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Are there alternatives to a government shutdown and the tidal wave of “budget cuts” proposed by Republican Rep. Paul Ryan and by President Obama’s Budget Committee of last year?
Yes! Here are some revenue raising and budget cutting options:
•To better fund Social Security, Congress should remove the salary cap on FICA deductions that appear on payroll slips. FICA pays for Social Security.
For some insane reason, no employee who earns more than $106,800 a year has to pay FICA on any income above this amount. Millionaires and billionaires should pay FICA on all income received from any source, without a “cap”.
•Those corporations that now pay no income tax, such as General Electric and Bank of America, should pay a Corporate Alternative Minimum Tax, similar to the AMT now applied to people. Corporations should pay either 10 percent of profits, or one percent of their gross annual revenues (whichever is greatest) as their annual tax share.
Such a Corporate AMT should also be applied by every state to any business operating in their state.
•Medicare and Medicaid should not be eliminated or greatly reduced, as proposed by Rep. Ryan. Instead, one way to control health care costs is to apply a national “price freeze” for five years so costs do not increase at two or three times the national inflation rate.
However, Medicaid and Medicare should be reserved for American citizens and legal immigrants.
•The Department of Defense budget, which more than doubled during the Bush administration, should be cut by 20 percent. That cut should be in hardware and weapons systems purchases.
But we should keep our existing personnel as they are the trainers of future service people and many are combat experienced. Payroll and medical benefits for veterans and active duty persons should not be reduced.
Base consolidations that save money should be done. And our spending on the Iraq and Afghanistan wars should end in 12 months, which would save billions in defense spending.
•Federal subsidies for oil companies, drug companies, new products and for agricultural monocrop businesses should be ended immediately. Although small, it would tell corporate America they need to pay for their own investments.
The only subsidies we should keep are those for alternative energy efforts such as wind, solar, geothermal, hydrothermal and nuclear plants that use the proven safe French nuclear reactor design.
•Budget increases for federal agencies should be held to the federal inflation index, which has been zero for the last two years. A limit good enough for Social Security recipients is good enough for federal agencies.
•We should oppose a national Value Added Tax on retail purchases, a proposal of last year’s Obama Budget Committee. While a Europe-style VAT would raise piles of money, it would hurt low and moderate income persons the most.
We do not need to take steps that add to the 50 percent of national wealth already owned by the top 5 percent of the population. Instead, a larger “luxury tax” on second homes, yachts, planes, jewelry and similar items should be applied to those who can most afford to pay--those making more than $1 million a year.
•Wall Street greediness caused the worst recession since 1929.
Since no one at Lehmann Brothers or other investment houses has gone to jail, we should tax every trade of stocks and bonds by anyone, with a focus on reducing the greed incentive for brokerages to play games that cost regular people their jobs and their homes.
•Any outsourcing of federal services should be done by competitive bidding that requires proof of competency, rather than be a payoff to political contributors.
Some federal work can be done cheaper and better by the private sector. But most federal employees are highly competent and dedicated to doing good work.
•Funding for Pell Grants, for NPR, for Planned Parenthood, for the National Endowment for the Arts, and similar efforts to provide learning, education and cultural exposure to all citizens should not be singled out for demolition, no matter how dire our budget crisis.
• Ending the Bush tax cuts for every income level, including the rich, would bring in an additional $370 billion to $500 billion per year in revenue. This would put the tax rates back to those in effect under Clinton.
Those rates gave us two years of balanced budgets. The Bush tax cuts, combined with the cost of two undeclared wars, created a large portion of our national debt.
Getting rid of exemptions, exceptions, subsidies and giveaways for corporate “citizens” and making some programs more sensible as in the FICA change, are the way to reduce borrowing without hurting people who are not rich.