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Since the presidency of Ronald Reagan, the federal budget and the taxes that fund it have been the most consistently debated topic in politics. This is because it is an issue from which the most difficult of questions arise: should America be run by “big government,” emulating the European social welfare state, or should it mandate minimal tax regulations, leaving each citizen entirely responsible for his or her well- being? Democrats tend to advocate the former, taxing citizens according to income and providing welfare programs for the less wealthy, while Republicans are proponents of the small, decentralized state and minimal taxation. Nevertheless, how the government spends its money affects all Americans, especially in times of economic downturn.
As it currently stands, the federal budget has reached previously unsurpassed levels, estimated at about $3.7 trillion for 2012, as estimated by the Congressional Budget Office. The majority of the budget goes toward the Department of Defense ($1.45 trillion), the Department of Health and Human Services ($1.11 trillion, or roughly $9,700 per household), which administers programs such as Medicare and Medicaid, and the Social Security Administration ($808 billion). Tax cuts, which some economists have argued should be counted into the budget, have most recently been estimated at $1 trillion in 2010, according to the liberal Center for American Progress. The most notable tax cuts, those passed by President George W. Bush in 2001 and 2003, are set to expire on New Year’s Eve this year, and are currently the most discussed topic related to taxes and spending among journalists and pundits, who have hyperbolically dubbed the sunsetting of these tax cuts “Taxmageddon.”
As the 2012 presidential election approaches, each candidate’s focus has been primarily on decreasing the federal debt, estimated at about $15 trillion. At its most basic level, President Barack Obama’s plan draws on Keynesian economic theory, the belief that a mixed economy of public and private enterprise, bolstered by a strong welfare state, can jumpstart the economy. Governor Mitt Romney, meanwhile, advocates a Reagan-esque devotion to laissez-faire economics, arguing that with substantial tax cuts and limited regulation on private businesses, the economy will naturally grow. Specifically, Mr. Obama’s plan, detailed on his website, targets tax loopholes for households with annual incomes over $250,000, via efforts such as the Buffet Rule (a stipulation in President Obama’s plan which would apply a minimum tax rate of 30 percent to individuals making over $1 million per year), while simultaneously reducing taxes for middle-class families and small business owners. Mr. Romney, on the other hand, states on his website that he would reduce government spending from its current level, around $33,000 per household, to around $25,000, while maintaining individual tax rates but decreasing rates for private corporations.
Regarding government programs, President Obama and Governor Romney stand opposed, with Romney vowing to repeal Mr. Obama’s healthcare act, saving the country around $95 billion, according to his website. He also has advocated cutting spending on social programs by 5 percent (without touching national security spending) and pulling funding from the National Endowment of the Arts and Humanities, the Corporation for Public Broadcasting, and the Legal Services Corporation. Furthermore, he plans to save up to $100 million by reducing foreign aid. Meanwhile, in September, President Obama revealed a plan to reduce the deficit by about $3.2 trillion in the next ten years via increased taxes on the American upper class and drastic reductions in defense spending.
The candidates’ positions on taxes and government spending, as noted earlier, drive right to the crux of their political ideologies, and relate to their positions on other political issues. For instance, President Obama’s insistence on reducing defense spending is tied closely to his desire to end America’s military activities in Iraq and Afghanistan, while Romney’s plan to eliminate Title X Family Planning funding draws quite publicly from his opposition to abortion rights. And while the main concern for both candidates is lowering the national deficit, the ways they would go about it are very different, and realistically would benefit very different types of Americans.
-This article was written by Dean DeChiaro and appears in full in The IDEA Guide to the 2012 U.S. Presidential Elections.