February’s crisis of the month is the looming “sequester,” which will automatically make deep cuts in government programs unless Congress gets its act together and passes an alternative fiscal plan by March 1.
As usual when it comes to money issues, Democrats and Republicans are at an impasse on how to avoid the sequester. Democrats want to replace it with a mix of tax increases and program cuts. Republicans want government services such as air traffic controller staffs, food stamps and health programs for children to take the brunt of program cuts, with no cut to military spending and no increase in taxes.
Both sides have it wrong. If the concern is to help the economy recover, we should raise taxes on the wealthy and not cut any programs. The government will spend every penny it gets, which will pump up the economy. True enough, poor people and much of the middle class support the economy by spending most of the money that they don’t pay in taxes on goods and services. History demonstrates, however, that the wealthy will invest much of their tax savings in ways that do not help the economy, for example in stocks on the secondary market (which means the company that originally issued the stock gets nothing) and overpriced art work. That’s why we should raise taxes on the wealthy only.
I agree with Paul Krugman, who in many of his New York Times articles over the past months has made the case that addressing the deficit can wait until the country has stabilized the economy. But if we do want to address the deficit right now, we should do it by addressing the two reasons why it is too large: war-time military spending and the Bush II reduction of taxes on the wealthy. That means raising taxes and cutting the military, but not other programs.
When thinking about cuts in government spending, ask yourself these questions:
- Would you rather see children in the United States have enough to eat or the U.S. stay in the senseless, objectiveless war in Afghanistan?
- Would you rather repair bridges and put decent mass transit into our mid-sized cities or continue developing drone technology?
- Would you rather see us work on green energies or develop that new-fangled aircraft that Congress is insisting be built even though our military leaders say we don’t need it?
- Would you rather cut our nuclear program (which can destroy all known civilization many times over) or cut air traffic controllers and slow down the takeoff and landing of all flights across the country.
That’s why I advocate that we replace the sequester with a mix of tax increases and cuts only in military spending.