Please read my explanation before rushing to judgment...
1) Federal expenses are officially categorized in three different ways.
Discretionary spending includes nearly everything we think of related
to government– the US military, Air Force One, the Department of
Homeland Security, TSA etc.
Mandatory spending includes Medicare, Social Security, VA benefits, etc.
The final category is interest on the debt. It is non-negotiable.
Mandatory spending and debt interest go out the door automatically.
Congress doesn’t even see the money, it’s automatically deducted.
2) With the rise of baby boomer entitlements and steady increase in
overall debt levels, mandatory spending and interest payments have
exploded in recent years. In fact, the Congressional Budget Office
predicted in 2010 that the US government’s TOTAL revenue would be
exceeded by mandatory spending and interest expense within 15-years.
That’s a scary thought. Except it happened the very next year.
3) In Fiscal Year 2011, the federal government collected $2.303
trillion in tax revenue. Interest on the debt that year totaled $454.4
billion, and mandatory spending totaled $2,025 billion. In sum,
mandatory spending plus debt interest totaled $2.479 trillion…
exceeding total revenue by $176.4 billion.
For Fiscal Year 2012 which just ended 37 days ago, that shortfall
increased 43% to $251.8 billion.
In other words, the republicans could cut the entirety of the Federal
Government’s discretionary budget– no more defense spending, SEC, FBI,
EPA, TSA, DHS, IRS, etc.– and we would still be in the hole by a
quarter of a trillion dollars.
4) Raising taxes, all taxes back to the Clinton levels, is one of the
few things that actually can help. Only raising the taxes on the upper income holders will net no where near enough to make up for the budget shortfall, they must all be allowed to expire just as they were originally intended to. The 4+ Trillion they add to the defecit is unsustainable. Middle and Low Income Families did just fine under the Clinton rates. If he could achieve this while reforming the tax code, simplifying it to a one or two page tax form so that people like Mitt Romney can't get away with paying a 13% tax rate, it will dramatically improve the fiscal situation we currently face. Tax all capital gains over $250,000 as regular income and eliminate the carried interest deduction.
Use a small sliver of this additional revenue to cut the payroll tax rate futher, as pay roll tax cuts actually do stimulate the economy.
5) Aside from that, entitlements need to be reformed, because the numbers
will only continue to get worse. 10,000 people each day begin
receiving mandatory entitlements. Fewer people remain behind to pay
into the system. The debt keeps rising, and interest payments will
continue rising. It's inevitable that entitlements will have to be reformed at some point. The longer we wait, the more out of control entitlement spending gets, the more inevitable that reform becomes. If not now, it will get done when Republicans have an upper hand. I would rather President Obama takes the lead and does it where he can ensure that low income individuals aren't badly hurt in the process (get rid of the cap on social security taxes on high income individuals for example), rather than wait for Republicans to do it in a way that cripples the poor.