Author Archives: jackheidel

One way to cut spending

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The fiscal cliff is looming, the national debt is exploding and the economy is stagnant.  So what can and should Congress do to prove that it is serious about our urgent economic and fiscal problems?  Simply extending all of the Bush tax cuts and repealing sequestration amounts to kicking the can further down the road and is not a serious option.  Of course we need pro-growth tax reform, i.e. a major overhaul of our tax code to both simultaneously lower tax rates and curtail tax deductions.  But this is a big project and will take some time to be sorted out by Congress.

What can Congress do quickly, in a matter of weeks rather than months, to get the ball rolling?  The organization, Taxpayers for Common Sense, has recently provided a useful answer.  The report, Sliding Past Sequestration, proposes a plan to cut $2 trillion from the federal budget over the next ten years, or roughly $200 billion per year.  This is an example of a serious budget reform program of the sort Congress should initiate to begin to whittle down deficit spending of over $1 trillion per year.  In this proposal cuts are made in many different federal departments, including Agriculture, Energy, Interior, National Security, Transportation, and also Tax Expenditures.

Check out these possible budget cuts.  More than likely you will approve of some of them and find others to be less appealing.  Note that entitlement cuts such as for Medicare, Medicaid and Social Security are not included in this report.  Nor are cuts in education programs or social programs for low income people such as food stamps and housing assistance, for example.  Of course, adjustments in entitlement programs and social programs will also have to be made sooner rather than later.

For Congress to take the initiative to begin making big cuts in the federal budget will have a very positive impact on its public image.  There will be vociferous complaints from those affected by the spending cuts.  But this will demonstrate that the cuts are serious and will help Congress recover the credibility which is now so severely lacking.

The fiscal cliff

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What should we do about the “fiscal cliff”?  First of all, we have to recognize that it has been caused by a combination of reckless federal spending and an unwillingness to implement policies which stimulate private sector economic growth such as broad based tax reform, relaxation of onerous regulations and vigorous promotion of free trade.  This means that short term measures which merely drive up the deficit will accomplish nothing more than kicking the can down the road and are therefore not helpful.  We need a long term solution!

The most valuable single thing we should do right now is to start reforming the tax code along the lines of the Simpson-Bowles Plan.  Cut individual tax rates and offset revenue losses by limiting tax deductions.  Also cut corporate tax rates, offset again by limiting deductions.  I would also say to increase the tax rate on capital gains and dividend income from 15% to 20% (reversing one particular Bush tax cut!) which will still be a much lower rate than for ordinary income and therefore will not discourage risk taking by investors.

Growing the economy faster will shrink the deficit but we also need substantial spending cuts to make a bigger impact on trillion dollar deficits.  Of course, cutting $100 billion across the board from discretionary spending as the “sequester” does, is not the most sensible way to cut spending but we’ve got to get the job done!  So let the sequester stand unless Congress can agree on a more rational plan of the same magnitude.

Basically what I am saying is that our economic problem of slow growth and our fiscal problem of huge deficits are closely interrelated and that we are much better off to address both of these problems simultaneously.  For Congress to take the easy way out by 1) just extending all of the Bush tax cuts, 2) failing to make significant spending cuts and 3) raising the debt limit without substantial reform on taxes and spending, for Congress to proceed on this basis is to shirk its duty in a time of crisis!

Let’s hope that Congress can rise to this critical occasion and do what is sorely needed!

Solving our economic and fiscal problems

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“The Election winners must choose between fiscal calamity and compromise” said Robert Bixby, Executive Director of the Concord Coalition, in a blog post yesterday.  “There must be spending cuts, including reform of our major entitlement programs such as Medicare, Medicaid and Social Security.  And there must be tax reform that broadens the base, maintains progressivity and increases revenues.  And all of this must be, and indeed can be, done in a way that enhances economic growth.”

This is an excellent statement of our country’s dire fiscal condition at the present time, put very clearly but in a nonpartisan and non-confrontational way.  It is critical that our national leaders, all of them and from both political parties, focus their full attention and efforts, on solving this problem.  As a highly interested local office holder in Omaha NE, I will be using this blog format to state in a direct and unequivocal manner what action Congress and the President should take in the days ahead to put our nation on a sound and sustainable economic and fiscal track.

Our immediate goal must be to stabilize (i.e. stop adding to) the national debt and this means quickly shrinking the size of our annual deficit until it either disappears entirely, or is at least greatly reduced.

First of all, we need to do a better job of growing the economy.  This will not only put more people back to work, but will also raise additional tax revenue, which will shrink the deficit.  In the meantime, while we’re working harder to stimulate the economy and make it grow, we also need to get started on making huge spending cuts in our national budget.  Let’s cut from programs across the board, especially including entitlements.  This is not only the fairest and most nonpartisan way to attack the problem but will also achieve the biggest overall spending cuts.

In the weeks ahead I will be as specific as I can possibly be on where spending cuts can be made.  I will also try to stay locally focused.  In other words, I will be paying close attention to the Nebraska congressional delegation and what our own representatives are doing on tax and budget matters.  Please consider contributing your own ideas to this forum so that we can work together to effectively address our country’s urgent fiscal problems!

My purpose in creating this site

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I am so concerned about the federal deficit and the rapidly increasing national debt that I entered the recent Republican Primary for Nebraska’s Second Congressional District. The Primary was held on May 15, 2012 and the incumbent, Lee Terry, was re-nominated.  Mr. Terry went on to win re-election to an eighth term on November 6.

My platform was (and still is) to completely eliminate the deficit. I describe myself as a non-ideological fiscal conservative. By this I mean that I am highly focused on fiscal issues with no particular axe to grind besides cutting spending and increasing revenue through tax reform and economic stimulus.  Even though Presidents George W Bush and Barack Obama are primarily responsible for our huge deficits in recent years, it is Congress which enables presidents to spend money and therefore Congress bears much responsibility as well. My attitude is that any member of Congress who is not actively and clearly providing leadership in cutting spending also bears responsibility for our huge deficits.

At this point, having spent so much time and effort in the political process, I am still highly committed in a personal and emotional sense to addressing this issue. This website will be used by me to continue raising awareness on the very same issues about which I recently campaigned as an active candidate.