National Deficit

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National Deficit

Peter Orszag's Ideas for One Nation, Two Deficits

Author: peteo3140@gmail.com

Orszag believes our nation is facing a "nasty" dual deficit problem.  He believes a job deficit is going to continue in the near future as well as a budget deficit in the long term. To deal with these issues Orszag proposes a compromise; extend the tax cuts from the Bush administration for another two years and then end them altogether.

This makes sense because over a long period of time the tax cuts are just not going to be affordable, but we can't end them right now due to the high rate of unemployment in the job market. Orszag says if we initiate high tax rates currently we are going to further depress consumer spending.  Also, losing consumer confidence in the bond market could be a problem and cause market sentiment to shift.

Orszag disagrees with both the progressives and the conservatives. The progressives hope to make tax cuts permanent, all but excluding the highest bracket of earners. Conservatives want to make tax cuts permanent, including the highest earners. However, Orszag says if we did either of those we would expand the nation deficit by more than $3 trillion just over the next ten years. It's going to be hard to even solve our budget issues over the next decade.

The economy needs a deficit reduction of about $200 to $400 billion a year by 2015, Orszag says. Medicare, Medicaid, and Social Security will take responsibility for almost half the nation's spending by 2015. The other half of the budget is blamed on net interest and discretionary spending.

Peter Orszag proposes solutions to cut the deficit. One of the solutions is to establish a new source of revenue through increasing tax reform. This would provide the U.S. with hope to improve the tax code by leaning towards a consumption-based tax system.

Orszag also says that by extending the tax cuts for two years and then ending them doesn't require an affirmative vote, but instead happens by default. This would solve the nation's "medium-term" deficit problem by reducing it from $200 billion to $350 billion each year from 2015 to 2020. Middle class and lower class families will have less of a concern of higher tax rates if we continue to tackle this medium term issue.

Finally Orszag calls for the uniting of the Democrats and Republicans to fight this. Orszag wants us to continue the fight for tax cuts for an additional two years and then for the end of them in 2013.

Article Source: http://www.articlesbase.com/politics-articles/peter-orszags-ideas-for-one-nation-two-deficits-4155647.html

About the Author

Ron Thomas

Republicans and Democrats Playing With Fire On National Debt

Author: Currentusa

Republicans and Democrats are butting heads as they try to negotiate a solution the debt ceiling deadline coming up in early August. This political brawl is, of course, a reflection of the need to deal with the national debt and get the finances of the federal government in order.

The Simple Problem

The fact the United States has run up against the debt ceiling is a reflection of the problems with our overall debt situation. The problem involves simple math. The government is spending far more than it takes in. The government is taking in roughly 2.7 trillion dollars this year, but has a deficit of 1.5 trillion. This effectively means that another 1.5 trillion is being added to the overall debt this year and this will occur for the foreseeable future.

Three Areas Problematic

This is one area where it is easy to tell whether our elected representatives are serious about dealing with the problem or not. This is because there are three programs that are the problem. If we terminated every other government program, these three would still cost us much more than we bring in as tax revenue each year. The three programs are Social Security, Medicare and the military. Unless our elected representatives are willing to address the tough issues with these three programs, any other steps they take are useless.

Playing With Fire

The simple fact is Republicans and Democrats are playing with fire in the debt ceiling negotiations. The Republicans are refusing to go along with any solution that involves raising taxes. The Democrats are refusing to go along with any solution that doesn't combine spending cuts with tax increases. Somebody is going to have to blink, but it appears more and more like neither side is willing to.

So, what would be the impact of no deal? The immediate answer might surprise you. The government would start suspending payments to pensions and would direct the money to pay the treasury notes coming due. There would be no default per se, but this is only a temporary solution that would last for perhaps six months before the debt had to be dealt with in earnest.

