The Hill News

The federal government will be running a deficit in excess of $1 trillion for the third year in a row in 2011. While many argue that raising taxes, particularly on high-income households, is necessary to reduce the deficit, the only real option in balancing our budget is to dramatically cut spending.

Over the past three years, the annual deficit as a percent of GDP has averaged 9.5%, and this is attributable to massive increases in spending and a dramatic reduction in revenues due to the Great Recession. However, the revenue reduction is only temporary. Even if the Bush-era tax cuts are allowed to continue, CBO projects that revenues will exceed the post-World War II average of 18% of GDP by 2021.

One of the most frequently discussed tax increases is raising the cap on Social Security taxes, which is currently set at $106,800, but there are several reasons why this is bad policy.

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