President Obama has a done a great job in bringing down the federal budget deficit, and although the federal debt of $17 trillion seems like a lot, it’s well under control and nothing solid economic growth won’t cut into substantially. Still, more can be done to lower the debt, leaving a lasting legacy of Democratic fiscal responsibility. Barack’s Backers proposes the Penny Plan.
Simply put, the Penny Plan does two things to cut into the national debt; First, the very rich contribute a single penny out of a dollar more in taxes each year, and secondly, it takes away a penny from the bloated military budget each year. This is a very gradual and noninvasive way of increasing revenue while cutting spending. I think that even hard core Republicans will agree that this is a sensible plan.
99% of Americans will not have to pay a single penny in new taxes, it’s only the top 1%, the group of people at the very top, the mega-millionaires and billionaires that have benefited so dramatically by the Reagan and Bush tax cuts, that will pay the penny. Currently, the effective tax rate of the top 1% is 23.5%. Yes, people like Mitt Romney and the Koch Brothers would like to eliminate all taxes on their billions and leave it to the rest of us to carry the tax burden (the average American pays 43% in taxes), but most believe the extremely wealthy should begin to carry their fair share. By contributing a penny of their huge fortune each year, billions in revenue will be raised.
The 2014 defense budget is $640 billion dollars. By implementing the Penny Plan, after only five years, $96 billion would be saved, just by cutting spending by a penny each year. This doesn’t include the secret budget at the CIA or Homeland Security, by including them, the federal debt could be cut even more. Likewise, increasing the capital gains tax by a single penny each year (that’s the money made in the stock market currently taxed at 15%) will eliminate the debt even faster.
This combination of raising revenue and trimming spending will make a huge dent in our national debt and leave America on a firm fiscal foundation. President Obama and the Democratic Party would be wise to pursue this policy, it appears that only they have the courage to fix the fiscal mess those in the Republican Party have created.