This doesn't mean problems would not happen. They would in a big way. The monitoring agencies have already indicated they will heavily downgrade the credit rating of the United States. This would result in a huge increase in interest rates on government debt, which would leak into the commercial market. This would mean the interest rate on all adjustable rate loans for cars, homes, credit cards and the like would go up, way up. We are talking about increases in the range of two to five points. Such an increase would bankrupt most of America so it behooves the politicians in Washington, D.C., to come up with a solution.

Article Source: http://www.articlesbase.com/organizational-articles/republicans-and-democrats-playing-with-fire-on-national-debt-5001650.html

About the Author

For more information about National debt , please visit http://www.currentusanationaldebt.com/

Amazing and Depressing Stats on our National Debt

Author: Anthony Ricigliano

Anthony Ricigliano - Anthony Ricigliano Economy News and Advice: The national debt is the amount that the United States has borrowed and is currently paying interest on. The national debt of the U.S. is now over $14 trillion, a number that is larger than the gross domestic product of China, the United Kingdom, and Australia combined.

Here's a list stats that are amazing but that you may not want to read:

* In 2010, the United States accumulated over $3.5 billion in new debt each and every day. That's more than $2 million per minute.

* The cost of executing the wars in Iraq and Afghanistan is well over $1 trillion and counting.

* The Treasury Department estimates that our debt to China is approximately $843 billion and counting.

* According to the January 2010 Congressional Budget Office (CBO) report, the federal budget deficit in 2009 was $1.4 trillion (9.9% of GDP). The 2010 deficit was approximately $1.3 trillion (9.1% of GDP). Not since 1945 have deficit been that high relative to GDP.

* According to the March 2010 CBO report, at proposed spending levels, the national debt will increase to 90% of GDP by 2020, at about $20 trillion.

* The government is also borrowing from itself, having borrowed from Social Security and Medicare, which have had surpluses.

* In 2009, according to the CBO, $187 billion of tax receipts were used to pay interest on the national debt. This is interest only and does nothing toward reducing the debt.

* The share of the national debt for each employed American is more than $90,000.
Recession and extended war efforts have exacerbated the numbers attached to the national debt as tax receipts have decreased while war and entitlement spending have increased. It's entirely possible that these expenditures could be decreased (by ending the war effort) while tax receipts increase in an improving economy.

The issue at this point is that both parties seem intent on blowing up the national debt regardless of the factors in play at the present time. Politicians seem intent on continually delivering the message to their constituents that spending can continue and that we'll deal with the debt monster at a later date. This shifts the debt burden to future generations who will suffer as the debt piled on by earlier generations consumes the lion's share of the country's GDP. It seems that everyone is living for today while leaving the bill for our kids, grandchildren, and the generations that follow.

Article Source: http://www.articlesbase.com/economics-articles/amazing-and-depressing-stats-on-our-national-debt-4245354.html

About the Author

Anthony Ricigliano's background in information technology, distribution, purchasing and regulatory affairs then gives him an edge with integrating that infrastructure with areas in the company that generate revenues.

How to Balance the Federal Budget & Eliminate Our National Debt Within 4 Years

Author: Erin Kent Magee

How to Balance the Federal Budget & Eliminate Our National Debt Within  4 Years

                                                Without Raising Taxes!


It is estimated that the top 1% of the US population, or 3,105,000 people, have an average

income of $1.1 million dollars a year. (Source: Department of Sociology, UC Santa Cruz,

January, 2011)

If we multiply $1.1 million ( $1,100,000 ) by 3,105,000, we come out with $3.4 trillion.

An adjusted tax rate of 25% will yield $1.7 trillion in revenues within 2 years and $3.4 trillion within the next 4 years, from just the wealthiest 1% of the US population.

Our national debt is now around $1.4 trillion. This will give us a surplus of $2 trillion over the four year period.

Our projected budget deficits for 2011 and 2012 will total $2.58 trillion, leaving us with a shortfall of $.58 trillion ( or, $580 billion ).

We're now talking billions, not trillions, which makes the numbers a lot more manageable. However, we are still faced with a deficit. To eliminate that deficit, we can either decrease spending or increase revenues.

