Close the tax loopholes
By: Sen. Bill Nelson,
After watching Standard & Poor’s performance in the Enron and housing debacles, it’s hard to stomach their decision to downgrade America’s credit.
Meh. Complaining about S&P's performance is like TV producers complaining about Neilsen ratings. You may complain all you like, but it's what the industry uses. In truth, we've been degraded by other agencies, almost a year ago by the Chinese equivalent of S&P, and nobody over here said a word. Frankly, I think S&P was right.
But even coming from S&P, there is a message we should hear: The finger pointing and hyper-partisanship has to stop. If it doesn’t, we really will be on the road to ruin.
Democrats need to see tea partiers as something other than debt-limit hostage-taking Republicans. And Republicans need to see President Barack Obama and Democrats as something other than big-spending socialists.
We’ve got to stop this attack madness. We have to bring civility back to the public square. We have to put the country back on the path to fiscal sanity.
To do that, we need to cut some $4 trillion to $5 trillion. We made a down payment on this with the $2 trillion dollars we cut just last week. Now we need to go further.
I believe you're suffering from what the doctors call “premature congratulations”. Your vaunted plan will not affect the big picture because that $2 trillion is in a 10 year plan and doesn't start for another three years (2014). We need to cut much more than that. Here's a before/after graph with and without your cuts:
To understand what we have to do, though, we first need to look at how we got here.
We went from a $236 billion budget surplus in 2000 to a $1.3 trillion deficit last year — and a record $14 trillion debt. A huge chunk of the debt comes from the wars in Iraq and Afghanistan. We’re bringing the troops home.
It's been reported that the total cost of those wars is about $1 Trillion. Too low? Let's triple that and say we spent $3T. 3/14, or 21%, is not a “huge chunk” in my book; huge starts at around 2/3 or 3/4. “It's the spending, stupid”, and stupid spending at that. But I tell you what: if you went back to the spending levels of 2000 the problem would go away! Don't want to do that? Didn't think so.
The implication here is the old “it's all Bush's fault”, which is a fantasy. Bush was no fiscal conservative, and had many bad policies (which, strangely, have all been retained by Mr. Obama) but the deficit for this February was more than the entire year of 2007! There is simply no equal in history for the deficit spending of this administration.
Agree or not, don’t you think most Americans were better off before the tax cuts than they are now?
Much of the rest of the debt comes from the economic downturn since 2008. That brings us to today. And there’s no mystery about what we have to do. It’s just common sense. In addition to the spending cuts Congress just made, we need tax reform. And by tax reform, I mean closing loopholes, special interest tax breaks and corporate subsidies. It’s just plain wrong to be protecting tax breaks for oil companies and to be rewarding businesses that ship jobs overseas.
As chairman of the Senate Finance Committee’s Fiscal Responsibility and Economic Growth Subcommittee, I’ve scheduled a hearing for early September to investigate closing many of these loopholes. Doing so will likely generate $2 trillion over the next decade. Add that to the $2 trillion in spending cuts we’ve made — and we’re in the $4 trillion range that we need to hit. It’s time to stop the shouting and bickering and political attacks. It’s time to show the world that America can take care of business.
Here's a few ideas for your consideration: we've deficit spent over 2.2 Trillion in failed stimulus, TARP and other ineffective programs. What if we said there was to be no income tax at all next year? The cost would be about the same as what we've spent. We'd borrow 100% of spending instead of 43% of it, but with some discipline, perhaps we could just get it down to doubling what we now borrow.