In a strange turn of political events, pro wrestler legend Hulk Hogan announced this week that he would make a great president. While I have doubts about that, Hogan did state that as president he would enact a “flat tax across the board.”
Who knew the Hulkster was so astute? The flat tax proposal is among several key budget deficit-reducing measures that have been recommended by many across the country to the Joint Select Committee on Deficit Reduction — known as the “Super Committee.”
Charged with finding $1.5 trillion in budget cuts by Nov. 23, the Super Committee’s deadline is fast approaching. It is of paramount importance that any approach they recommend includes mechanisms to repair our economy in the long-term and give the private sector the stability and confidence it needs to create jobs. Three approaches in particular can achieve these ends:
Eliminating wasteful spending
Congress’s spending problem is the biggest reason the Super Committee now exists. In the summer of 2009 alone, I offered more than 500 amendments to the FY2010 defense appropriations bill to strike earmarks – the symbol of federal spending largesse – designated to for-profit companies worth a combined $1.5 billion. Not a single amendment passed the House. If Congress couldn’t even cut $1.5 billion in spending then, it’s not hard to see why we’re running a budget deficit of $1.3 trillion and a total debt of $14.8 trillion now.
Eliminating wasteful spending must be a priority in reducing our budget deficit. There has been no shortage of plans offered to the Super Committee by groups and individuals in and outside of Washington, and almost every single one includes significant cuts to wasteful and redundant spending. Doing away with ethanol subsidies alone would save taxpayers $60 billion over 10 years. Certain outdated agricultural payments: about $30 billion. Though non-security-related discretionary spending – the type of spending where many examples of waste can be found – accounts for only about 14% of our government’s total outlays, billions saved from the elimination of outdated and/or inefficient programs should never count as just a drop in the bucket.
Furthermore, if we can’t even make cuts to a small portion of our budget, how will we ever make the necessary adjustments to keep our entitlement programs solvent; programs which account for the federal government’s largest expenditures?
It’s simply impossible to put our government back on a fiscally sustainable path without reforms to entitlement programs, like Social Security and Medicare. By making reforms to these programs now, we can ensure that changes will not affect anyone currently receiving benefits or those nearing retirement age.
In 1960, there were five workers for every retiree. Today, there are three. In fewer than 20 years, as baby boomers continue to retire, the ratio will be two-to-one. Without reform, Social Security is not solvent. Raising the retirement age and means-testing benefits are going to be necessary for future retirees. If we act now, we can maintain present benefits for current retirees and those 55 and older.
Considering Medicare, establishing a “defined contribution” system would give beneficiaries greater freedom in making their healthcare choices by allowing these retirees to receive funds to purchase health insurance that best meets their needs, and would save $100 billion in its first seven years, according to the National Bipartisan Commission on the Future of Medicare formed in 1999. Additionally, a defined contribution system would promote greater market competition.
Currently, the federal government collects more than $1 trillion a year in income taxes, and returns roughly an equal amount back to taxpayers in the form of “tax expenditures,” or credits, deductions, and exclusions. By eliminating many of these carve-outs, more federal revenue would be generated, allowing for lower overall rates for individuals and business and making the tax code fairer. In addition, a simpler tax code would provide businesses with a clearer picture of their long-term opportunities and perimeters, encouraging greater investment of resources to improve and expand, thus creating jobs, rather than encouraging business to hinge their decisions on government handouts.
By eliminating wasteful government spending and enacting significant entitlement and tax reforms, the Super Committee would not only achieve its mandated goal of trimming $1.5 trillion from our nation’s budget deficit, but would give the private sector the means and security to stimulate the economy and begin to create more jobs. With the many ideas the members of the Super Committee have at their disposal, it seems everyone’s itching to ask them, as Hulk would say, “Whatcha gonna do?”
• Jeff Flake, a Republican, represent’s Arizona’s Sixth Congressional District, which encompasses much of the East Valley.