Recently, the focus has been on spending cuts; but, wherever we look, we run the risk of cutting essential services. There has even been talk of drawing upon the Social Security Fund. However, this fund belongs to a separate trust and should not be considered a part of the federal budget.

How can we safely increase federal revenues? President Obama believes this can only be done through massive tax rate increases for those in the upper tax brackets, but history shows higher taxes lead to lower revenues. According to Dr. Daniel Mitchell of the Heritage Foundation:

"When tax rates are reduced, the economy's growth rate improves and living standards increase. Conversely, periods of higher tax rates are associated with sub par economic performance and stagnant tax revenues".

Dr. Mitchell proves his point through a review of historical cuts in the 20s, 60s and 80s.

The Tax Cuts of the 1920s

Tax rates were slashed dramatically during the 1920s, dropping from over 70 percent to less than 25 percent. What happened? Personal income tax revenues increased substantially during the 1920s, despite the reduction in rates. Revenues rose from $719 million in 1921 to $1164 million in 1928, an increase of more than 61 percent.

The Kennedy Tax Cuts

President Hoover dramatically increased tax rates in the 1930s and President Roosevelt compounded the damage by pushing marginal tax rates to more than 90 percent. Recognizing that high tax rates were hindering the economy, President Kennedy proposed across-the-board tax rate reductions that reduced the top tax rate from more than 90 percent down to 70 percent. What happened? Tax revenues climbed from $94 billion in 1961 to $153 billion in 1968, an increase of 62 percent (33 percent after adjusting for inflation).

The Reagan Tax Cuts

President Reagan proposed sweeping tax rate reductions during the 1980s. What happened? Total tax revenues climbed by 99.4 percent during the 1980s, and the results are even more impressive when looking at what happened to personal income tax revenues. Once the economy received an unambiguous tax cut in January 1983, income tax revenues climbed dramatically, increasing by more than 54 percent by 1989 (28 percent after adjusting for inflation).

Why do lower taxes lead to increased revenues? In short, more money is set aside by taxpayers at the upper income levels for savings and investment, which generates more taxable income. When rates are increased, these same taxpayers place more of their income in tax shelters, such as securities and foundations.

Thus, any attempt to increase revenues and eliminate debt through massive tax hikes would not be a wise course of action.

A better approach would be to increase revenues, without a tax rate increase. This can be done by addressing the Trade Deficit. The Trade Deficit can be offset by increasing our sales around the world, or increasing tariffs on imported goods.

From 2007 to 2010, our trade deficit with China, alone, was $1.26 trillion, nearly enough to pay off our entire national debt! Since our budgetary deficit can be offset through tax revenues, we can wipe out our national debt by eliminating the trade deficit between the U.S. and China; and, by increasing our export volume, this can be done within the next 4 years!

 

 

Article Source: http://www.articlesbase.com/politics-articles/how-to-balance-the-federal-budget-eliminate-our-national-debt-within-4-years-5016172.html

About the Author

Erin Kent Magee is a Veteran with 10 years of prior federal service.  He has worked for the Department of the Navy and Department of the Army; and, in 2010, he retired from the IRS.

On April 5th, he filed his Statement of Candidacy with the Federal Election Commission as the 1st Republican Presidential Candidate from the State of Florida.

He is bullish on America, and believes our current economic woes will be overcome through an increased volume of trade and private investment in emerging industries.

The Unrelenting Hypocrisy and Lack Of Leadership Of The Obama Administration

Author: Bruno Korschek

This article discusses the national debt from both a hypocrisy and leadership perspective. As most people know, unless the political class agrees to some sort of financial plan in the next week or so it is highly possible that the United States' Federal government will start defaulting on the massive debt levels it has created over the past decades, a trend that has violently accelerated in the past three years.

What will happen if that should occur is open to debate but it will likely not be pretty. Given that the Federal government spends $1.40 for every dollar it collects in taxes, the most immediate impact is a likely 30% decrease in what the political class has to spend on government programs which will likely result in disruptions to government services and payments.

