The election is getting really personal. The name-calling and trash talking is deafening. And yet, neither candidate has delivered a detailed plan to get the economy back on track. Nor has either man provided voters a strategy to reduce the deficit and balance the budget. Voters need details now. These items are the most important issues facing our nation at this time.
Americans are losing money every day, not from additional income taxes (yet), but from higher gasoline prices, higher home fuel oil prices, low investment rates, lower housing prices (as compared to four years ago), lost jobs or jobs that are not commensurate with education/business experience and so much more. The economy is performing unevenly in a way that is not yet beneficial to average Americans.
During the debate (the last of which is supposed to focus foreign affairs) and in the next two weeks before the election, the American public needs to receive answers to the following questions before making an educated choice at the polls:
The economy is creeping along at an unsatisfactory rate. What will you do to increase the rate of improvement?
Specifically Obama: During the past four years, you have been unable to keep your promises to reduce unemployment to significantly lower levels and to reduce the budget. What will you do, if reelected, to increase the number of jobs available in America and to bring the budget into balance?
Specifically Romney: There is skepticism about your comments relating to reducing the deficit. You say you will increase revenues and cut spending significantly during the next decade. Specifically, how will you do this? Will you increase taxes on any class of people? If not, how will you generate such a large inflow of revenues and/or reduction of expenditures? Are Social Security and Medicare on your list of cuts? How much of your reduction comes from increased tax payments resulting from higher income of Americans and businesses over time?
How will you negotiate past the risks affiliated with the “fiscal cliff?”
How will you overcome the toxic partisanship in Congress to deal with the issues relating to the fiscal cliff and other national problems?
What exactly will you try to do to reform Social Security and Medicare? Will you increase the age at which beneficiaries receive benefits? Will you eliminate payments totally for the affluent?
What are the entitlements that you will target besides Social Security and Medicare?
There is a great amount of cheating and tax evasion taking place in the country. Estimates are that hundreds of billions of dollars of tax revenues are lost each year because of tax and medical fraud. What enforcement programs will you implement to decrease maleficence?
Congress is notorious for appropriating money for programs and never ending the programs after they are no longer doing what was originally intended. Do you believe this is a serious problem, and what would you do to combat this lack of oversight?
There has been little conversation about public works programs in lieu of welfare. Do you believe that every able-bodied person in the country should work to receive aid? Are you prepared to offer every person a job and end welfare, as we know it today?
What have not been discussed in any detail are the many potential targets available to increase revenues and decrease spending. During the campaign, these items have only been mentioned peripherally. This may be because neither candidate wants to be locked into any promises before the election takes place. But voters should be aware that there are billions of dollars that can be obtained and/or saved by decreasing benefits to the affluent and to entitlements.
Here are some of the largest revenue targets (in billions of dollars per annum):
Untaxed medical insurance: 184
Deductible mortgage interest: 99
Capital gains benefits at death: 61
Exclusion of imputed rental income: 51
Charitable deductions: 43
Accelerated depreciation of machinery and equipment: 24
Capital gains: 38
State and local tax deductions: 49
Employer plans: 45
The total of these items is $662 billion each year. If one assumes that 50% are attributable to the affluent (my unscientific assumption), $331 billion could be eliminated generating $3.3 trillion over the next 10 years. The number would likely be higher as all of these items are expected to increase over time. Revenues could be obtained by either eliminating these deductions/benefits or by capping them for higher income taxpayers.
The following demonstrates the impact of entitlements on the deficit (in billions of dollars per annum and their percent of the annual budget):
Social Security: 781/21%
National Defense: 676/18%
Net Interest: 224/6%
Social Security, Medicare and Medicaid have increased 36.8%, 67.7% and 37.8%, respectively since 2002.
Obamacare is expected to cost $1.7 trillion over 10 years and equal 44% of mandatory spending. Keep in mind this program will assist only about 10% of the population (assuming 30 million participants). The program is supposed to decrease Medicare by $716 billion over the next ten years, which the Medicare chief actuary says is an unrealistic assumption.
The conclusion to be drawn from these statistics is that there are numerous targets to decrease the budget, in the form of increased revenues and less spending. This could facilitate lower tax rates for all Americans while not having a negative impact on the budget.
The principal concern is that neither candidate has been specific, nor has either referred to these numbers to make his case. It is puzzling. Yet, I believe the one who provides clarity relating to the economy and to the budget will have a huge advantage over the other candidate on Election Day.