Simple thoughts on avoiding America's credit default

OPINION – The Republicans and Democrats have been fighting over how to handle America’s debt crisis.  Moody’s has warned of a possible downgrade of America’s top rating if the issue isn’t resolved (Mason & Sullivan, 2011).  The Republicans want Democrats to reduce spending while the Democrats want to raise taxes on the ‘rich’. This is an old ideological battle between these two parties.  It has always been a way of scaring the American people. 

I have some solutions that might help the politicians out of this dilemma and allow them to avoid the downgrade.  These solutions are not new, but they will require politicians on both sides to actually lead the country instead of playing games with its future. It will also require Americans to exercise their rights and demand these changes of their politicians.  Leadership requires sacrifice.  Leadership that tries to avoid sacrifice is just self-serving.  I propose that the government cut spend and raise taxes. 

Raise taxes

I’ve read and heard over and over that the majority of the countries wealth resides in the nations top 20%.  This is Pareto’s 80/20 principle. Depending on which source you look at (you can Google it for yourself) you’ll find that between 70-90% of America’s financial wealth resides with only 20% of the population. Raising taxes on the top 20% means that the other 80% – the hard working and unemployed middle class will be spared.  Call or email your elected representative and demand that they do this.  Exercise your democratic right and don’t let the minority be the only ones that make the rules.  

I would suspect that most politicians are fundamentally opposed to tax increases because if they raise taxes on the richest 20% most of them would be affected.  The base salary for a US representative is $147,000 a year.  This is just over $100,000 more than the median annual salary in the United States.  I suggest in this case that the majority should actually take a stand and demand that taxes be raised on the riches 20%.  

For those who are afraid that this might hurt the economy or be bad for jobs take a look around.  The economy is already in the tank and many of the wealthy individuals who pushed America to the brink of the Global Financial Crisis in 2008 have done well for themselves at the expense of the 80%.  Americans in general need to stop waiting for their government to get them out of this mess.  Average Americans need to call on that entrepreneurial spirit that settled a continent, tamed the West, and created a country that the world wanted to come to (not destroy), and initiate opportunities for themselves.  Why shouldn’t the average person look after the interests of their families?  The government is busy looking after their own? 

Cut spending

Politicians might not want to raise taxes because it will impact them personally.  But if they were to raise taxes at the same time they cut their salary to the national median, they wouldn’t have to worry about paying more taxes.  There are 432 members in the House and another 100 in the Senate.  American taxpayer would save roughly $53,000,000 a year if Congressional salaries were pegged to the national median income. By taxpayer I’m referring to the 80% who pay most of the taxes because the top 20% have found ways of avoiding it.  We could also look at their health care benefits, to make sure they’re getting what the average American has access to.  If your company does well in the finance sector you get a big bonus. If our Congressional leaders got a pay raise when they enacted changes that helped to raise the median income they might actually get something done. If pay for performance works in industry – why not for our government officials?   

There’s more money to be saved in the lobbying industry too.  The health care lobby alone last year spent $123 million lobbying the government over Obama’s health care reform.  That’s $123 million of your insurance premiums that didn’t go to providing you with better health-care, it went to trying to make sure that that the health care companies were able to make more money from you. In banking, there are three lobbyists for every member of Congress – that’s 1,600 lobbyists paid by your bank fees and interest on your credit card and mortgage.  They’re lobbying Congress for ways to get more money out of you.  So let’s get more money out of them by lobbying Congress to pursue banking reform that will actually help create wealth for America – not destroy it. When was the last time you spent any money to lobby your Representatives about the things that matter to you? Invest some time in making a phone call or sending them an email this week.  Send them your suggestions about how to save some money. 

I’m sure there are more things that we could think of but I’m going to stop here.  Like I said, none of this is new.  These steps alone won’t keep America from defaulting on its national credit card, but it would save a few hundred million dollars, and that’s got to be worth something. 

Comments

[Billy Wynne]

Thanks Joel , I'll past this on . It's true so many of us forgot that we the people are suppose to run the Gov. & not the Gov. run us !!