Washington: You are Go for Sequestration

Sequestration. It's all over the news. Essentially the definition is, "If Congress cannot agree on ways to cut back the total (or does not pass a new, higher Budget Resolution), then an 'automatic' form of spending cutback takes place. This automatic spending cut is what is called sequestration."

In reality it's yet another example of what an economic mess we're in and government's total and absolute inability to do anything about it.

If both the Executive and Legislative Branches can't act like grownups it all kicks in March 1. 

A lot of folks are saying "The Sky is Falling!" Get real. If this whole thing was such a big deal the President wouldn't have gone golfing with Tiger and Congress wouldn't have gone home to shake hands and raise money for their next campaigns. This is all about politics. The folks with the "Bully Pulpit" are bullies themselves. And they're picking on us.

So let the spending cuts fall where they may. While I strongly disagree the sky will fall, if indeed it does maybe it's exactly the "Wake-up" call government needs to get serious about dealing with a $67.7 Trillion deficit.

A couple of guys who came up with a solution to this mess, and were promptly ignored by the very government who asked them to do it in the first place, are Al Simpson and Erskine Bowles.

Here's a basic outline of their original ideas:

• Replace the current tax bracket system of 10/15/25/28/33/35/39.6 with three brackets: 12%, 22%, and a maximum of 28%.
• Permanently repeal the AMT, the PEP phase-out of personal exemptions, and the PEASE limitation on overall itemized deductions.
• Eliminate all tax deductions; require taxpayers to take the standard deduction.
• Keep the earned income and child tax credits.
• Replace the mortgage interest deduction with a 12% non-refundable tax credit. Creditable mortgage balance would be capped at $500,000 (maximum credit $60,000); no credit for second residence.
• Replace the charitable contribution deduction with a 12% non-refundable tax credit, subject to a 2% of adjusted gross income floor.
• Treat state and local bond interest as taxable.
• Tax all capital gains and dividends at ordinary rates

In other words, if we're really serious about all this we'll need to do more than raise Warren Buffet's taxes.

 Never the type to give up Simpson and Bowles now recommend at the very least, trying this:

"Reform the Tax Code in a Progressive and Pro-Growth Manner. The current tax code is complicated, confusing, costly, anti-growth, anti-competitive, unfair, and riddled with well over $1 trillion of tax expenditures – which really are just spending by another name. Tax reform must reduce the size and number of tax expenditures to reduce the budget deficit and lower marginal tax rates for individuals and corporations. At the same time, tax reforms must maintain or improve the progressivity in the tax code and promote economic growth. Tax reform will make the tax code more efficient, effective, and globally competitive.:

The tax code is 70-thousand pages long, just one of the reasons Facebook is getting a $428 Million tax refund this year. How do you "Like" that?

Such foolishness, so avoidable, so very, very sad for all of us.

So maybe it's just as well Sequestration happens. As the Beatles sang, "Let it be."

Brian Olson
Owner/Consultant
Conversation Starters Public Relations
"We start the conversation about you"

All things in moderation. Too bad the Moderates are leaving.

Republican Maine Senator Olympia Snowe is calling it quits. She joins a growing list of political moderates from both the Republican and Democratic Parties who have had enough of the bizarre political partisanship that has sadly become the norm in government.

Not that long ago, Senators like Ted Kennedy and Alan Simpson would verbally duke it out on the Senate floor, but at the end of the day they would find a way to compromise and do what's best for America. Senator Simpson once told me that "If you like to get your own way, don't go into politics."

Polar political opposites, Senators Kennedy and Simpson were also close friends.  After a tough day of doing the nation's business, they were as likely to go out together for dinner and enjoy each other's company, knowing full well they'd be battling the next day in the Senate. But things got done.

Another political odd couple was President Reagan and House Speaker Tip O'Neill. Both folk heroes in their respective parties, with differing views but when the going got tough, they could get together (often over a nip or two) and figure out a way to craft legislation that benefited the folks on Main Street. Again, it involved compromise. Both fully understood what their duties were.

I met Speaker O'Neill briefly at an event at the Kennedy Center. We were standing in line at a bar and chatted briefly. It was a black tie gala, but I noticed O'Neil had dirt under his fingernails. The true sign of a working man.

I don't know about you, but I watch and read with great sadness the political hoo-ha from both parties this election year. It's all about painting your opponent as being evil. Can you remember any candidate looking into the camera and telling you how they wanted to make life better for you and your family? I thought not.

Government is described these days as dysfunctional, by definition something "that is flawed and doesn't operate correctly, or someone that deviates from normal and accepted social behavior."

Maybe it's time we start all over again, time to throw all the bums out. Goodness knows they're not hard to find.

Brian Olson
Owner/Consultant
Conversation Starters Public Relations