Moving Forward

John BoehnerA long grueling election season has finally come to an end. The president was reelected and just as important, the power in Congress has remained the same. Democrats still control the Senate picking up a few more seats. The Republicans remain the majority in the House of Representatives although they lost a few seats there as well.  Even though I tend to be more on the liberal side, I’m still glad that Republicans control the House. It means that the half of the country which is Republican still have a strong voice in the federal government. I say that I’m glad to have Republican control in the House for one reason…compromise. As long as John Boehner and his constituents are willing to compromise, we can get something accomplished. This means they should refrain from remarks like “Our main goal is to deny the president another term”. If they can get away from this kind of politicking, things may actually be able to get done. (I know the president can’t run again in 2016, but the GOP could state their main goal as that of regaining power in the White House.)

Republicans, running on their high from the 2010 midterm elections thought they were given a mandate by the people to stop Obama and the Democrats at all costs. After this last election, now they may be second-guessing that thinking. Either way, what the American people want most of all, is government to work and their elected officials to do what’s best for the country.

And finally we have some hint of compromise from Republicans in the House when Mr. Boehner recently agreed to look at raising tax revenue. He still says he opposes raising tax rates, but at least there is a better tone of compromise. So what could a compromise on budget and taxes look like?

Democrats want to raise tax rates. Republicans want to cut spending.  So a compromise would be a bit of both. It is the “balanced approach” President Obama has spoken of for the past 4 years. Boehner mentions raising revenue by cutting deductions. Which deductions do we eliminate or reduce that would have little impact on the struggling middle class and be able to raise enough revenue? Most middle class people rely on the Mortgage interest deduction and the Student Loan interest deduction. But what about the Foreign Income deduction? Here’s one that I think few could argue against eliminating; getting rid of a deduction that rewards people whom keep money overseas. But this is just one example of a deduction that can be eliminated which would affect few people. What other deductions are there, which unfairly reward a small percentage of people?

Next let us look at individual tax rates for a moment. In the recent past when Democrats wanted to extend tax cuts for everyone except those in the top tax bracket, the Republicans wouldn’t allow it, calling it unfair. As a Democrat, I would point to what the original Bush Tax cuts did. They lowered taxes for everyone by 3%. But the top income bracket had their rates lowered by 4.6%. Talk about unfair. So, maybe as a starting point we could make up this unfair difference by raising the top tax rate by 1.6%. Can we at least get Republicans to agree to this?

But an even more important piece to the tax puzzle is the Capital Gains tax rate. Under Clinton the tax on Capital Gains was 20%, already far below individual tax rates. Then Bush lowered it even further to 15%. This is the biggest tax loophole! It is what allows Mitt Romney to pay a lower tax rate on his income then most middle class families.  This low capital gains rate severely benefits the wealthy disproportionately since very few middle class Americans actually see income from capital gains and dividends. (More on this argument in my book Social Capitalism). How do we fix this? First we can either raise the rate again or we can do as the recent “Buffet Rule” called for a minimum tax rate on those who earn over a million dollars. It is in essence an Alternative Minimum tax for the wealthy, which would limit deductions. If Republicans in Congress want to talk about their mandate given to them by the American people, how about the polls, which showed about 77% of Americans favoring the Buffet rule. Even Mitt Romney proposed limiting deductions. The Buffet Rule is a perfect example of how you can do this.

Then finally, in our quest for sensible compromise we have the issue of corporate tax rates. Everyone agrees we should lower corporate tax rates. It is now at 35%, which is high when you compare it to rates in other countries. If we want to be competitive around the world and want to help our businesses here at home we can and should lower this rate. It is one thing the Republicans have always wanted and we can give it to them! But with our fiscal situation we cannot risk drastically loosing revenue. So at the same time we make sure to close loopholes and deductions for the big multinationals. Deductions that reward moving jobs overseas, or keeping profits overseas. These are just a few of the loopholes that cost us billions every year. I’m sure here is a sensible compromise that could be easily reached.

Then there is the issue of spending cuts. We can come up with a sensible budget that trims the fat is some areas, but preserves our most needed government functions. With the Iraqi war over and Afghanistan winding down, the defense budget, which makes up about a quarter of government spending can be significantly reduced. As for Medicare and Medicaid, these costs have already begun to be tackled in part by the Affordable Healthcare Act. One of the key purposes behind the law was to lower healthcare costs not just for individuals, but for the government as well. Only that it won’t be until 2014 when the full law goes into effect, and it will be another year or two afterwards before we can see if the law is successful in lowering our country’s healthcare costs. Further moderate reductions can be made to these programs in a sensible fashion that doesn’t jeopardize the intended benefits of these programs.

You don’t have to agree with all these ideas. The bigger point is that there are many issues to look at and there is room for compromise in all of it. Not everyone will get his or her way 100%. But for progress to be made, each of these issues needs to be debated sensibly in a moderate fashion, free of past pledges and promises.  Hopefully a solution can be reached that looks to benefit our entire nation and all Americans. We are tired of the past few years where partisan politics has prevented our government from taking action in a time when we need progress the most. If I could say anything to Congress I would say, THIS IS YOUR MANDATE, to work together, compromise and find solutions; even if it means staying up to 2am and forgoing another vacation. Git er done!

If you like some of the ideas laid out in this article, you may read further on how we can find common ground and compromise in my book Social Capitalism: A Return to Balance and Reason.