The 21% Solution
August 16th 2011 17:49
According to the August 15 issue of Time Magazine ("The Tea Party's Triumph," Michael Crowley, Time, 8/15/2011), the US owes its creditors $14.3 trillion. The largest parts of this debt are the $3.6 trillion due to shortfalls from the recession (due to less revenue), $1.7 trillion due to Bush-era tax cuts, $1.3 trillion due to the Iraq-Afghan wars, $1.4 trillion due to interest, and $2.7 trillion owed to Social Security.
Spending during the Reagan administration averaged 22.4% of GDP while taxes dropped to 18% of GDP by time he left office. Yes, he lowered taxes, but the national debt tripled. Currently, federal spending is at 24% of GDP while taxes are at 15% of GDP, which is why the deficit keeps growing so fast.
The Republican/Conservative/Tea Party solution is to cut government revenues even further while cutting spending in the hope that the wealthy and business will suddenly start hiring people who will start spending their salaries. Cutting taxes would destroy the social programs which they hate.
I have a better idea. The $2.7 trillion owed to the Social Security Trust Fund, and the interest paid to maintain that debt should be forgiven. What, you say? It can't be done! Why not? We owe the money to ourselves, and we forgive plenty of foreign debt every year. We must write that debt off to something, maybe good will. The accountants can figure it out. That would wipe out almost 21% of our debt (between the debt and the interest on the debt).
Immediately withdraw all troops from Iraq and Afghanistan. We never should have gone into Iraq with troops, and we invaded Afghanistan to get Osama bin Laden (The Taliban refused to turn him over to us but were willing to turn him over to a third country, where we could have gotten him much sooner); we got him, so there's no need to be in Afghanistan supporting that ingrate Karzai, who wants to deal with the Taliban anyway. That would stop any further debt due to those wars.
Reducing the debt by 21% would bring the debt to $11.3 trillion. If tax loopholes were eliminated, and the Bush-era tax cuts were allowed to expire in 2012, revenue would rise to about 19% of GDP. All Congress would have to do is pass a law stating that it was forbidden to dip into the Social Security Trust Fund again to balance the budget, and Social Security and Medicare would be saved.
Spending during the Reagan administration averaged 22.4% of GDP while taxes dropped to 18% of GDP by time he left office. Yes, he lowered taxes, but the national debt tripled. Currently, federal spending is at 24% of GDP while taxes are at 15% of GDP, which is why the deficit keeps growing so fast.
The Republican/Conservative/Tea Party solution is to cut government revenues even further while cutting spending in the hope that the wealthy and business will suddenly start hiring people who will start spending their salaries. Cutting taxes would destroy the social programs which they hate.
I have a better idea. The $2.7 trillion owed to the Social Security Trust Fund, and the interest paid to maintain that debt should be forgiven. What, you say? It can't be done! Why not? We owe the money to ourselves, and we forgive plenty of foreign debt every year. We must write that debt off to something, maybe good will. The accountants can figure it out. That would wipe out almost 21% of our debt (between the debt and the interest on the debt).
Immediately withdraw all troops from Iraq and Afghanistan. We never should have gone into Iraq with troops, and we invaded Afghanistan to get Osama bin Laden (The Taliban refused to turn him over to us but were willing to turn him over to a third country, where we could have gotten him much sooner); we got him, so there's no need to be in Afghanistan supporting that ingrate Karzai, who wants to deal with the Taliban anyway. That would stop any further debt due to those wars.
Reducing the debt by 21% would bring the debt to $11.3 trillion. If tax loopholes were eliminated, and the Bush-era tax cuts were allowed to expire in 2012, revenue would rise to about 19% of GDP. All Congress would have to do is pass a law stating that it was forbidden to dip into the Social Security Trust Fund again to balance the budget, and Social Security and Medicare would be saved.
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