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sandy2

Join Date 08/2004

The horror of our debt.

Would someone like to guess what the third largest expense is for the United States Federal Government?

Its the interest on our 7 trillion dollar debt, and it equates to more than 300 billion dollars. Only defense spending and the medicare (and other health/human services) cost more each year.

Each person in this country holds $22,000 worth of debt, on top of any debt they might have. The gov. pays the equiv. of more than $1000 per person a year in interest payments. These payments will continue to rise as our debt is currently increasing by 7% a year. This is a major problem for the United States.

This debt should be payed of as quickly as possible, and further, legislation should be passed preventing the budget from project a deficit. Only for emergency war time costs should such deficits be allowed, and in that case emergency tax increases should accompany.

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I agree whole heartedly. I would be like spending one third of your income on credit card Debt and still buying Pizza every night.

But I don't believe raising taxes is the way to go though, there is alot of fat that still can be cut from the federal budget.

Accualy I do want to note that Social Security was higher then the interest. Also that the a full 25% of the defence budget really is used by the CIA/NSA/FBI/NASA. All the spysatilites and other equipment like them are built and maintained under the Defence budget.

Unfortunately, both sides (Rep & Dems) are guilty of not stopping the deficits. The Rep. keep lowering taxes when they should cut. Then the Dems. keep wanting to raise Social spending.

I have to give Clinton credit for backing a balenced budget (this makes my skin crawl). So he did do something right. But also remember Clinton alone could not balence the budget, it took Congress (controled by Reps. some years, Dems others, and mixed most of the time) to also not add items and hack some of the fat that was on Clinton's budget (40 Billion).

Only for emergency war time costs should such deficits be allowed, and in that case emergency tax increases should accompany.

I agree. I've seen this first hand. For the Four years leading to 9/11, the Bosnia/Serbia and million dollar cruise missile events was sucking the defence budget dry. It was common for military logistics people to be told not to buy anything for the last three months of the year.

Thats My two Cents

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Join Date 03/2001

+23

But I don't believe raising taxes is the way to go though, there is alot of fat that still can be cut from the federal budget.

The taxes should be rinsed but not too much. We could basically meet in middle by rinsing taxes AND cutting budget.

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I am all for a Constitutional amendment the does not allow the Federal Government to spend money it does not have.

The Nevada Constitution has one and it has served this state well.

( Note: Except recently with some activist Judges.)

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sandy2:

The situation is even more desperate than just the debt and it's relationship to the cost of government. First, we are continuing into debt with a 440 billion dollar deficit this year and projections for next range from 400 to 600 billion more depending on the source. Second, when the government borrows money at the rate that this one is, it causes the GDP to drop and ties the hands of the Federal Reserve who can't raise borrowing rates because the deficit would cost even more, but then can't stop inflation in the system (just think of oil).

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I agree that the situation is desperate. Because we have such a deficit right now, the first step is to mandate that deficits are not acceptable. Next, we should institute a temporary emergency national sales tax, except on raw uncooked un prepared food (food which is not from a eating establishment). This should also apply to services. This will apply to foreigners and all imported goods (a customs charge). If it were 5% then we would get aprox. 500 billion dollars a year, and then after about 15 years (assuming no deficits are allowed) we will have paid back the debt. I understand that a 5% sales tax will not only make products more expensive after tax, but also pretax, but I am also aware that it is the best tax system that is easily implemented temporarily. If the sales tax system works well, then after the debt is paid off it will remain and the income tax will be reduced. This will allow the GDP to go up alot because there will be no debt and taxes will go down and taxes will go even further down because there will now be a 500 billion dollar surplus in place of the interest payments. The sales tax will cause the GDP to fall some in the first year, but after that it will return to its before levels because the interest payments will drop and the debt will drop.

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IF we closed all our foreign military bases and got out of Iraq, that would probably yeild us $300B a year that we could put towards the debt.

" I am all for a Constitutional amendment the does not allow the Federal Government to spend money it does not have."
-I'm 99% positive that every state besides vermont has something similar. Anyway, the problem that can arise is that on bad years economically the government still has to spend as much as on good years, but it won't have the money. Switching to an LVT would lower the volatility of government tax revenues somewhat, making it easier to plan budgets.