But it did not have to get to this point. Anyone in Washington with first grade math skills could have figured out a year or more ago that this crisis was coming. That is when the political class should have started talking about a coherent, integrated, strategic way to get spending under control. Outside of crisis mode, months ahead of the crisis. This is not a debate about what to name a new post office, it is a debate that will likely negatively impact the lives of just about every American and it should have been taken much more seriously.

But the political class, including the most powerful figure within that class, Barack Obama, never got around to the crisis until just weeks before D-day. Not only did the politicians start late but they cannot even get close agreeing on how to solve the crisis. The biggest obstacle is the fact that Obama is insisting that any agreement to cut the budget and raise the debt limit must include big tax increases on businesses and wealthier Americans. Republicans are insisting on only spending cuts with no tax increases before they will agree on raising the debt limit.

Which brings us to the hypocrisy part of this discussion. Consider a generic yet accurate definition of what hypocrisy is:

Hypocrisy: an act or instance of falseness.

In the light of this definition, now consider some direct Barack Obama quotes from the past few years starting with his position when the Bush administration in 2006 needed to raise the debt limit during his second term in office and Obama was still an Illinois Senator:

"The fact that we are here today to debate raising America's debt limit is a sign of leadership failure. It is a sign that the U.S. Government can't pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government's reckless fiscal policies. … Increasing America's debt weakens us domestically and internationally. Leadership means that ‘the buck stops here. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better."

So, in 2006, raising the debt limit was a failure in leadership according to the morals and standards of Obama. But now Obama wants to raise the debt limit. How is doing the exact same thing that Bush did not be a failure in leadership? How could that be a failure in leadership in 2006 but not 2011? Same issue, same person, different viewpoints. Which one is a falsehood?

Incidentally, in 2007 and in 2008, when the Senate voted to increase the limit by $850 billion and $800 billion respectively, Obama did not even bother to vote. How and why would a Senator avoid voting on these two important votes, votes that again could have affected just about every American? Hardly a leadership approach to his responsibilities.

But the hypocrisy continues. In August 2009 when Obama was in Indiana to promote his economic stimulus plan, he was being interviewed by NBC's Chuck Todd. Todd fielded a question from a local citizen, Scott Ferguson: "Explain how raising taxes on anyone during a deep recession is going to help with the economy."

Obama's response: "First of all, he's right. Normally, you don't raise taxes in a recession, which is why we haven't and why we've instead cut taxes. So I guess what I'd say to Scott is – his economics are right. You don't raise taxes in a recession. We haven't raised taxes in a recession."

"We have not proposed a tax hike for the wealthy that would take effect in the middle of a recession. Even the proposals that have come out of Congress – which by the way were different from the proposals I put forward – still wouldn't kick in until after the recession was over. So he's absolutely right, the last thing you want to do is raise taxes in the middle of a recession because that would just suck up – take more demand out of the economy and put business further in a hole."

So, is this even more Obama hypocrisy? While we are not "officially" in a recession, it certainly feels like one. Official unemployment is high and rising, underemployment is much higher and rising, average wages recently dropped again, a major leading indicator is trending downward, job creation is minimal, and the housing industry is still in the dumps.

Two years ago Obama correctly understood that raising taxes for any American, wealthy or not wealthy, is a stupid economic policy to follow in bad economic times, "it is the last thing you want to do." Now, in order to get Republicans to agree to spending cuts in return for support on raising the debt ceiling during a very bad economic time, he is insisting on raising taxes for wealthy Americans and businesses.

But the examples of hypocrisy just keep on rolling in. Back last fall when Obama and the Republicans agreed not to let the Bush tax cuts lapse, keeping the tax rates the same, Obama was again supporting the strategy of letting American citizens and businesses keep more of their wealth. Consider his words at that time:

"Millions of entrepreneurs who have been waiting to invest in their businesses will receive new tax incentives to help them expand, buy new equipment or make upgrades – freeing up other money to hire new workers."

