Today, JPMorgan Chase CEO Jamie Dimon said at an interview on CNBC that the business community would easily accept a higher tax rate IF entitlement spending is curbed. He added that both Obama and Boehner know that this will be the deal. All that remains is to outline exactly what the rate will be and what specific cuts will be made. He predicted that, once the fiscal cliff is resolved, the economy will grow at a robust 3-4% rate.
Let's keep in mind that "entitlement spending," which sounds like something the government is giving to people who feel entitled, is really mostly spending that will support you when you turn 65. For everyone in the U.S. is "entitled" to receive Medicare, which is $523 billion in the FY 2013 budget. Most people are also entitled to receive Social Security, which is $820 billion.
When most people think of entitlement spending, they think of programs to help lower income families, which totals $654 billion. This includes a whole series of programs, such as Food Stamps, Unemployment Compensation, Child Nutrition and Tax Credits, Supplemental Security for the Disabled and Student Loans. The other program for the lower income folks is Medicaid, which is only $283 billion. This is unlikely to be cut, since it is being expanded through Obamacare.
However, the single largest budget item is not even on the table. That's military spending, at $851 billion in FY 2013. Can anybody explain to me why this isn't even on the table for discussion? Naturally, we want to stay safe from any other terrorist attacks, like 9/11. However, shouldn't we be talking about slicing some from this budget before we talk about cutting programs for seniors? Shouldn't we be challenging the Defense department to be more efficient?
In fact, a group of retired Generals advocate cutting Pentagon spending, saying that future wars will not require investment in expensive equipment like the F-35 joint strike fighter. In fact, more was spent on that development than on all veterans in the last 20 years. (Source: CNN, Generals: Cut Pentagon Spending, December 12, 2012)
Dimon made an unrelated good point about income inequality. He said he didn't like that the U.S. was so unequal, but that the problem wasn't because bankers were paid what they were worth. It was because opportunities for education weren't equal. He wanted to expand education to as many people as possible to increase the mental capital of the U.S. He said that immigration needs to be fixed, to allow the smartest people in the world to not only get educated, but to continue to work in the U.S. instead of sending them home. (Source: Live testimony on CNBC)