U.S. debt issue

Cutting money Pictures, Images and PhotosIn the coming days, weeks and probably months you will hear a lot about the U.S. debt problem. The United States has a large national debt that must be addressed because it is close to unsustainable levels. Moreover, until major changes are made, it is still rising. All branches of the government are looking for ways to both cut spending and raise revenues (taxes), even if they aren’t saying it publicly. Unfortunately, when the debt is as large as it is, you have to do both spending cuts and tax increases. There is no real way around it.

In terms of revenue increases, you could raise the tax bracket on those earning the highest income to the levels they were before the Bush Tax Cuts were implemented. This would likely not hurt the economy and would raise tax revenue to pay off the debt. You could also tackle loopholes in the system that allows big companies to find ways to legally avoid paying much tax. This would not technically count as a tax increase and would make the U.S. balance sheet look more sustainable.

The tougher part of this equation is the spending cuts. The majority of U.S. government spending comes from health care. Without making cuts in this category, you simply cannot make a serious dent in the long term debt. Both political parties have their ideas on how to make these cuts. The Republicans have recently unveiled the first of these ideas. The President is scheduled to release his ideas in the coming days. It is likely that neither of these ideas will be fully implemented but it will get the ball rolling on these negotiations.

I am weary about the Republican plans more than the Democrats because the Republicans are generally more likely to put in their social agendas which do not reflect the majority of the country. Also, the President has shown himself to be less liberal than his opponents claim and is really more of a centrist which is where most Americans are. I will follow up on this important issue as big developments occur.