The Fiscal Cliff: No Pain, No Gain.

The reaction to the final presidential debate underscored what anyone who is paying attention already knows: The current state of the American economy is the most important issue on everyone’s mind. Foreign policy is important, but the lack of jobs and weak growth are simply more immediately felt by the average citizen.

Thinking people also recognize that unless major changes are made, we are headed for a financial, and perhaps even social, collapse. Greece and Spain are just the “canaries in the mineshaft” for the world economy, while right here at home the looming bankruptcy of California is the template for what we may soon see as a nation.

Obama’s massive “stimulus” programs have been abject failures, while simultaneously raising the national debt to an unsustainable $16 Trillion. So, unless we take dramatic steps to stop the insanity of borrowing and spending, bad times are coming. And that means cuts. Not “reductions in the rate of growth” but actual, and substantial CUTS.

But therein lies the problem – big cuts will have to made across the board, but no one wants their pet government project to be cut by even one penny, much less eliminated all together.

The Left operates under the delusion that “if we only cut the military, we’ll have plenty of money for education (or “free” healthcare, or “food stamps” etc.)” – failing to confront the harsh reality that cutting the ENTIRE military budget wouldn’t even put a dent in our national debt – it doesn’t even equal what we spend on welfare alone, let alone the major entitlement programs.

Conservatives on the other hand, are more than happy to cut government programs…unless, that is, they happen to live in a corn producing state – then God forbid that anyone dare try to cut their precious Ethanol subsidies. Likewise if they have a big military base in their district, even the most fiscally conservative Republican suddenly gets weak in the knees about cuts to the military.

But what then? The real problem is that not only are we are spending too much, we also have a shrinking minority of people shouldering more and more of the tax burden. Even worse, those in the bottom half keep paying less and less of the tab – half of Americans pay NO Federal Income Tax. Meanwhile, these same people are getting more and more in government benefits.

No matter how you slice and dice the numbers, cuts will have to be made, which means that some people are going to see their government handouts cut. But perhaps even more importantly, the way we collect taxes must be genuinely reformed.

And, no, I’m not talking about yet again jacking up taxes on “the rich” – we could take every dime from every American who makes more than $200, 000 a year (hardly “rich” by any standard) and you would still run out of money in about 6 months. Besides, hitting those in the top “1%” actually ends up causing the loss of jobs – after all, these are the real job creators, so burdening them with ever higher taxes simply hurts those seeking a job.

Unless and until we flatten and broaden the tax base (increase the number of taxpayers), the problem is not going to go away. Which means a big segment of the populace is going to have to start paying taxes for the first time. And that will generate howls of protest from Democrats who rely on the votes of those who pay no Federal income tax and are woefully dependent on government largesse.

Absent a national sales tax to replace the income tax altogether, the next best solution is a flat tax (same rate for everyone) or at most, a 2-tiered tax of for example, 15% up to the median income (currently around $50,000 per year) and 25% above that – with no deductions/exemptions. NONE. So, yes, those who currently pay no tax will have to pay something. But surprisingly, those in the upper brackets will also pay more under a flat rate of 25% than they currently do – because under the current system with its indecipherable mountain of exemptions, they now often pay around 17% or less – although, the dollar amount they pay is often staggering – Mitt Romney paid almost $2 Million in federal income tax – anyone want to trade tax bills with him?

No surprise, when you start demanding that the “bottom half” start chipping in, the Left will howl that they “can’t afford” to pay more.  They act as if those who live here, work here, enjoy the same protection of our military that everyone else does, and who, in too many cases, are receiving some sort of government hand-out, somehow have NO OBLIGATION to contribute. But when someone is not affected by a future tax increase, they are also not affected by massive spending increases.

Unless any proposal for increasing taxes hits everyone we will never be able to stop our headlong slide into fiscal catastrophe. Only when everyone has “skin in the game” will we be able to get the kind of real spending cuts that are essential to digging out of our financial sinkhole.