therein lies the rub.
The Republicans can take the upper hand in this discussion by advocating for a higher corporate tax and higher tax on wealthy individuals. They can also steal some thunder by proposing a cut in defense spending and the sacred cow in our region, farm subsidies.
Then the Republicans can call for reform from the thousands of programs that fall under the entitlement tent. They can propose, for example, taxing all income for Social Security purposes, not just the first $100,000 or so that is currently taxed.
By this pre-emptive strike on the foundation of the Democrat's argument, the GOP can then demand substantial entitlement reforms. A failure to agree on these cuts would put the Democrats in a position of economic folly. But then again, that's familiar territory for many Democrats.
Those affected by the higher taxes will complain and then, most likely, pass along those higher taxes to the consumer.
The real chaos will come from the entitlement cuts. Far too many of our fellow citizens embrace the entitlement life. They know nothing else. They more often than not come from entitlement families who depend on taxpayers to provide their daily needs.
The true discussion deals with the emotional issue of fairness. Most taxpayers are willing to pony up more of their hard-earned wages to help those truly in need. But there is a perception -- perhaps a reality -- that far too many able-bodied folk are living off taxpayers instead of attempting to provide for their own needs.
When it comes to helping this population, most wage-earners want to draw the line.
Politicians won't make that distinction. They should.