The article Dealing With the Budget Deficit: Does the Middle Class Have to Take the Hit? by Dean Baker, Center for Economic and Policy Research, provides the ammunition for my claim that tax raising must come before any discussion of entitlement cuts.
In short, there is little reason to be talking about imposing increased burdens on the middle class any time soon. For the near term, the budget deficit is clearly not a problem. The financial markets are willing to lend the country large amounts of money at very low rates. Over a longer term, the deficit will pose more of an issue, but most of this pressure will come from health care costs. If these costs can be contained, and we get additional revenue from the top 1 percent and restrain the military budget, then the need for the middle class to bear additional burdens can be pushed out well into the future.
At some point, we likely will need more revenue from the middle class since we will probably want to increase government spending in some areas like infrastructure, education, and research and development. However, this is not a near-term prospect and quite possibly not even something that will be necessary over the course of a decade. Furthermore, if the need for additional revenue comes at a time when the unemployment rate is again down in a 4-5 percent range and real wages are rising, it will be much easier for the middle class to bear.
Don’t let the politicians including our own Senator Kerry fool you into accepting any compromises he seems inclined to permit from the Deficit Reduction Super Committee. If we had Elizabeth Warren sitting where Kerry is now sitting, I would feel much more secure in the knowledge that someone was looking after our interests.