Truth be told, America has little control over the deficit and debt burdens of other nations. But as the world's largest economy, we can and should lead by example. On fiscal issues, however, our leadership has been sorely lacking, as the deficit has ballooned to $1.7 trillion in this fiscal year. Shockingly, today's total federal revenue is only enough to fund Medicare, Medicaid, and Social Security; spending on all other programs, including our national security, is funded entirely by debt.
The first thing I would do is stop the domestic spending binge by going back to fiscal 2008 level for non-security discretionary spending and freezing it for a number of years. Second, we need to set annual budget deficit targets of at least three percent of GDP, which are enforced by automatic across-the-board spending cuts if they are exceeded in any year. Third, we must address our own entitlement spending time bomb. Like Greece, much of our federal budget goes to income support and transfer payments for the elderly, which will consume an unsustainable share of our budget and economy by the end of this decade. We need to repeal and replace the new health care law, which is an expensive new entitlement that we simply cannot afford. More importantly, we must have serious national discussion about strengthening and modernizing Social Security and Medicare, which has to include raising the retirement age and changing the benefit formulas for future retirees.
Finally, we need a tax code that rewards innovation, investment and growth. We should lower marginal tax rates, close tax loopholes, and streamline the tax base a la the 1986 Reagan tax reform, or better yet, implement a flat tax, which would unleash our economy, and provide a model for the rest of the world to follow. - Politico
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