Carrying such a load of debt also means we’re courting higher interest rates on our borrowing. “U.S. Lacks Credibility on Debt, Says IMF” reads a recent headline in the Financial Times. The International Monetary Fund, in what the paper calls “an unusually stern rebuke to its largest shareholder,” says the U.S. is “the only advanced economy to be increasing its underlying budget deficit in 2011, at a time when its economy was growing fast enough to reduce borrowing.”
Yet President Obama and many in Congress refuse to face reality. They’ll concede the need to cut spending … then trot out a figure that may sound large, but actually amounts to little more than a rounding error. Meanwhile, the entitlement programs that consume the bulk of our spending -- Social Security, Medicare and Medicaid -- remain virtually untouched.
Worse, President Obama is playing the old class-warfare card -- calling for, yes, increased taxes on the wealthiest Americans. Never mind that the top 1 percent of taxpayers already pay about 40 percent of the income tax burden, or that such tax hikes would discourage the very kind of job-creating investments that the top taxpayers are in a unique position to make. Some perspective is in order. “We don’t have a trillion-dollar debt because we haven’t taxed enough,” President Reagan once said. “We have a trillion-dollar debt because we spend too much.”
It’s truer now than it was then. It’s time to cut more, not tax more.