So now we really need to figure out what "sequestration" means. A month ago I thought it had something to do with carbon dioxide or jury duty. Today we know it could determine the future of our economy.
With the supercommittee throwing in the towel on deficit negotiations, sequestration will kick in, meaning $1.2 trillion in automatic budget cuts over the next 10 years.
Nobody knows exactly what will be cut. The Pentagon is supposed to take 50 percent of the hit. But as Center for American Progress analyst Lawrence Korb points out, this calculation is based on a reduction of planned increases in spending. So military spending will still grow, but not as fast. On the other hand, sequestration has opened the opportunity to negotiate which parts of the Pentagon budget will be eliminated. With effective advocacy, some of the most hopelessly obsolete weapons systems and military bases could be on the chopping block.
As for the other half of the automatic cuts, it's supposed to be spread around different government agencies. The Congressional Budget Office gives broad brush stroke estimates that domestic programs, such as education and transportation, would be cut by 7.8 percent starting in 2013, while Medicare spending would fall by about 2 percent.
What's clear is that sequestration is far from the vision-based change this country needs. My organization, the Institute for Policy Studies, has a new report that starts with a 20-year vision for the country and then translates that vision into fiscal policy.
Where do we want to be in 2031? We want the United States to be a healthier, more equitable and sustainable country that engages effectively with global partners to prevent conflict. Our proposed reforms would head us in that direction.
On the military, we propose $252 billion in spending cuts per year - far more than what's slated under sequestration. We target cuts that would not weaken national security in three areas: 1) End the war in Afghanistan; 2) Reduce the sprawling network of overseas U.S. military bases that were built up during the Cold War era; and 3) Eliminate obsolete military programs that do nothing to make America safer.
On taxes, we go beyond rolling back the Bush tax cuts for the wealthy. Our six proposed reforms would generate $375 billion per year while ensuring that Wall Street and the wealthy pay their fair share. For example, we recommend a progressive estate tax on large fortunes and raising the capital gains tax rate so that income from wealth is taxed at the same rate in income from work. We also call for a small tax on trades of stocks, bonds, and derivatives as a way to both generate revenue and discourage high-risk, high-frequency trading.
Our report also emphasizes the need for fiscal reforms to create a cleaner environment - something the supercommittee debate ignored. We recommend eliminating corporate welfare for the oil industry and introducing new taxes on pollution that could generate an estimated $197 billion per year in revenue. These changes would create incentives to adopt green technologies and reduce our nation's dependence on foreign oil.
We live in a rich country. There is plenty of money to address our fiscal challenge while also reshaping our society in ways that would make us better prepared for the future.
Rather than putting the future direction of the country on a sequestered auto-pilot, let's use the space created by the supercommittee's failure to push for a bolder vision.
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