Why raise taxes? There are better ways.

I note a news report this morning that the Secretary of the Treasury, Mr. Timothy Geithner, has contributed his two cents worth to the current debate over the authorized debt limit.

Treasury Secretary Timothy Geithner said Tuesday that a deal to raise the legal debt limit, which he expects to be completed in the next few weeks, will be only a short-term “down payment” on solving the nation’s debt problem, and that it would be "irresponsible" to reduce the massive federal deficit anticipated over the next ten years with spending cuts alone.

What is needed, he said, is a longer-term deal on a “balanced framework” that includes “revenue increases through tax reform.”

. . .

“I think for it to work for the economy you need to have a balanced framework,” Geithner told a Washington, D.C. gathering of CFOs from major corporations.

“If you try to do this, the magnitude of deficit reduction we need--and we need about $4 to 5 trillion in deficit reduction over the next ten years--to try to do that only on spending cuts in parts of the budget would be irresponsible and really not achievable politically,” said Geithner. "You can't pass the budget without that.

“So, you need a balanced plan that has modest revenue increases through tax reform as well as some near-term spending savings and long-term entitlement reforms,” he said.

. . .

The national debt is now $14.34 trillion. This year, according to the Congressional Budget Office, the federal government will run a deficit of $1.4 trillion. Over the next decade, according to the CBO, the budget proposed by President Barack Obama would run up deficits totallling $9.5 trillion.

. . .

Geithner outlined a two-step process that would start with a deal for a short-term increase in the debt limit paired with some spending cuts followed by a longer-term deal for fiscal reform.

“So whatever we don’t do in the down payment we’ll have to do in the next couple of years,” said Geithner. “And if Congress can’t act, we want an automatic enforcement mechanism that locks in the deficit reduction savings we need.”

There's more at the link.

*Sigh*

Don't you get tired of hearing politicians pontificate? And make no mistake, although he's the Secretary of the Treasury, that's a political appointment, so Mr. Geithner is as much a politician as his boss, President Obama.

I have a few responses to Mr. Geithner:

1. By 'revenue increases through tax reform', what you really mean is 'increased taxes'. Don't try to weasel your way around the subject - come out and say what you mean.
2. I wouldn't trust any Administration, much less a tax-and-spend juggernaut like the present one, with increased tax revenues. If you want more tax money, you're going to have to earn it by cutting down your expenditure by a very meaningful amount. Right now, the government is borrowing 40c of every dollar it spends. That's completely unsustainable, and criminally irresponsible to boot. If you haven't got the money, don't spend it!
   
3. Rather than increase taxes, I have a better idea. Special interests have carved out all sorts of sweet deals for themselves, with tax rebates here, allowances there, and so on. Let's take the bull by the horns and cancel any and every tax rebate, allowance and deduction on the books. Individuals and businesses will simply pay the percentage tax they owe on their gross income, without deductions. Sure, it'll hurt - but it'll hurt the special interests most of all. Let's force them to pay their fair share, without the tax shelters their tame Congressional representatives have so obligingly erected for them.
4. Another idea: kill all corporate subsidies. I've got no problem helping the small farmer; he's the backbone of the country, in more ways than one. However, if an agricultural conglomerate like Archer Daniels Midland can make billions every year out of agricultural subsidies, something's terribly wrong. ADM can do without the subsidies, and fish or cut bait. The same goes for the ethanol subsidy. It's costing the US government more than $6 billion a year. Why??? If ethanol is that good an idea, it'll sell itself. Why should taxpayers have to subsidize refineries to that extent?
   

I reckon those steps would be a good start, and would raise and/or save most of the money we need to balance the budget. How about it, readers? Any better ideas?

Peter