Right mix of cuts, tax reform needed to tackle deficit

Over the last two weeks, I have met with Alaskans from all over the state. Whether it’s at a town hall meeting or the grocery store, Alaskans often come around to the same two questions: How did we as a country get into this trillion-dollar deficit mess? How do we get out of it?

 

The first answer is easy. The second is difficult, but not impossible.

Both political parties are to blame. Beltway “group think” got us here and Democrats and Republicans alike played along. Turns out it’s not free to wage two wars halfway around the world, launch a massive new prescription drug plan and give major tax breaks to everyone millionaires. You just can’t balance a budget that way.

How we fix it starts with Congress My colleagues must recognize we are truly out of time and that this is the time to come together because the consequences of inaction are so dire.

We’re facing the so-called fiscal cliff because we’ve put off tough decisions for too long. It’s like crashing your mom’s car — telling her will be painful either way but the pain worsens the longer you wait.

It’s time to tackle the government’s bottom line with an understanding of your family’s bottom line. If Congress doesn’t pass a responsible plan after the elections, this country faces a grim forecast. Taxes will go up for everyone. And because last year’s deficit talks stalled out, the first round of $1.2 trillion in automatic budget cuts begins.

To some, that might sound good. But because this fallback plan involves no new tax revenue, the cuts will be deep and severe: Major reductions in defense spending, fisheries management, schools, oil and gas permitting, heating assistance – the list is long.

Resolving this will take sacrifice. Even a moderate deficit-reduction plan must include cuts to important services, and also some new taxes for those who can best afford them. We’ll still face a smaller cliff, but through bipartisan compromise we can make the landing smoother.

Along with budget cuts the package must include tax reform and smart investments to build the economy. All federal agencies will have to be part of the solution — no free passes.

Here are some of my ideas for budget cuts: A continued pay freeze for members of Congress; taking back unspent “orphaned” earmarks; ending a wasteful $400 million mobile missile-defense system the military doesn’t want; winding down the $700 million program that bailed out major banks. You can see more of my ideas at begich.senate.gov.

On tax reform, we need to protect the middle class while asking the wealthiest Americans to pay their fair share. I am working on a bipartisan bill with Senators Wyden and Coats to simplify the tax code, hold down rates for families and provide tax relief for businesses to invest and grow.

Our bill creates a single corporate tax rate, lowering it from 35 percent to 24 percent. For families and individuals, it lowers and replaces six tax brackets with just three.

It protects mortgage, retirement and other tax incentives to give families financial security, and also encourages investment by protecting capital gains. Under our bill, American families can file their taxes on a simple one-page form.

The final piece of deficit reduction involves smart investments to grow our economy — in education, infrastructure and energy. This will make us competitive worldwide, create new jobs, and bring back jobs from overseas.

We can do all of this because the economy is slowly coming back. When I came into office the economy was hemorrhaging over 700,000 jobs a month. Today, the stock market is above 13,000; unemployment is below 8 percent for first time since the recession; housing starts are up and consumer confidence is improving. If we’re smart about deficit-reduction we can keep building on these positive trends

A steadily strengthening American economy is the best answer of all. We can get out of this trillion-dollar mess by working together to build a responsible budget, a fair tax system and a platform of investments to spur continued economic growth.

Mark Begich represents Alaska in the U.S. Senate.

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