Today, Greek protestors, angry at the possibility of their country’s acceptance of austerity measures tied to a European Union bailout of their nation’s debt crisis, lit fire to nearly a dozen buildings in Athens.
Greece, which got into this mess by overspending through huge deficits, is now teetering on economic collapse.
However, as sad as this is, it is of their own doing. And perhaps even more frightening, it is the direction America is heading in unless something is done quickly.
Greece’s deficit in 2010 represented 12.7% of their GDP, a ridiculously high figure. The United States in 2010 was nearly as bad with a deficit at 11.2% of the GDP.
And if Congress were to pass President Obama’s recent budget proposal, the deficit would top $900 billion next year. That number includes many of his revenue raising gimmicks, like a $61 billion penalty on the nation’s banks for causing the economic crisis.
In Greece, much of the problem has been caused by a government that has severely outspent its revenue and provides retirement benefits at the age of 55. The austerity packages that the Greeks are rioting over include such provisions as raising the retirement age to 65 and limiting bonuses, yes bonuses, to public sector employees to €2,000 a year.
Unless Americans want to go over the same cliff, some serious reforms are necessary, but with the ideologues controlling the national agenda, few of them seem possible.
Here are a few common sense ideas that most Americans, tea partiers and socialists aside, could get behind.
Raise the retirement age for Social Security to 70, but grandfather everyone over 40 into the system currently in place
This would satisfy the commitment that has already been made to those anywhere near retirement, while saving billons of dollars in the future and admitting that with a rising life expectancy, the government can’t provide for a 15-20 year retirement pension.
Raise taxes on those earning over $250,000 back to Clinton-era levels
This would raise taxes a mere 3% on a very small subset of Americans, none of them needing that extra revenue to feed their family. And please, no claims about that killing job creation. If that were true, the nation wouldn’t have had unprecedented prosperity during the Clinton administration and the jobs that disappeared in 2008 would already be back.
Create a new tax bracket on those earning over $1 million a year
This could be as low as 40%, or a mere 5% higher than the current rate. This would be almost identical to President Obama’s proposed Buffet Rule.
Reform the capital gains tax
Currently, someone who earns their income primarily through stock trading, pays a lowly 15% in taxes. For someone like GOP Presidential candidate Mitt Romney, it means paying 13% in taxes while earning $22 million last year. Obviously the government does not want to dissuade investing through taxation, so this change would have to apply only to those who make their income primarily through stocks with an exemption for seniors who are selling stocks to cover living expenses.
Realize pension reform is necessary
While this is primarily a state issue, this nation’s governments, whether municipal, state or federal, cannot continue to provide a pension system that is bankrupting many local and state governments. Again, these policies will have to be grandfathered in to keep promises that have already been made, especially to those already retired or near retirement, but most reasonable people would agree that even public sector workers have a responsibility to save for their own retirement, and not rely solely on future taxpayers.
Let’s stop making a political football out of this nation’s debt problems and solve them before it’s too late.