In chapters 4 and 5 of Wessel’s ” Red Ink there is a discussion about the source of federal tax revenue, as well as the path forward on fiscal policy. Tax revenue is currently not sufficient to pay for all anticipated spending for the next few years. There are several options on the table for increasing tax revenue, not limited to increasing corporate tax rates, increasing income tax rates, or increasing payroll tax rates. Current law is in place such that the tax cuts initiated by during the George W. Bush administrations and extended during the Obama administration are set to expire at the end of this year. Also the payroll tax cuts passed during the Obama administration are set to expire at the end of the year.
Additionally, when the Congress passed the Budget Control Act in 2011 to raise the debt ceiling, they agreed to cut another $1.2 trillion from spending over the next decade, as well as stick to caps cutting another $1 trillion of discretionary spending. Projections are that the U.S. deficit would essentially be eliminated much sooner if all the tax cuts expired and all these spending cuts were extended.
However, politics is a different game. There are some proposals out there to tinker with these programs around the corners, but few serious politicians have actually suggested allowing for all these tax cuts to expire, and few serious politicians have suggested allowing for the sequestration of the Budget Control Act to be extended without alteration.
Questions you might answer:
You should take one of two approaches in this discussion. Try to avoid blaming one particular individual, or group for the current situation, and think about the political feasibility of our future. Wessel examines three idealistic plans to control the “Deficit”, “Unemployment”, and “Spending” in chapter 5. Examine these proposals for not just their potential to cut or eliminate the deficit (and when), but also the CURRENT political feasibility. Do not just throw up your hands and declare defeat. Lay out a conceivable path forward.
You might also choose to discuss taxation. Face up to the fact that few seem to think that they are taxed fairly, everyone would like to pay more in taxes, but everyone also expects to receive numerous government benefits at some point in their life. Who should bear the burden of the taxes, and how. If you propose something like a ‘flat tax’, examine the changes that would take place to the tax rates of many families with children, and discuss the development of our current tax program. If you propose higher corporate taxes, higher payroll taxes, or higher income taxes across the board, examine the consequences, and benefits of this action.
The book provides a lot of numbers, but try to go deeper into some of these details with outside information where possible.