(1) The Reagan Admin. and Congress tried the supply-side tax cuts experiment in the 1980s, essentially lowering marginal tax rates from 70% to 50% (1st. Reagan term) and 50% to 28% (2nd. Reagan term and Bush II (39.6 to 35%). Even with the Bush I (31%) and Clinton (39.6%) tax increases, we still are still at some of the lowest marginal tax rates in a century.
(2) The Reagan Admin. and Congress passed the Greenspan Commission recommendations in "whole cloth", leading to massive Social Security FICA Tax Increases (from 1% on an income on $3000 at inception to $12.4% on an income on an income cap of $25,900(1986) with a Income Cap Increase annually ... 12.4% on an income cap of $106,800 (2009-2011). They also gradually increased the retirement age to get full benefits. Medicare Tax rate of 1.45% was extended to ALL income (i.e. NO CAP).
(3) Yet, Congress did not close the Barn door, i.e. they left the Unified Budget in place, so the operating budget deficits were masked by Trust fund surpluses, and the operating budget has siphoned off $2.6 T and counting from Social Security, and over $4 T from Medicare Part A and 110 other smaller trust funds.
These are deliberate acts of Congress, and they must be held responsible!
So, I would suggest we have "Individual Balanced budgets" - reached with both tax rate hikes (& revenue increases) and spending cuts by "individual" budgets:
Once we break up "Unified budget" into its component parts: "by revenue source and related spending", we see the only way to fix the debt is to:
(1) Reduce spending, which will lessen future deficits and debt in the operating budget.
(2) Raises Operating budget "tax rates" and close tax loopholes to increase "Tax Revenues" (income, estate and excise) to repay the IOUs to the trust funds (FICA taxes).
Once, and only once, the trust funds IOUs are repaid, they (individual trust funds) will have under the "individual balanced budget Act" have to deal with any further shortfalls by: (i) raising FICA taxes to maintain current benefits; (ii) reduce benefits, (ii) raise retirement age, or a combination thereof.
(B) We have two problems.
> The first, the past due debts of the "Operating budget"
> The second, the long term unfunded liabilities.
If we solve the past due debt (requires revenue increases), first, as we should, we repay the IOUs to the trust funds (operating budget owes the trust funds), and improve the outlook and longevity of the trust funds.
However, if, as the GOP, suggests we ignore paying down the past due debt (which can only be solved with revenue increases, and the GOP unequivocally states no revenue increases, EVER), and instead focus on the second problem only, we undermine the Social Security and Medicare program (increase age, reduce benefits), and are still saddled with a $14.5 Trillion (T) debt and growing. i.e. this solution is an "illusion".
Speaker Boehner, Paul Ryan, Eric Cantor and all of Pope Grover Norquist's subjects in the GOP engage in untruths, when they say that "We have a spending problem, not a revenue problem".
Instead of paying off past debts (which would entail revenue increases), they have moved with full speed to carve-up the long term liabilities.
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