A Keep It Simple Solution (KISS) to the fiscal cliff would be to enact the following, to expire in five years:
• An additional deficit reduction tax of .5 percent of gross income, including capital gains, and before any deductions. This tax shall apply to all income. Leave the Bush-era tax rates in place during this period.
• Eliminate cost-of-living adjustments for all entitlement incomes, including Social Security, veterans benefits and federal retirements. COLAs will be revisited at the end of five years.
• Reduce all other federal government expenditures by 1 percent per year for a cumulative 5 percent reduction.
• Congress shall not exempt itself from any of these provisions.
I believe this approach is necessary and fair. It recognizes that we are all in this struggle together to right the nation’s ship. No individual or company will go unscathed, nor should they if one truly believes in “government of the people, by the people and for the people.”
It sets demonstrable targets and known taxes for a fixed period of time. This provides the certainty individuals and businesses need to facilitate planning.
Finally, I believe that people in all branches of government can creatively manage to reduce expenditures within a reasonable but specific target when required to do so.
This proposal is not pie-in-the-sky. It is concrete and straightforward. It does not kick the can down the road. It does require courage and a willingness to take political risk.