Defeating the Deficit

I think everyone by now knows this country has got a serious issue on its hands: an ever-exploding federal deficit. Everyone knows that you don't spend money you don't have unless you've got a plan to get out of it. (Yes, my own deficit soon will be exploding with law school tuition payments to make.) The federal deficit now stands at $12.8 trillion dollars! With the estimated population of the United States at 308.1 million that is about $41,000 debt per United States citizen. Our debt is excessive. Now there will always be economists who debate whether or not that is a bad thing for growth, but fiscally we're experiencing a disease that will continue to eat away at us until it's too late.

Today the director of the Congressional Budget Office said, "US fiscal policy is unsustainable, and unsustainable to an extent that it can't be solved through minor changes." Yesterday Ben Bernanke, chairman of the Federal Reserve, expressed similar concerns when he said, "Unless we as a nation demonstrate a strong commitment to fiscal responsibility, in the longer run we will have neither financial stability or healthy economic growth." The debt-to-GDP ratio is expected to go from 63% to 90% by 2020!! 90% of our GDP! Imagine a debt that big. Greece is currently experiencing a fiscal crisis with a similar debt ratio. Are we going to avoid the same course?

Now, we know that a sudden, dramatic stop to controlling the deficit would be economically devastating, but don't expect that to happen anyway. Our leaders in Washington love spending money and bringing home the bacon for their constituents so they can win reelection. They also just need quick spending fixes to solve the immediate economic needs so the political environment is better the next time they run for election. Serious and thorough changes need to be made if we're going to tackle the deficit.

One idea floating out there is to institute a VAT tax. Now, for those that have never been to Europe this might not stir any fear in your souls but it definitely does mine. The VAT, or Values Added Tax, is a tax on most all products and services that averages about 20%! Everything you purchased would cost 20% more and your purchasing power on your savings would be now 20% less. Washington would be seeing green but the everyday American would be suffering. Instituting a VAT tax would also move our country into slow-growth economics of Europe. Let America stay America!

To solve our deficit problem lets get unnecessary and corrupt spending under control before we start taxing the heck out of every American citizen. I'm afraid if we don't get that under control then to everyone's detriment higher taxes are definitely on the horizon. Let's stay the land of the free.