In response to the May 14, 2012, editorial “Preparing for austerity,” you seem to discount the effect raising taxes will have on the deficit and the amount of spending cuts needed to address the deficit.
The general public does not understand the difference between the rhetoric and fact; however, a publication such as Pensions & Investments has enough integrity and intelligence in its employ to not fall into the same boat.
The United States Tax Code currently has the lowest tax rates to which Americans have been subject since 1916, except for the deficit ridden years 1988 to 1992. During much of the period from 1917 to 1980, the top tax rate was from a high point of 92% to a low point of 70%. Rates for the lowest income levels are also at their lowest point during this same period when rates started at 16% and before you earned $8,000 you were in the 30% rate.
Social Security and Medicare are not entitlements, but rather returns for taxes paid during one’s working career. These plans have been paying benefits for 75 years for Social Security and 45 years for Medicare. There are very simple adjustments to these programs to bring them back in balance and keep them working for an additional 75 or more years.
Austerity will lead us back into recession and will neither solve our deficit nor our national debt.
Smart cuts to programs that have outlived their usefulness and letting the Bush tax cut expire are both steps toward beginning to address our problems and putting us back on track.