It’s amazing when a group of elected officials create the very problems that they in turn run against.
The austerity measures that were included in the debt ceiling compromise are anything but draconian. An initial $1.2 trillion over ten years works out to $120 billion a year, about 3% of current spending. So, if we were borrowing about 42 cents out of every dollar we are now borrowing 39cents. No wonder they needed such a long vacation.
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I am not going to argue spending cuts versus revenue increase; I don’t believe it is only a binary choice-but that is a separate article. I will focus on the fact that the deficit we are trying to close is only the current annual account deficit that we continue to create. By 2021, according to the recent budget we will have accumulated over $20 trillion in deficits. At a more average long term interest rate of 5-6% we will be paying over $1 trillion in interest payments alone. This is a fact acknowledged by both parties.
Since none of the current plans deal with the long-term deficit anyway, only the current account deficit, I want to put mine out there as a solution.
Here are three things we need to pay off our debt.
1. A balanced budget amendment. Can you imagine if President Clinton had been able to pass one what a different world we would be in right now? Not today and not tomorrow-but in a reasonable timeframe of 5-7 years the budget has to be balanced. In case of war or other major event, Congress would have to act to allow extra spending-after all something as drastic as war needs consensus anyway.
2. No “pork”. If you have a person in business that uses company money that was pledged to go to a business project to build a fence around his own home you say he is stealing. Though the fence may be nice and his neighbors may like it-it is stealing. I say to Congress, no more stealing.
3. A temporary national sales tax of 3-5% that goes to paying off the principle portion of the debt. Exclude groceries so as not to adversely affect people with lower incomes. This tax can only by law go toward paying off the principle of the national debt. This tax disappears the second the debt is paid off. The current budget still has to pay current debt service.
In 20-40 years, depending on economic growth, the US will be a superpower with no debt, something we haven’t been since Andrew Jackson last had our balance sheet clean. We would be the strongest country in the history of the world at that point, and our position of power economically would be assured for the rest of the century.