We need both spending cuts and tax increases to reduce the national debt. The problem is that the libertarian & conservative side never discusses tax increases. They talk vaguely about "economic growth" policies but there is nothing on the palette that'll drive the consistent 4+% growth that'll be needed to generate sufficient tax revenue to deal with the annual deficit. So we have to get creative (and politically brave) with tax reform...such that it does not kill productivity/growth. Why not cut taxes for businesses/individuals but create a temporary consumption tax - high enough to pay down debt but temporary so that it can be eliminated when the national debt falls below 50% of GDP. Add that to entitlement reform that reduces spending and serious regulatory changes that enable quicker and larger investment in industry and infrastructure, and we might see a change in the country's fiscal health.
While a temporary consumption tax sounds like it might work, it will likely become a permanent feature. As Cato's Adam Michel explains, consumption taxes affect individuals at all income levels (i.e., “everyone has to buy goods and services”), leading to substantial revenue increases that can significantly expand the size of the government. Considering the government’s track record, the probability of the initial 'temporary' label holding true is very low.
My understanding is that even if these lawmakers accept there is a problem, they know they'll get turfed out of office if they even hint about reforming entitlements as then their opponents will portray them as heartless monsters who are going to cut Social Security and make granny eat cat food. So they're basically just hoping to be out of office when we hit the fiscal wall. In order to reform you would need one party to have a FDR level supermajority in both chambers so they can take decisive action without fear of losing office. So, not gonna happen.
A Base Realignment and Closure (BRAC)-like fiscal commission would overcome those political hurdles. This commission, tasked with stabilizing the public debt, would be composed of independent experts. Therefore, the controversial entitlement reform would be outsourced to outside experts, shielding legislators from political risks.
We need both spending cuts and tax increases to reduce the national debt. The problem is that the libertarian & conservative side never discusses tax increases. They talk vaguely about "economic growth" policies but there is nothing on the palette that'll drive the consistent 4+% growth that'll be needed to generate sufficient tax revenue to deal with the annual deficit. So we have to get creative (and politically brave) with tax reform...such that it does not kill productivity/growth. Why not cut taxes for businesses/individuals but create a temporary consumption tax - high enough to pay down debt but temporary so that it can be eliminated when the national debt falls below 50% of GDP. Add that to entitlement reform that reduces spending and serious regulatory changes that enable quicker and larger investment in industry and infrastructure, and we might see a change in the country's fiscal health.
While a temporary consumption tax sounds like it might work, it will likely become a permanent feature. As Cato's Adam Michel explains, consumption taxes affect individuals at all income levels (i.e., “everyone has to buy goods and services”), leading to substantial revenue increases that can significantly expand the size of the government. Considering the government’s track record, the probability of the initial 'temporary' label holding true is very low.
See Adam Michel’s work here: https://www.heritage.org/taxes/report/progressive-road-map-soaking-the-middle-class
See the temporary taxes that became permanent here: https://taxfoundation.org/blog/temporary-could-mean-permanent-when-it-comes-taxes-0/
and here: https://www.americanactionforum.org/research/temporary-taxes-that-never-die-short-term-levies-have-lived-to-hit-taxpayer/
My understanding is that even if these lawmakers accept there is a problem, they know they'll get turfed out of office if they even hint about reforming entitlements as then their opponents will portray them as heartless monsters who are going to cut Social Security and make granny eat cat food. So they're basically just hoping to be out of office when we hit the fiscal wall. In order to reform you would need one party to have a FDR level supermajority in both chambers so they can take decisive action without fear of losing office. So, not gonna happen.
A Base Realignment and Closure (BRAC)-like fiscal commission would overcome those political hurdles. This commission, tasked with stabilizing the public debt, would be composed of independent experts. Therefore, the controversial entitlement reform would be outsourced to outside experts, shielding legislators from political risks.
For more on this, see here: https://www.cato.org/blog/designing-brac-fiscal-commission-stabilize-debt