At the same time that millions of Americans were filing their tax returns, the ratings agency Standard & Poors changed its outlook on U.S. bonds from “stable” to “negative.”
The shock waves that rattled financial markets weren’t the result of new information -- after all, investors already knew about U.S. debt -- but, instead, they were the result of a high-profile vote of “no confidence” in our political leaders.
Who can blame them? The best either side can do is offer plans, loaded with gimmicks, that promise to balance the budget by the time we all own flying cars. You don’t have to be a cynic to doubt their seriousness.
So, what would a serious effort look like? S&P chief economist David Wyss recently told The Washington Post that the U.S. must address both spending and taxes. He noted what I have said before on BreakPoint: “Even if we eliminate all nondefense discretionary spending, the deficit would remain much too high.” By 2050, “entitlement spending alone will cost more than the U.S. tax system raises.”
By “entitlement” he means Social Security and Medicare which, according to the polls, most Americans would exempt from cuts or even reforms. They are cheered on in this flight from fiscal reality by many liberal politicians who depict those who want to reform entitlement as heartless fiends.
On the conservative side, flight from reality is related to what Wyss says is the other necessary ingredient in reducing the deficit: raising taxes.
While emphasizing that he was speaking for himself and not Standard & Poors, Wyss said what almost every non-ideologically driven economist will tell you: “tax hikes have to be part of any budget balancing process.”
The conservative position is that advocating tax hikes, even to reduce the deficit, is the moral equivalent of advocating the drowning of kittens. Like the liberal position, it is also popular among the American people, who only favor tax hikes on “the rich.” And by “the rich,” they mean “anybody other than me.”
Should we reform entitlements and rein in government spending? Of course! But at the same time, we have to fix our ridiculously unfair and complicated tax system. I talked to a very wealthy man recently. I joked that he must pay Uncle Sam quite a bit in taxes. He laughed at me and said “Don’t you realize it’s only the middle class that pays taxes? Those of us who have learned how to make a lot of money have also learned how to beat the tax code.” He’s right. After all, according to reports, you may have paid more in federal taxes this year than General Electric did.
Bottom line: The political status quo and the financial mess it has created can’t go on forever. It will destroy our economic stability.
So, what do we do? Well, as I say on today’s Two-Minute Warning, which you can watch at ColsonCenter.org, is for the American people to reject the political ideologies holding us captive. We are in a crisis, and that requires asking basic questions about the kind of government we want, can afford, and how we want to pay for it.
And as Christians, we have to ask examine our own motivations -- are we dancing to an ideological tune, or are we relying on revealed truth to show us the way out of this mess?