There has been much discussion and talk about this so-called fiscal cliff that is staring America in the face. If an agreement is not reached by January 1st, the Bush tax cuts will expire and many spending cuts will kick in. This double whammy scenario will have a very negative impact on our economy and will no doubt lead to another recession. But what is the right solution to this mess and is anybody really confident a deal can be reached?
A lot of debate is going on how to increase revenue and where to cut spending. As the January 1st deadline approaches, these talks will no doubt get very intense. Both sides have totally different views on how to increase revenue and it will be very interesting to see what spending cuts will be made. Whenever you bring up entitlement reform, people’s emotions tend to run high but it is a necessary evil. Medicare is going bankrupt and with the baby boomer population aging, the last thing we need is for Medicare to run out of money. It would be devastating to this country and put undue hardship on many seniors.
I think a few things need to be added to this debate. For those who still do not get it, the best to increase revenue to the government is through good economic growth and prosperity. And how do we get that growth? We get people working again and earning more money!! With the unemployment rate so high in this country, it is little wonder that the government cannot produce the revenue it needs. They need a strong tax base and with this many people out of work or underemployed, they will fall short every time. Increasing the tax rate of high wage earners is really a foolish idea. It only has a very small impact on the debt and will certain harm economic growth. Why penalize the job creators and investors of this country? I fail to understand the logic of people including the president who say the rich must pay their fair share. They certainly pay more than their fair share!! I cannot blame some guy with a lot of cash for being hesitant to start-up a business at this time. These people do not need to have their taxes go up especially in difficult economic times.
Another thing that is often not mentioned is the impact of Obamacare on our deficit. Already, you are seeing companies cut back workers and reduce people to part-time positions. If this trend continues and the unemployment rate goes up again, then how are we going to generate that lost revenue? The cost of this massive plan has already tripled and sure to increase even more. Can this country afford this? How are we going to pay for it? I wish those involved in the talks would consider how Obamacare, could affect the deficit and the economy in general for the next ten years.
With the economy struggling as it has, more people are relying on government programs such as food stamps, Medicaid and unemployment insurance. These programs cannot continue at its current pace. Sooner or later, the money will run out and then what? A good vibrant economy does not have these problems and spending on those programs. A poor economy just adds more spending to all these entitlement programs
I hope both parties can come together with bipartisan cooperation to reach a deal. If not, our country could be in some serious trouble. I just wish the participants in these talks would use some good old economic and business common sense in finding a solution.