The Real Budget Picture
Posted by Brittany Stepniak - Tuesday, July 12th, 2011
It is often said that a picture is worth a thousand words. Some may argue that this chart is worth a few more:
What the Chart Really Shows
1.) Immediate spending cuts are imperative
2.) Income taxes are at the lowest since 1950 (at 14.9 percent, as a percentage of gross domestic product)
3.) It's going to be incredibly challenging to negotiate a solution to the budget crisis without raising taxes
4.) Reform to some "entitlement programs" -Medicare and Social Security- may be unavoidable to effectuate sustainable budget goals
"Now is the time to deal with these issues," said President Obama yesterday at a news conference held at the White House, just before continuing conversation with congressional House leaders on proposals to reduce deficits and raise the debt ceiling.
And he's right, it must be done now. If a decision is delayed further than August 2, the goverment will default on its debts.
Obama clarified that he would NOT sign any agreement for any type of extension for the debate, aggresively stating:
"We might as well do it now -- pull off the Band-Aid, eat our peas."
Unfortunately, finding a solution is proving to be a difficult feat. Disagreements have turned into frustration that is coming across as contentious rhetoric.
Obama vs. Boehner:
Obama asserts that he has "bent over backwards" to work collaboratively with the Republicans on finding an agreeable solution to the ongoing debate.
Meanwhile, House Speaker John Boehner, let Obama and the media know that he and the rest of the Republican party are obstinately opposed to any form of tax increases. According to Bloomberg:
“The American people will not accept and the House cannot pass a bill that raises taxes on job creators,” Boehner, an Ohio Republican, told reporters on Capitol Hill before departing for the White House for yesterday’s talks. Negotiators are scheduled to meet again at 3:45 p.m. today.
Obama most recently rejected a Republican proposal to cut spending while maintaining a high-enough debt-limit increase to get the country through the upcoming 2012 elections. According to Obama, the total amount offered -$1.7 trillion-would simply not do...it did not come nearly close enough to Obama's $4 trillion goal.
Democrats say Obama is focusing on tax breaks for oil and gas subsidies, corporate jets, and carried- interest income of hedge fund managers.
Albeit their differences, we can only hope that the Republicans and Democrats can come to some sort of compromise on account of their mutual committment to bring the long-term debt in a more stable, manageable condition.
Undoubtedly, whatever plan they adopt will likely implement major spending cuts, with tax increases to afford issuing those cuts.
Senior Democrat on the House Budget Committee, U.S. Representative Chris Van Hollen of Maryland, explores some of the intricacies of the ongoing political negotiations regarding the budget and deficits: