A case in point, Republican Ryan in the House has put a broad proposal on the table to reduce the deficit by making broad cuts in federal programs and revamping Medicare, but omitting significant new revenue sources.
The Obama administration reacted by clamoring for higher taxes on millionaires and billionaires, that is, any family earning $250,000 or more.
Beware of Economic Talking Points
Both sides are adroit at crafting and employing repetitive talking points to bludgeon the opposition with -- and in the end, gridlock ensues. We as investors and voters need to break down the arguments and filter out political diatribe from serious economic and fiscal policy debate.
Too Much Expense—Not Enough Revenue
With apologies to the Greeks, rather than resorting to political Greek drama, complete with chorus, our leaders need to acknowledge both a revenue and expense problem and work together to address them.
Demand for U.S. debt has limits -- 47 percent of U.S. debt is held by foreign governments, including more than 13 percent by China. At some point there will be a demand for higher yield.
U.S. Debt Outlook Negative, Credit Downgrade Possible
Last week S&P issued a negative outlook for U.S. debt. Though not a downgrade of U.S. debt from AAA, we can see that result from here. This should be motivation enough for our representatives to set aside political bias.
What Should Be the Common Objectives?
Lower hire cost, reduce deductions, capture more tax at present rates, cut federal entitlement expenses
One: lower cost of adding employees to encourage new hires.
Two: reduce personal and corporate deductions and capture more tax at all income levels without rate increase.
Three: reduce federal expenditures per bi-partisan commission report.
So let’s challenge our leaders to step away from the camera and devote their creative energies to solutions. With business investment, jobs and our overall economy in the balance, our economic and financial futures depend on it.