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I'm just afraid that when you raise a temporary tax that it don't stay that way. How many Gas taxes have been past because it was needed for this or that. Then the law makes deside later that now that the origainal thing is payed for, lets use the income for something else. For them it's win, win because truthfully they are not raising a new tax and the public just don't notice it most of the time. I think that why many people fear raising any taxes. That over reaction feeling is the reason why the NRA fights so hard against gun control, not because they are again all control but they just don't want to start a snowball effect.

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Well I stated that hopefully it would become a permenent tax. Believe me, if we are generating a surplus (I think we should have a 500 billion dollar reserve for emergencies by the way), a tax cut will be given.

Cwarsh- I said that in cases of emergencies we should have an aditional emergency tax. Another way to handle the situation would be to have a 1 trillion dollar emergency reserve).

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IF we closed all our foreign military bases and got out of Iraq, that would probably yeild us $300B a year that we could put towards the debt.

I agree that we should do this too. Not only because it will help us prevent terrorism (there is another post on this), but because it is one way to eliminate the deficit. Remember that before we can repay the debt we need to cut costs to be equal to our income tax revenue. The other problem is that the gov. doesn't consider Social Security expenses to be part of the budget, so our deficit is actually larger than they claim.

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Hmmmmm....record deficets. Those no good "tax and spend liberals!" Wait a minute....all of this was brought to you by the so called "fiscally responsible" Republican controlled Congress! Talk about hypocracy!

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Sandy, which health/welfare programs do you favor cutting/freezing?

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Madine:

The Education Department that Ronald Reagan campaigned he would eliminate in 1980! It is worthless and a depository for a lot of congressional pork. Then I would revamp the IRS with it's 7.000,000 page code that noone, even they understand. How about the Rural Electrification Administration? Know any place in the country without electricity? How about hiring a buyer for government services who actually is not interested in paying Halliburton $1 million for a $100,000 contract?

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sandy2:

Republicans will never agree to change the tax structure. It works for them and if proper tax rates for people were ever put in place they would be a lot poorer. Consider a sales tax for example. 90% of the income is made by 10% of the people and so is the spending....

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Wait. So explain to me how it is the republicans that would never agree to a change in the tax structure. More than 90% of taxes are paid by the top 10% of income earning people. Since republicans tend to favor tax cuts that help the wealthy, how would they not agree to a sales tax which considerably would lower the burden placed on the wealthiest 10%. Or are you talking about the wealth tax? Florida has a successful Wealth Tax. And a wealth tax modeled off that of Switzerland would raise about 73 billion dollars according to NYU professor Edward Wolff (Robb Report Worth Magazine- September 2004).

Madine- Obviously we can't cut medicare. I liked the suggestion outlined by someone on one of the posts about decreasing malpractice liability thus decreasing the cost of medicare. Also, I think that we should cut all corporate welfare and personal welfare, with the exception of food stamps.

Another way to increase revenue would be to force companies to pay their corporate tax. "Harvard University economist Mihir A. Desai has calculated the difference between the profits that corporations reported to the Internal Revenue Service in 1998, and the profits that accountants certified in the annual reports the companies issued to their stockholders. The difference between them is staggering: $154 billion in 1998. The result of almost one-sixth of a trillion dollars hidden by accountants’ sleight-of-hand from the IRS? The federal government did not collect $54 billion that should have been paid in taxes. " (commondreams.org). This money needs to be collected. The way to do that is to force companies to pay taxes on the income they claim to their stockholders. This will work to stop fraud and to increase tax revenues.

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cactoblasta

Join Date 04/2004

+48

Americans don't need to worry about their national debt. If it becomes too large and too draining, the US will simply declare it's not going to pay it back, and just take the repercussions of such a move. After all, there's nobody to stop them.

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sandy2:

Even though the wealthiest 10% pay 90% of the taxes, the amount collected from a sales tax (consumption, the physical not biological type) from them would be much higher because you can protect assets by sheltering them (becoming a corporate entity for example) but there is no way to protect yourself from the spending. Spending is what many call a "wellhead" tax where income tax is "backend." Much easier to create loopholes on and jump through. I have talked to millionaires who threatened to move out of the country if a national sales tax were ever enacted instead of income tax.

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Then let them move out of the country. If they don't want to pay their fair share of taxes they can leave.

