Budget Debt
The US Government spends about $3.7T a year and generates revenues of about $2.5T a year. A $1.2T annual deficit in 2012. In the last five years, Sequestration cuts and increased revenues have reduced the deficit. If anyone wants to know why we have a budget problem in this country, all you have to do is look at the running debt clock. We are now at $20T in debt.! But, if big numbers alone don't get your attention, then lets put the $20T in perspective, it represents over 100% of GDP. The nation owed $10.6 trillion on Jan. 20, 2009, when President Obama was sworn in, and he doubled it – more than Bush piled up in two terms. There is bipartisan agreement that we cannot sustain this level of debt. There is also bipartisan agreement that we must correct the outflows exceeding inflows that drives the debt higher every second (see debt clock) . Everyone who manages a checkbook has seen this problem before and knows how to correct it - reduce expenses and increase income. Increasing revenues is critical to the solution, but will not have an immediate impact. Reducing expenses is also critical to the solution and can generate immediate impact. It is the only thing in your control instantly! Everything else we here about this subject beyond these two facts is just noise and should be ignored. The political left and right cannot agree on how to correct this problem. Doing something is also better than doing nothing, which is what this stalemate is giving us now. The left solution to our problem is to increase taxes on the rich to increase income. Currently the top 20% of income earners pays 80% of the federal tax burden. So do we want them to pay 100%? 110%? 120%? Maybe just write the check every year for the entire cost of government, whatever it is? Clearly this is not a solution. The right wants us to reduce spending and taxes, which was also a poor solution in a recessionary economy, but in a growing economy in 2017 has promise. But, the truth is we must do both (reduce expenses and increase income), we must do it now and it will not be easy. All the political hot air outside these two facts is simply a distraction from the difficult but obvious answer. To increase income we must immediately restructure the tax code to foster a growing economy. Trump did that in Dec 2017. A growing economy will usually increase income (tax revenues for the government) over the 10 years, but not immediately. The Trump tax reform due to money overseas that will be returning home, will have immediate positive revenue impacts. To immediately begin to impact our budget and debt problem whiling anticipating increased revenues we also must immediately and dramatically cut spending. That MUST include discretionary spending AND entitlements (Social Security, Medicare & Obamacare) which represent 90% of the problem. The left will say you are hurting education, the homeless, healthcare of all Americans, the elderly and on and on. The right will shout "we are already taxed enough". All This whining MUST be ignored. No one wants to hurt themselves, their families or their neighbors We have no choice but to intelligently make these difficult decisions while minimizing the pain. But there will be pain. And our representatives MUST ACT NOW. It is a dereliction of duty if they do not. The 2 year budget passed Feb 2018 does not do this. It was a purely bi-partisan negotiation (which is good) but gives everything to everyone and makes no tough decisions on spending. Below you can watch the ongoing debate on this critical issue. And hopefully see the solution we need develop.

What Clinton and Trump Wouldn’t Say About the Budget at Debate

from MSN Money,

Forget for a minute Donald Trump’s treatment of women and Hillary Clinton’s trustworthiness. For the first time during this election’s three debates, the focus turned to what may be the biggest economic problem our next president will face: What to do with the nation’s looming budget deficit.

he candidates, who met for the final time at the University of Nevada, Las Vegas, on Wednesday night, were quick to repeat talking points on growing the economy and raising taxes on the rich. But neither managed a complete answer on what combination of raising taxes and cutting spending will solve our future budget shortfalls. That means that whoever moves into the White House next year will likely take office without having put a clear proposal before voters. With tens of millions of Baby Boomers entering retirement each year, America’s commitments to Social Security and Medicare are set to roughly double in the next eight years. Meanwhile, a solid but hardly exhilarating economy—GDP is projected to expand at 2% annually over the next decade—means tax receipts won’t grow fast enough to pay our new bills.

If nothing changes, the U.S.’s annual budget deficit, which is pegged at just under $600 billion this year, is set to double by 2026, according to the Congressional Budget Office. Meanwhile, over the same period, the national debt would swell from about $14 trillion to about $23 trillion. Neither Democrat Clinton nor Republican Trump have put forward a plan to address the situation. In fact, Trump, whose main economic policy revolves around a massive tax cut, could add $5.3 trillion to the national debt over the next decade. And even Clinton, who has proposed a far more modest combination of tax hikes and new spending, would still do little to fix it, according to the Committee for a Responsible Federal Budget. The candidates got another chance to address the issue during the third debate when Fox News moderator Chris Wallace used his final question to ask, “Why are both of you ignoring this problem?” Trump, going first, argued he would fix the federal budget not with a combination of tax hikes and benefits cuts, but by boosting economic growth through lower business taxes and a better trade policy. While his campaign has tried to square its budget proposals by suggesting the U.S. could return to annual GDP growth of about 3.5%, a pace America enjoyed in the 1990s, Trump went further on Wednesday night: “I actually think we can go higher than 4 percent. I think you can go to 5 or 6 percent.” The problem is that few independent economists think Trump’s growth projections are realistic. And one frequently cited economic analysis, by Moody’s Analytics, actually predicted Trump’s plans could shrink the economy. Clinton, who on Wednesday stuck by her past pledges not to cut benefits, suggested she will solve the budget problem by raising taxes on the wealthy, a group she’s frequently defined as those making more than $250,000 a year. For Social Security, she said she would raise the upper limit on income taxed to fund the program, now $118,500 annually, but she has not spelled out by how much. “I’ve made it very clear,” she said. “We are going where the money is. We are going to ask the wealthy and corporations to pay their fair share.” This approach has its own problems, however. That’s because increasing taxes on the wealthy alone might not raise enough money to both address the nation’s budget problems and allow her to move forward with her other spending priorities, such as making college more affordable and expanding child care tax credits. To accomplish both goals at the same time, the Committee for a Responsible Federal Budget found, Clinton would have to raise rates on some high earners to more than 60%, a level it believes might backfire by discouraging work and investment, potentially leading to lower federal revenues.

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