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Sensible ways to reduce the deficit

The House Republicans recently approved a plan to reduce the federal deficit. Simply stated the Republican plan calls for reducing or eliminating spending on social programs, holding taxes at current levels and even reducing taxes on corporations and the most wealthy. But there is one problem. Their deficit reduction plan is similar to all others that have failed in the past, every one of them, every time.

In 1937, just as the U.S. was recovering from the Great Depression, FDR cut social programs. The economy immediately went back into a severe recession. Currently, Europe, Great Britain, Italy, Spain, Greece and others have significantly reduced social program spending leading to increased unemployment and a decrease in their GNP.

In 1954, as our post-World War II recovery faltered, President Eisenhower with bipartisan support passed the Interstate Highway Bill, which revived the recovery. Currently, Republicans have voted against a major construction bill to rebuild our crumbling highways, bridges and schools. These construction jobs would reduce unemployment and stimulate the economy.

Republicans call the wealthy “job creators” and state that there would be more hiring if taxes were even lower. The truth is that companies hire only when demand for their goods and services increases. In 1954, the income tax rate for the most wealthy was 91 percent vs. 35 percent today, but those high tax rates did not stop the wealthy from investing in their businesses or hiring additional workers.

Can deficits be reduced? Yes, but only by a sensible program of raising income taxes on the wealthy (those earning over $1 million per year whether from earnings or investments), eliminating corporate tax giveaways, reducing defense spending for new weapon systems designed to fight a nonexistent major superpower, and revamping Medicare to set limits on end-of-life spending.

Robert Frankel

Schaumburg

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