That Used to Be Us_ How America Fell Behind in thted and How We Can Come Back - Friedman, Thomas L. & Mandelbaum, Michael [100]
The fourth guideline is that we cannot simply cut our way to fiscal sanity. We also will have to raise revenue through taxation—and as many Americans as possible have to contribute something. While the best-off among us ought to contribute proportionally more than the least affluent, no one can be entirely exempt. No segment of the Greatest Generation opted out of World War II or the Cold War, and no part of the baby boom generation—ultrarich, upper class, middle class, lower class, retirees—can be excused from the task the nation confronts. As a society, we need to pick some functional level of poverty, and every American above that level should contribute something by way of income taxes. Some combination of tax reform that includes the closing of loopholes, taxing energy, eliminating farm subsidies, and raising marginal rates for the wealthy—and for the middle class as well—will be needed. Anyone who says that we can restore order to our nation’s finances today without raising taxes is not being serious.
In the end, both parties are going to have to give up on their ideologies and accept a blended arrangement of across-the-board cuts in entitlements, defense, and discretionary programs, along with across-the-society tax increases and the closing of tax loopholes, plus some targeted investments. The proposal by the 2010 bipartisan National Commission on Fiscal Responsibility and Reform, chaired by Alan Simpson and Erskine Bowles, is the kind of framework that is required. Unfortunately American politics in the second decade of the twenty-first century do not lend themselves to such a national effort.
“It has been so long since the two parties have worked together to take things away from people,” David Stockman observed, that “they are out of shape.”
We had better get into shape. Reducing the deficit is not just an accounting issue or a food fight among policy wonks. It is the baby boomers’ Greatest Generation moment. The future of the country is in our hands, as it was for the GIs on the beaches of Normandy. We have to do something hard, we have to do it now, and we can only do it together.
Atlanta’s mayor, Kasim Reed, understands what we have to do because he starred in the off-Broadway mini-version of this play in his own city. A former Georgia state senator, Reed won Atlanta’s mayoral race in December 2009 by 714 votes. The day he took office, Atlanta had only $7.4 million in reserves and an out-of-control budget, and was laying off so many firefighters there were often only three firemen on a truck, which is below national standards. Reed started his reforms by enlisting two professionals, not cronies, to help run the city: Peter Aman, a partner at the consulting firm Bain & Company, to be his chief operating officer; and John Mellott, the former publisher of The Atlanta Journal-Constitution, to lead a pension-review panel. To end the war on math in Atlanta politics, Reed had to bring in outsiders whose assessment of exactly where the city stood financially was unimpeachable. When he took over the mayor’s chair in early 2010, runaway city pensions—which had increased by 30 percent in the early 2000s and been made retroactive for all city police, fire, and municipal union workers—were eating up 20 percent of tax revenues, and rising. So between 2001 and 2009, Atlanta’s unfunded defined-pension obligation grew from $321 million to $1.484 billion. Reed couldn’t cut existing pensions without lawsuits, but he reduced pensions for all new employees to pre-2000 levels and raised the vesting period from ten