Constructive Ambiguity: What’s Needed in the Debt Ceiling Debate
While I agree with those who argue that we need less government spending rather than higher tax rates, their game of chicken over the debt ceiling makes me very nervous. I’m afraid the other side will win by doing nothing, even though win is not the right word. What we need is something I’ll call “constructive ambiguity,” or language that will enable both sides to save some face.
In a recent interview on CNBC, my old boss, Alan Greenspan, suggested that something commonly called tax expenditures might serve such a purpose. He mentioned that the recommendations of his Social Security Commission in the 1980’s were accepted by both parties in part because they interpreted the change through their different perspectives. I asked him to elaborate, and he gave me permission to quote him as follows:
“The best example I know occurred with the compromise agreement during the National Commission on Social Security Reform in 1983, where the recommendation of taxation of benefits of higher-income groups was hailed by the Democrats, but also by Republicans who interpreted the move as a cut in benefits. Both agreed to the statutory language implementing the change, but for different reasons. The situation with tax expenditures has much the same dynamic.”
The precedent has already been set for Schedule A deductions to gradually phase out at higher income levels as well as the value of dependents and other deductions from taxable income. While that always irritated me, it’s better economics than higher marginal income tax rates.
A broader base and lower rates is the way to go. Too bad reducing the primary home mortgage exemption would be an untimely candidate for base broadening. Too bad it wasn’t done several years ago. Too bad compromise is necessary, but I’m afraid it is.
Bob:
I have heard you speak at the Dallas Rotary Club for years. I have enjoyed your jokes as well.
But I have to disagree in this situation. I just sent the following to my Senators and Congressman.
“It is critical that the Republicans not give into the President. No new taxes. Cut spending. Do not raise the debt ceiling, demand a balanced budget amendment if nothing else, starting immediately.
The debt has gone up about $16,600.00 for ever man woman and child in this country over the last three years. That is insane.
We don’t have a revenue problem we have a spending problem. The top 5% of wage earners already pay over 50% of the income taxes. How much more should they pay? Why do 52% of Americans pay nothing, shouldn’t they have “Skin in the game”?
If you continue to let Obama pander “bread and circuses” to the masses we will go the way of the Rome empire, on to the dust heap of history.
Please stand up for what is right and I will stand with you.”
Republicans/Conservatives/Libertarians?etc. have to make a stand at some point. We are already on the slippery slope to disaster. If we don’t put a piton in now we won’t be able to after we go off the edge of the cliff.
Charles Read
A tax increase by any other name is still a tax increase!
I agree completely with Mr. Read. Compromise with the ‘nanny state’, big government forces (democrat as well as republican) is what brought us to this precarious point in the first place. Compromising with what is wrong and does not and never has worked for America is not what’s best for our country. Stop the spending NOW. Closing all tax loopholes will bring greater additional revenue than increasing taxes, and before we even think about means testing the American taxpayer, lets’ start with means testing our Congress regarding their salaries, pensions and benefits. Yes, EVERYONE needs to have skin in the game, at every level of income, and the easiest solution is the flat tax. Reverse direction and restore our great nation to what it was before FDR and the progressives. The restoration can begin now, or rest assured it will happen with the second ‘freshman class’ and new majority in 2012! I look forward to the arrival of that day.
Mr. McTeer,
You obviously have had too much FED Kool-Aid.
You are still carrying the FED front.
You and the FED need to be Repealed.
Americans do not negotiate with Economic Terrorists named Obama and the Federal Reserve.
Respectfully,
Charles Lukens
We have a number of problems – none of which cannot be solved with proper leadership. That’s our biggest problem.
In the same spirit of “saving face” of the parties, why not limit Medicare and Social Security benefits for the wealthy to what they have paid in plus cost of living adjustments or simple modest interest, and means tested based upon net worth?
Dems like hitting the rich; GOP likes cutting entitlements; it’s perfect. I hang with several wealthy retired Republicans that disliked this proposal as I stated it to them face to face, but I believe it to be fair.
Ambiguity, constructive or otherwise, strikes me as “DC Speak”. The heart of the question is what do we wish to accomplish, do we want to make a deal whereby the politicians can go home once again and tell their constituents that they won the argument, or brought home the bacon?
I think there are a constituent group who want their representatives to tell the truth and win arguments based on strong constitutional principles. Washington may not have received the message yet, but they will, hopefully not in the mode of the Greeks.
Raising the debt ceiline is a no-brainer. The money has already been appropriated! What’s necessary is to obtain in exchange concrete assurances that spending will decrease. However, good luck with that.
The term “tax expenditure” serves a purpose; it does a bang-up job of muddling the waters… and then honest people find it annoying.
The problem is that the debt ceiling, and , of course, the debt, should be lowered. Everyone knows it, but many seem to think that if they ignore it, it will go away. And then there are the Keynesians, who have been trying to con us into believeing that inflation and debt are good rather than evil.