It is now five months into 2013, and the United States government is still far away from working out a deficit-reducing measure. In fact, Republican representative Paul Ryan of Wisconsin, chairman of the House Budget Committee, said at the Peterson Foundation fiscal summit in Washington on Tuesday that he doubted that lawmakers in Congress could agree on a significant plan to tackle the budget deficit and other fiscal problems.
“I don’t think we’re going to have a grand bargain,” he said. “A grand bargain implies you’re going to fix the problem.”
Before the summit began, Bill Gates met with Bloomberg Television’s Al Hunt, who questioned the Microsoft (NASDAQ:MSFT) co-founder on his thoughts on the state of the U.S. economy. Gates indicated that he also thought that a radical solution would not be forthcoming. Noting that Gates saw the sequestration — the automated, across-the-board federal spending cuts implemented in March — as a “meat ax approach,” Hunt asked him how the budget deficit should be handled.
Austerity measures, which have been implemented in several debt-ridden nations in Europe — are not Gates’s first choice. While Gates said he believed it was important that long-term debts do not get to the point where people stop trusting the government to pay those back, the U.S. needed to keep the push on growth as strong as possible.
Gates said he also had an issue with sequestration, as it targeted discretionary spending programs, including education, infrastructure, and research. Gates said he found cuts to programs meant to ensure the future strength of the country worrisome. “The sequester, I don’t think reflects our values,” he said. “There will have to be a discussion about funding the future.”
In order to reduce the deficit, either programs must be cut, or new revenue sources must be found — yet neither of those two options are regarded very favorably by most Americans. Neither spending cuts nor tax increases — the most common method of boosting federal revenues — are a nice trade-off, noted Gates. Either way, someone would likely be going without, or at least with less.
When Hunt asked Gates whether he thought the government should increase revenues through higher taxes on individuals, corporations, or capital gains, Gates said the wealthy should pay more to help the U.S. grapple with its deficit. “There’s no doubt that as you look at balancing budgets to the degree you need more revenue” that lawmakers will need to look to the wealthy “to get a little bit more from them proportionately than you get from people as a whole,” Gates said. “I think that’s pretty likely,” he added.
In his opinion, it was far more likely that the government would increase taxes on the wealthiest Americans than institute a value-added tax — also known as proportional tax or consumption tax. According to Gates, when people talk about radical change, the probability of that happening seemed very low. “We have a hard time changing status quo,” he noted, referring to Americans. He added that he believed doing something as simple as getting rid of tax deductions was also highly unlikely because “political audacity doesn’t seem to be in the cards.”
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