Congress keeps putting off the debate over increasing the debt ceiling. It was increased without any debate or discussions about spending reductions several weeks ago. This latest increase is expected to get the government the credit limit it needs to get to about January 14th. Of course, Congress will get a Christmas break that ends on January 7th. That gives them one week to figure out what to do to prevent another government shutdown. Will they work on this before the Christmas break? If you believe they will, then I have some beach front property to sell you in Wyoming.
So what will happen on or about January 14th? Maybe we'll get another extension for a few months. I also expect the Republicans in the House to demand spending cuts, while the Democrats in the Senate will refuse to cut spending without a tax increase on the rich. It will be deja vu all over again.
If we get any spending cuts, will they be real? Will the government actually spend less or will the rate of growth be reduced? There are already advertisements on TV in Cincinnati claiming that the Republicans want to cut or even take away Social Security from the retirees. Any meaningful attempts at cutting spending will bring us attacks like this that make cuts political suicide. Americans continue to reward the MessAPolitico with re-election after they run ads like this. Will we ever get enough cuts to balance the budget with this system in place? It is not likely.
I know this blog sounds like a broken record sometimes, but I wholeheartedly believe that our country is headed for bankruptcy unless the politicians make drastic cuts immediately. All of the senior citizens that are receiving Social Security, Medicare, and, in some cases, Medicaid, should be more worried about these programs going away completely. That's what would happen if the bond markets suddenly downgraded our debt drastically. The US credit rating will eventually be downgraded if we remain on this path. Maybe the retired folks of today figure it won't happen until they are gone from this earth. I guess they don't care about the younger folks like their kids or grandkids.
How do we solve the budget problems facing the federal government? There are a couple of choices: spending reduction or increased tax revenue generation. Spending reduction as it has been done (or not done) in the past will never get us there. I believe that it could if we eliminated a lot of worthless agencies, waste, and redundancy in the federal government. However, I don't see that happening.
So, let's consider the tax revenue side of the equation. This could definitely stem the tide of red ink. Do I think we need tax rate increases on the rich or anyone? Absolutely not! That will cause revenues to drop. This has been proven time and time again. Reducing tax rates frees up capital in the private economy. Increasing spending there will put more people to work, and they will pay taxes. The corporations will have increased profits, and that means they will pay more taxes. More people working will pay more Social Security and Medicare taxes as well.
Why does our economy remain in a funk after over five years? Our federal government has been doing all the wrong things for five years. This will never end if the government continues to punish prosperity and job creation. Endless regulations, not the least of which is Obamacare, keep businesses small and large from hiring more employees in the USA. Tax increases on the "rich" small business owners simply take money from them that might have been spent on inventory or equipment or new buildings or hiring new employees. They are encouraged to move their plants overseas or to simply purchase goods from manufacturers outside the USA.
Please join me in voting out the MessAPolitico post haste.
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