Fast-forward 15 years and we have a very different fiscal proposal. In 2012, the federal treasury received the third-highest amount of revenue ever collected in our nation: $2.45 trillion (almost $600 billion more than the last year of the Clinton Administration). While American paychecks have diminished, federal revenue has increased, even under the “Bush” tax rates. But over the past five years, federal spending has also increased almost a trillion dollars. In 2007 we spent $2.73 trillion, and in 2012 we spent $3.54 trillion. If federal revenue is at record-high levels and we are still overspending by a trillion dollars, maybe the problem is our spending rate, not our tax rate.
The president repeatedly implies that the deficit can be resolved if we can identify a few “other” families and tax “them” more. Who would not support raising taxes on someone else to solve the fiscal problems we face as a nation? But, the math doesn’t work. Even the president’s largest tax demand, raises $160 billion a year to solve a trillion-dollar problem. A recent report by Ernst & Young illustrated that President Obama’s proposed tax increases on taxpayers making $250,000 or more would actually result in only $70 billion a year in additional federal revenue, which leaves a $930 billion hole in our budget every year.
During the negations it appears that the president is focused on avoiding the fiscal cliff, while Republicans are focused on fixing our debt and deficits. The House passed a tax proposal in July and sequestration offsets in May to solve the fiscal cliff, but the president and the Senate never reciprocated. As a country, we need to decide what is more important: moving beyond the fiscal cliff or addressing the systemic debt that brought us to the fiscal cliff? Unless we want an annual “cliff” problem, we must make long-term decisions to reduce our federal debt. If we cannot implement a plan to bring spending levels equal to or less than what we bring in, we cannot say we are serious about major debt reduction.
In short, until the president corroborates with Republicans on a plan that emphasizes major spending cuts to solve our debt crisis first and the fiscal cliff second, he is not offering a balanced approach. Smoke-in-mirrors accounting and fake spending reductions will not solve this crisis. If President Obama is intent on solving our debt and deficit crisis through increased taxes, he is better served to fully support the Republican calls for major tax reform through the proper legislative process next spring. Until then, we should extend the tax cuts on all tax brackets in preparation to actually solve the problem through reform, not just tweak rates. The current tax code exceeds 72,000 pages. It is burdensome and complicated and isn’t navigable by anyone without a CPA. That is something Congress can and should fix in an open-door, transparent process.
In days past we talked about how the national debt would damage our children’s future, now it is apparent that it is also affecting this generation right now. The leaders of our nation must come together to fix the debt problem, not just the fiscal cliff.
Lankford is a member of the House Budget Committee.