I’ve been saying it for years: Heaven help whatever president is in office when taxes are raised. No politician wants to be the one to raise taxes. However, we’re rapidly approaching the point at which taxes are going to have to be raised on someone. Our spending habits as a nation over the past 30 years have been horrendous. We’ve increased spending while decreasing relative revenue. That sort of financial situation is unsustainable. With the debt ceiling reached, and partisan politics being played to the hilt, no one wants to state the truth: We have to cut spending and raise taxes.

Some would have us believe that cutting spending alone is enough to save us from this situation. (Don’t get me started on those that think that cutting taxes will help us in this instance.) Others believe that if we just raise taxes — a little bit — we could see the solution to the problem; no spending cuts required. The problem is that the solution rises in decreased spending and increased revenues. We are to the point where our national finances are so bad that one or the other won’t help us. We have to be willing to settle on some priorities, make some cuts, and then raise some revenue.

Are We, As a Nation, Ready to Fix Our Problems?

The real question is whether or not we are ready, as a people, to fix our money problems. As much as we’d like to blame the economy, and the debt problems, on one president or another, or on one party or another, the truth is that we’re addicted to the spending — and the lowest taxes of almost any developed country — as a nation. In order to gain votes, politicians in both parties have been willing to ramp up spending for decades, keep taxes low, and generally tread a path of fiscal irresponsibility. All the while pointing fingers at “them” for the mess we’re in.

But we bear some of the responsibility for this mess, too. We kept electing these guys, without demanding better financial behavior. Indeed, we have, for the most part, been taken in by the partisan bickering, so confident that the other party is to blame that we fail to see that the status quo of bigger and bigger deficits is maintained — no matter who’s in charge. As a people, we need to shoulder some of the responsibility, and demand accountability from our political leaders. We need to be willing to deal with fewer services as spending is cut, and pay higher taxes to make up for the fact that we have all been enjoying some of the benefits that come with pork-barrel spending and entitlements. Corporations — especially those that are enjoying record profits — should realize that the way things have been run for the last 30 years have been helping them to fabulous wealth. And CEOs should probably give back, considering the fiscal policies of the last few decades have resulted in salaries that are 400 times that of the average worker (up from about 30 times in the 1970s).

It’s time to get real. Many of us can afford to pay more in taxes. And many of us will survive if some programs are cut. Both of these actions will need to be followed if we want the U.S. back on stable financial footing.



Miranda is freelance journalist. She specializes in topics related to money, especially personal finance, small business, and investing. You can read more of my writing at Planting Money Seeds.