April 27, 2012

Commentary: Its Sunday morning for the U.S. Congress time to clean up
By JARED JACOBS Sunday morning usually starts with an argument in my house. It wasn't Andrew's friend who spilt the drink. It wasn't Jesse's late night food that he didn't throw out. It wasn't Dave's dishes that he didn't wash. Our house is usually a mess and nobody wants to take responsibility to clean it up. America's fiscal issues are starting to resemble my house on Sunday mornings. America is currently borrowing 41 cents for every dollar we spend. Even the bi-partisan Super Committee, tasked with getting America's fiscal house in order, failed to bridge the current divide in Washington. When co-chairmen Erskine Bowles and Alan Simpson released the Commission's findings, they conceded that, "it will not be possible to make any bipartisan agreement available to the public before the committee's deadline." Our country is a facing a deficit of leadership. Washington needs to develop a leadership agenda that restores economic confidence in this country. To do this, we need to reform the budget process and focus on making the four most expensive government programs more effective: Social Security, defense, Medicare and Medicaid. First, Washington needs to change the culture of budgeting by framing spending decisions based on what works and what doesn't work. Congress should consider changing the annual budgeting process to a biannual budgeting process. This would enable Congress to do the budgeting and appropriating in the off-election year and spend the other year analyzing its effectiveness. This will also allow our agencies not to feel the pressure of coming up with a budget every year. It seems simple, but Washington must learn to tighten its belt like families across the country. Social Security and Medicare require comprehensive reform. With an increasing number of baby boomers retiring over the next 20 years, the system is only going to get more complicated to fix. Life expectancy has grown and these programs need to reflect our increased longevity. All options should be on the table to figure out a way for both to become solvent.

Tax reform is essential for job creation and economic growth. According to the Organization for Economic Cooperation and Development, the U.S.'s combined state and federal corporate tax rate of 39.2 percent became the highest in the world after Japan lowered its rates. We need to make America the best place in the world to start and manage a business. To achieve this, we need to lower corporate tax rates. However, the answer to tax reform cannot just be about cutting taxes. Ironically, tax revenues stood at 15 percent of GDP, the lowest level since 1950. It is also estimated that 27 percent of Americans don't take the tax credits they are eligible for. These statistics indicate a simple truth: The current system is ineffective. America's defense budget accounts for almost 43 percent of all military spending in the world. However, the impending automatic cuts are far too steep. Our military needs to build and maintain the capabilities required to protect us from tomorrow's threats. Cuts will have to be made, but safety should never be on the chopping block. My roommates and I hate Sundays. That is because we finally have to face the mess from the weekend and clean it up. Nobody wants to claim responsibility for the late-night food left out on the counter, the beverage that spilled all over the floor and the dishes from the week. Yet, after a few runs of the blame-game, we all agree that it's in our best interest to clean our house. It feels like Sunday morning in America now is the time for our elected officials to take responsibility and clean up the house. Jared Jacobs is a graduating senior at the University of Michigans Stephen M. Ross School of Business. Email comments to letters@detnews.com.