The question is how to reach a solution that eliminates the deficits and dramatic underfunding of Social Security and Medicare.  It seems unreasonable to say "later, man, be cool!"  

The total of the MANDATORY, unadjustable expenditures currently equal the total of all the government revenues, with NOTHING LEF OVER TO RUN THE GOVERNMENT.  Therefore, we must increase taxes sufficiently to pay for running the government.  Duh!   (See the numbers, below.)


The Democrats seem to fight for not reducing spending unless taxes are raised at the rate of 1/3 of the spending cuts.   They have not written a plan out and seem unwilling to face the politics of dealing with the third rail (the sensitive Social Security and Medicare huge underfunding problems of $100 trillion).   

The Republicans refuse to raise tax rates, expressing fear that if they add any more money to spend the children (politicians) will just spend more.  They fear that the promises of cutting three times the spending for every $1 of tax increase will not be kept; this happened to Reagan, where he increased taxes, but the promise of reducting spending did not come about.  However, the Republicans accept the idea of increasing revenue from eliminating "tax loopholes").  

The Republicans bluffed effectively in bargaining to get spending cuts, but were (falsely) accused of bringing the economy to the brink of disaster and being  the cause of the credit downgrade (the Democrats bluffed til the last minute, too, but were never blamed for the standoff, remarkably enough).

The Republicans have addressed the issues and written out specific plans, from which compromises can be made and of which there will have to be some tweaking.  The Democrats criticize and vastly misinterpret or twist the facts, but fail to come up with specifics.  

The Republicans get the flak for trying to protect the rich (which is a false accusation) and for being unrealistic in their refusal to increase taxes.  (This actually means tax % rates, as they are willing to increase "revenues", i.e. taxes, by reducting the tax deductions and loopholes.)


Who's right? 

If we keep up the battle, no one will win and we'll continue to be fiscally on a road to ruin and/or to passing huge burdens on to future generations.  People seem to think we'll never have to pay the piper, but borrowing has its limits and we can't just continue to do it at an "immoral" (self destructive) level.

The only solution is a balanced budget amendment, with practical exceptions and a 2/3 override for emergencies, as the only solution that will force a balance.  It is the only way to force keeping it in place, as promises don't seem to work!  Then the politicians MUST work it out.   Of course, when there is an extreme situation, the override would take place.  The latter answers the Dems objection to balancing the budget hurting the economic recovery, which logically has to be true to some extent. 


Corporations do not exist out of nowhere.  They are formed from people's money, aka capital.  People own corporations, therefore corporations are in a sense groups of people who contributed money. 

If the people were in business directly on their own and made a good profit, they would pay a marginal rate of around 35% (not adjusted for the additional 3.8% in Obamacare taxes).

The people who invested in the corporation would first have to pay the corporate tax on profits of 35% and then, if there were dividends, they would have to pay at the rate of 15%.  The two together, adjusted, would be about 47%.  The taxes would be higher for those people who provided the capital.  That is called, in accounting, double taxation (actually it is being taxed twice on the same profits, just at different rates).

If we tax something higher, it drives money away from that something - and if there is less invested, there will be fewer jobs. 

So it is all a balancing act.  Too much in taxes drives away money from investing, period, and from investing (and hiring) in the United States - a mini-form of killing the Golden Goose, and hurting everybody, not just the goose (or those danged greedy rich who don't need no more danged money...).


Note that mandatory spending uses up all of our current total revenue!

Current tax revenue:                                  $2.1 tr
Mandatory spending, unadjustable             $2.1 tr

    Amount left over for running things      0

To cover "running things", we must increase revenue.  Duh!


Mandatory Spending                 $                  As % or Revenue

Medicare                               453B                                       Must set it up to pay for itself
Social security                       695B                                       Must set it up to pay for itself
Unemployment/Welfare           571B                                       Must control for proper benefits
Interest on national debt          164B                                       Will jump alot if interest rates go up
    Total                               2.173 Tr                100%
Discretionary Spending         1.378 Tr                                     
    Total                               3.551 Tr                164%

Borrowing about 40% on the dollar.          

What is the breakdown of the revenue to the government?

Notice that less than half comes from individual income taxes.
Notice how small the percentage is from corporate income tax.
Notice that social security and Medicare revenues are all, basically, spent on benefits and that there expenditures will soon be higher than the revenue.

                                                                      Revenues                   Expenditures

Individual income taxes                                    45%    $1,090 tr.
Social insurance taxes
     (Soc Sec, Medicare, Medicaid)                                  .865                  820.7
Payroll taxes (really for benefit programs)          36%
Corporate income taxes                                   12%
Excise                                                             3%
Other                                                               4%