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"Even though the wealthiest 10% pay 90% of the taxes, the amount collected from a sales tax (consumption, the physical not biological type) from them would be much higher because you can protect assets by sheltering them (becoming a corporate entity for example) but there is no way to protect yourself from the spending. Spending is what many call a "wellhead" tax where income tax is "backend." Much easier to create loopholes on and jump through. I have talked to millionaires who threatened to move out of the country if a national sales tax were ever enacted instead of income tax."

-exaplain how they could do that under a no-exemption/deduction flat tax? Under congressman Dick Armey's flat tax proposal, the most famouts one so far, both individuals and businesses would pay a 17% rate. Individuals would get a single bottom deduction from what they have to pay taxes on. For example, a single adult doesn't pay taxes on the first $13,100 of his her/earnings, for a single head of household its $17,200 plus $5300 per dependent, and for a married couple filing jointly its $26,200 plus $5300 per per dependent. Also, this is only counting wages, salaries, and pensions, so in other words theres no capital gains tax (tax on capital gains, dividends, or interest). This is justified because the companies that you are investing in are already paying the 17% tax rate also. All companies would pay 17% of (total revenue) - (wages, cost of goods, services, materials, and equipment used in business.

How could people hide income in corporations if corporations would be taxed at the same rate as individuals?

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exaplain how they could do that under a no-exemption/deduction flat tax?

Remember, even if we did instutute a no-deduction system, it would not last long. Many powerful groups get large amount of their income from deductable contrabutions. Groups like the Boy Scouts, Sierra Club, Catholic Church, ACLU, PBS, and Salvation Army to name the largest. All have large lobying groups in DC and I feel it would not take long for the law makers to reinstate those deductions (Then we are back in the loophole games again.).

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OK, so say only allow deductions for charitable contributions. There would have to be some kind of reform on charitable contributions of securities, because I know that thats one loophole.

The way it works is you find a stock with low liquidity and buy up all the shares for sale. For example, you might find a stock selling for $1 and buy 100,000 shares, but in doing so you run up the stock price to $10, but you had an average buy price of say $3 a share because you bought most of the shares in the $1 to $2 range. That means that on your shares you spent $300,000, an average of $3 for each of the shares. However, you drove the bid price up to about $10 per share. So you quickly donate the shares to a charity and list the bid price as $10 a share, meaning that you "made" a $1,000,000 contribution. If you are in the 35% tax bracket, that means that you'll get $350,000 off your taxes, even though you only spent $300,000 on the stock! Of course this means that the charity didn't really get $1,000,000 because as soon as they start selling it they'll drive it right back down to $1. So under this example, the guy gets the good PR of donating $1,000,000 and makes $50,000.

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CWarsh

True, True... Practices like that unfortunarely happens.

My biggest fear is that in ten years there will be so many holes punched into the new system, made by Congress, that it will be just as Rotten as the old (if not more).

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Horror is exactly right. While the 'conservative' claim the be engine of growth and bastion of morals. They largely preside in the bread basket and extraction economies which take huge goverment subsidies for their efforts at pandering in the media and government. Meanwhile the 'liberals' get themselve educated, produce massive amounts of technology and intellectual property growth, and get smeared by the shouting, bullying,
leeching American conservatives. What contradiction those moral hacks have played upon the public. To hell with all of em.

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produce massive amounts of technology

Last time I checked Bill Gates and Steve Jobs (One time counter culture hippy) were both Republican.

They largely preside in the bread basket and extraction economies which take huge goverment subsidies for their efforts at pandering in the media and government.

???? Medicare, Welfare, National Health care, and supporting the Arts are all huge government subsidies, they are not Republican. I geuss NASA, the Military, and Intelligents operations are all just fluff.

If your talking about pork prodjects then yes there is to much, but both side are guilty of that.

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We don't need to raise taxes (though we should roll back a few of the tax breaks, ahem!) but we do need to cut the pork! Most "pork-barrel" spending comes in the forms of representatives and senators securing government funds for ballparks, airports, and research projects whose main questions are things like "Why does spilled coffee create imperfect rings?" We almost balanced the budget in the '90's and were starting to pay down the debt. Now we're going hogwild!

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All this pork makes me hungry for bacon.

And if the bank has lended you all its money... you OWN THE DAMN BANK! Who cares what we owe!

Vote for PORK!

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