It could be argued that the debt is huge and a little dent isn't worth the effort to reign in. I'd have to disagree. You have to start somewhere or you'll never reach your destination. According to the Government Accountability Office (GAO) the U.S. government has 15 different agencies overseeing food safety laws, 82 programs to improve teacher quality and 47 for job training/employment.
With so many agencies handling similar issues, there has to be a vast amount of redundancy in these programs. Here's a good example - The FDA makes sure that chicken eggs are safe, wholesome and properly labeled. Meanwhile a division of the Department of Agriculture is tasked with ensuring the safety of eggs processed into egg products (Paletta, 2011).
Seriously? A logical person would suggest that we get rid of this redundancy and streamline our operations. This could be viewed as bad. How could that be bad? Well, all of those redundant departments are staffed by hard, or not so hard, working Americans who make a paycheck. This paycheck is spent on things - hopefully consumer goods that are made in America and help keep factory workers in their jobs. I'm certain firing them goes against the "lower taxes and more employment equals greater spending and more corporate profits/taxes" scenario.
There is no winning. Face the facts. We as Americans do not want to go without. If we don't make sacrifices of any kind there is no way to get rid of the budget's deficit. Some cuts have to be made somewhere and to do so will result in some seriously pissed off tax payers. Good luck with that Senator.
Paletta, D. (March 1, 2011). Billions in bloat uncovered in beltway. Retrieved from http://online.wsj.com/article/SB10001424052748703749504576172942399165436 .html?mod=rss_Politics_And_Policy
Saturday, June 30, 2012
The Wondering Years
Historically the debt has ballooned during times of war. Looking at the graph below you can see the national debt back to the year 1800. Notice that pre-1950, the spikes in debt were due to war - specifically the Civil War, World War I and World War II.
Smaller jumps in the deficit also occurred during the Great Depression. During that time the government instituted programs to spend their way out of economic hardship - running up the nation's debt to do so.
Things changed about the time of the Korean War. Perhaps it was the Truman Doctrine's glorious fight against the spawn of the devil known as Communism that propelled us into greater and greater debt. Maybe the blame should fall on Lyndon Johnson's Great Society programs and the costs they added to the federal budget.
The only thing that is known for sure is that until the Clinton administration, the federal debt grew almost non-stop for 50 years. That trend has continued unabated since the 9/11 attacks. What changed to make our government run its balance sheet in the red for over half a century? It makes me wonder. You?
Graph courtesy of pgpf.org
Smaller jumps in the deficit also occurred during the Great Depression. During that time the government instituted programs to spend their way out of economic hardship - running up the nation's debt to do so.
Things changed about the time of the Korean War. Perhaps it was the Truman Doctrine's glorious fight against the spawn of the devil known as Communism that propelled us into greater and greater debt. Maybe the blame should fall on Lyndon Johnson's Great Society programs and the costs they added to the federal budget.
The only thing that is known for sure is that until the Clinton administration, the federal debt grew almost non-stop for 50 years. That trend has continued unabated since the 9/11 attacks. What changed to make our government run its balance sheet in the red for over half a century? It makes me wonder. You?
Graph courtesy of pgpf.org
Never Ending Debt
Our nation's debt is skyrocketing. I doubt that is news to anyone. What can be done to solve the impending crisis? Let's look at two types of thinking when it comes to a solution to the debt and perhaps a third which is a combination of the two. Camp One wants to raise revenue, usually in conjunction with lowering taxes to promote growth. Their thought is that the lower taxes will put people to work, with working people spending money on consumer goods. This spending means getting businesses into gear making vast amounts of money and therefore paying higher taxes.
As you can see in the graph below, just stabilizing the debt using the increased revenue model will take a 46% increase in revenue to close the debt - not decrease it mind you - just stop it from expanding. Of course, that percentage does not take into account the tax cuts used to promote growth in the first place.
What about Camp Two you ask? They can fight the debt by cutting costs. Trimming the fat from the budget will allow us to stop any new debt from being added to the ever growing total. Looking at the graph you can see that we would need to trim 31% from the budget just to break even - let alone work off the current debt faster than interest only. Cuts that deep would affect every program you could imagine - Medicare, Medicaid, Social Security, Unemployment Insurance, highway bills, national defense and much more.
Graph courtesy of pgpf.org
As you can see in the graph below, just stabilizing the debt using the increased revenue model will take a 46% increase in revenue to close the debt - not decrease it mind you - just stop it from expanding. Of course, that percentage does not take into account the tax cuts used to promote growth in the first place.
What about Camp Two you ask? They can fight the debt by cutting costs. Trimming the fat from the budget will allow us to stop any new debt from being added to the ever growing total. Looking at the graph you can see that we would need to trim 31% from the budget just to break even - let alone work off the current debt faster than interest only. Cuts that deep would affect every program you could imagine - Medicare, Medicaid, Social Security, Unemployment Insurance, highway bills, national defense and much more.
Graph courtesy of pgpf.org
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