Negotiations are underway to find a solution to America’s public finance problems. Cuts and tax raises are necessary. Not having to face the nation’s vote again, Barack Obama can afford to lead the charge for tax reform and a return to the tax environment pre W Bush. The pressure is on.
Compromise is the only way forward
With congress basically crippled, Obama needs to act. The loss of moderate politicians who were central to deal making has meant that no bill stands a chance, unless it is something obvious and cross party. The budget is neither. It requires compromise from both sides to even the books. Some of the cuts must be painful, and some of the taxes will have negative effects on the economy. But politicians have to take responsibility and pass a budget.
There is a divide between the two sides on how to approach the balancing. Republicans, ever mindful and beholden to their rich donors, dont want to see tax cuts expire. They also are unwilling to cut from defense. They have proposed closing loopholes as the answer, which would only hurt middle and lower class families who cant afford to pay financial advisors to find loopholes for them. In this strategy, nothing changes for the rich.
The Democrats, for their part, are unwilling to cut from Medicare and social security, two staples of their base. They want to see a return to the tax structure of the 90s, and refocus spending from the defense department.
OPPORTUNITY
There is opportunity here to find a balanced solution that gets us back on track. However, the politicians in congress are playing their own strategy games, and no one wants to have been on the wrong side of a budget deal when re-election comes up. But there are two sides: and in fact they are not down party lines. There is passing a budget, or not passing a budget. Let’s hope they get it done.
