Confronting the Realities of our National Debt – RantAWeek
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Confronting the Realities of our National Debt

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Posted by mjdudak on February 5, 2013 at 5:19 pm

Everyone in Washington seems to be proposing their own solution to solve the nation’s crippling budgetary woes.  The big issue: many of these so called solutions don’t actually solve our debt problems, and their math just doesn’t add up.  Few politicians are willing to address the numbers head on, but it’s important for Americans to realize the exact predicament our nation is in.  So let’s do something that politicians won’t, and examine the underlying numbers behind our nation’s fiscal failures.

Our fiscal year 2013 deficit is projected to come in at 901 billion dollars(1).  But that’s just a one year budget shortfall.  Our total national debt is around 16.4 trillion dollars and rising fast.  Clearly, monumental steps need to be taken in order to stabilize our budgetary failings.  Unfortunately, politicians are only focusing on the small solutions, and this shortsightedness is evident from both major parties.

Republicans have clamored that a smaller government is the right path to a balanced budget.  It’s a good argument on the surface, but dive further into the math and Republican proposals seem far from a panacea.  The reason for this is that Republicans are targeting too small of programs.  Take food stamps, a federal program Republicans have lambasted.  But when Republican backed legislation to curb spending on food stamps surfaced in the House last year, it was only able to trim about $16 billion of the $80 billion food stamp budget.  Simply put, proposed Republican budget cuts don’t have the ability to solve our nation’s fiscal woes.  Bigger reforms are needed.

That all being said, Democratic proposals for tax hikes have been far from a panacea as well.  While tax hikes can certainly ameliorate our budget woes, they are far from actually fixing the problem by themselves. On the surface, tax hikes also seems like a good idea- raise revenue while possibly lowering the income inequality gap. Yet, upon further examination, this plan runs into some problems. First and foremost is the breadth of tax hikes needed. Currently, federal taxes are about 18% of the United States’ GDP. In order to balance the budget, these rates would have to be hiked by about 10% over the next ten years. Not only is this a huge hike which could slow down economic growth all around, this only takes care of the deficit in 2023. By then, the United States will have picked up as much as 26 trillion dollars of debt.

Neither the Republicans nor the Democrats can stick to the hard line on this issue. Simply spending cuts or simply tax hikes will make a little dent in the deficit, a smaller dent in the debt, and overall get nothing done. If Congress is serious about cutting our deficit and eventually lowering our debt, a comprehensive approach must be taken. Taxes must be raised, this much is evident. The Bush Tax Cuts have run their course and should expire entirely, perhaps even raising taxes across the board on this issue. Republicans will first have to break free from their Norquist-ian chains, reach across the aisle and admit it has to be done. Yet Democrats also have to give in some too. Programs like Social Security, Medicare and even defense spending have become wildly inefficient and are doomed to bring failure to the budget of the United States. An all-encompassing reform of revenue and spending must occur if Republicans and Democrats alike want to hold on to hope to truly ridding the United States of the shackles of debt.

 

(1) – White House Office of Management and Budget – http://www.whitehouse.gov/omb/overview

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