Thus, late last year it was a good idea for businesses to keep more of their profits and invest them to help the economy. Nine short months later is a bad idea since Obama wants to raises taxes on the same people that he wanted them to keep their money and invest in the economy. Hypocrisy again.

These words are not from Republicans, Fox News, Tea Party people or Rush Limbaugh. They are Obama's own words. The only way they make sense from when they were stated to today is that the President is an incredible hypocrite, willing to say anything at anytime to make political points for himself. They are called acts of falsehood, it is called hypocrisy. It is also pathetic for a so-called leader.

Enough abut hypocrisy, the above quotes prove the point of what type of person the President is. Let's move on to leadership. The following quote from Arnold Glasow captures the essence of what a true leader is:

"One of the tests of leadership is the ability to recognize a problem before it becomes an emergency."

Failing to raise the debt limit and failure to get out-of-control spending under control is certainly now an emergency. Back in the fall of last year the President's own debt reduction commission, after much hard work over most of the 2010 calendar year  presented the President with a detailed, non-partisan, coherent plan for reducing government spending.

At the time of the plan's completion, the Democrats controlled the White House, the Senate, and the House of Representatives. A leader would have taken that plan, ran with it, convinced his Democratic friends in the Congress to pass it, without needing Republican support, and the debt crisis we are weeks away from would have never become an emergency.

All it would have taken is a little leadership and fortitude for the President to tell the American people that government had to tighten tighten up spending and shown how HIS commission had the right plan to do it. Heck, he could have blamed the deficit reduction commission to avoid any personal blame and any political fallout.

The President missed that opportunity to avoid an emergency but he had other chances. Earlier this year he submitted his budget plans to Congress for review. His plans did nothing to control spending. In fact, if that original Presidential budget had been approved, it was projected to add at least another $9 TRILLION to the national debt, or about $80,000 worth of debt for every American household.

This budget was rejected by the Senate by a unanimous vote of 97-0. Even his Democratic friends in the Senate knew that his budget plan was a disaster. Thus, rather than start the discussion constructively towards reducing spending many months ago, the President chose to pass the buck again, missing another chance to avoid the current emergency.

As the potential for an emergency got closer and closer, the President avoided all contact with this issue, leaving Joe Biden and six members of Congress only a couple of months  to tackle a problem that a his full Presidential deficit commission took almost a year to wrestle to the ground.

In those months, the President was no where to be found relative to this emerging emergency, spending time touring the world, having tea with the queen, and blaming Congress for the impasse on the debt ceiling issue. Rather than giving credit and taking blame, the behavior of a good leader, Obama was doing just the opposite in order to politically protect his own selfish interests.

At least three instances where a true leader could have recognized the problem before it became an emergency and in each instance, the President failed to step up and perform. It is now obvious that his only priority is to get re-elected in 2012, the country's financial and economic welfare be damned. His positions on taxes, spending, and the debt limit are so incredibly and so obviously hypocritical. His failure at leadership so blatant and destructive.

The truly sad thing about this whole emergency is the tax increases he is proposing, removing oil company loopholes, taxing corporate jet owners, taxing the rich, etc., his hypocritical demands that are holding up a solution to the emergency, are infinitesimal in the whole picture of out-of-control spending. They are simply ploys to energize his base and prove he is tough on corporations and rich people, they would have nothing to do with fixing this fiscal emergency.

Article Source: http://www.articlesbase.com/politics-articles/the-unrelenting-hypocrisy-and-lack-of-leadership-of-the-obama-administration-5030293.html

About the Author

Walter "Bruno" Korschek is the author of the book, "Love My Country, Loathe My Government. - Fifty First Steps To Restoring Our Freedom and Destroying The American Political Class," which is available at www.loathemygovernment.com and online at Amazon and Barnes & Noble. Our daily dialog on freedom in American can be joined at www.loathemygovernment.blogspot.,com.

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