Debt Reduction Means the Military and Millionaires Must be in the Mix

Posted on June 28, 2011. Filed under: Uncategorized | Tags: , , , , , , , , , , , , , , |

When it comes to being serious about deficit reduction there simply cannot be sacred cows—bombers, big business and billionaires must all be fair game and subject to taking a hit if this country is to ever get its financial house in order.

Clearly, reducing the deficit is going to take a combination of deep spending cuts and significant revenue increases.

One of the easiest and least painful ways to increase revenue is to close tax loopholes—eliminating those special perks in the tax code that are targeted to very specific groups and individuals. However, when the Democrats proposed closing tax loopholes on oil companies—companies that rake in billions of dollars in profits every year—GOP lawmakers cried bloody murder despite the fact that eliminating those tax breaks would generate $40 to $50 billion in revenue. And when Democrats proposed capping tax deductions claimed by households earning more than $500,000 a year at 10 percent of adjusted gross income the GOP went ballistic. According to our sources this was apparently the proposal that caused Rep. Eric Cantor (R-VA) to walk-out on the budget talks last week.
Speaking for the GOP on this issue, Senate Minority Leader Mitch McConnell (R-KY) had this to say: “Throwing more tax revenue into the mix is simply not going to produce a desirable result, and it won’t pass.”
Obviously, Republicans equate closing tax loopholes with tax hikes—which is where they draw a line in the sand.

Surprisingly, though, another historical no starter for the GOP—cuts to military spending—may just be on the table this go around. The buzz on the Hill is that Republican leaders have hinted that there could be support for a debt-reduction package that shrinks the Pentagon budget. If that is indeed the case, Democrats appear willing to give on tinkering with the tax code if significant defense cuts are made.
If you can take Rep. Barney Frank (D-MA) and freshman congressman Adam Kinzinger (R-IL) at their word, then there is a likely path to compromise.

“Defense spending is damaging spending. Many of us believe it does more harm than good to our people and to our reputation in the world,” said Frank. “If we can get $100 billion from reducing unneeded military spending, that’s better than $100 billion in taxation.”

And while Kinzinger called defense spending a “pillar of Republican strength… a pillar of national strength,” he also said the time for “sacred cows” has passed. “We cannot afford them anymore.”

–C.Z.T–

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