Dear Editor:
Balancing the federal budget will be extremely difficult, but it can be done in a way that is both fair and that emphasizes key national priorities. Here are my recommendations on key principles, cutting spending and raising revenue:
• Do not balance the budget on the backs of the poor and the middle class.
• Increase investments in energy (including conservation and renewable energy), education and infrastructure. Other priorities include environmental protection and research. Such investments will also help put people back to work.
Here are the best ways to cut spending:
• Pull out of Afghanistan, or at least dramatically reduce our presence there.
• Stop spending on weapons systems that the Pentagon doesn’t want.
• Close some military bases, especially overseas. We can certainly reduce our presence in Germany and Japan.
• Cut Medicare spending by eliminating the crazy provision that bars the government from negotiating lower rates with the drug companies. Emphasize evidence-based medicine, which would cut spending on wasteful procedures.
I agree with Democrats that we need to eliminate tax subsidies for the oil companies. Likewise, I agree that we need to raise tax rates on people making over $250,000 a year. But we need to do much more than that.
So here are my thoughts on other aspects of the revenue equation:
• Cut loopholes, both for business and individuals.
• Increase enforcement of the tax laws.
• Raise the capital gains rate. The principal beneficiaries of the lower rates on capital gains are the wealthy — some of whom don’t work at all.
• Reduce some tax credits, including those for home mortgages, charitable contributions and employer-paid health insurance. However, these reductions must be crafted very carefully so that they do not fall on the middle class and keep the impact on charities to a minimum. For example, cap the deduction for charitable contributions at $50,000. Eliminate the mortgage deduction for second homes and cap the deduction for first homes at $500,000.
• If necessary, increase the rates on people earning less than $250,000, perhaps even on incomes as low as $50,000, although any percentage increase on those with incomes under $250,000 should be far lower.
• At the same time, we need to help the middle class with a permanent fix to the alternative minimum tax.
My proposals will require some tough choices and real courage in Congress and the White House. But as I indicated above, proposals along these lines reflect the need to cut spending, preserve national priorities and raise revenue if we are to balance the budget and do it in the fairest possible way.
William Armbruster