How would you propose the United States fix it’s ballooning budget deficit? As I stated previously, out of the following Presidents Nixon, Ford, Carter, Reagan, H.W. Bush, Clinton, W. Bush; every President ran a budget deficit every year they were in office except Clinton. (please reference the US historical budgets http://www.gpoaccess.gov/usbudget/fy11/hist.html) What would you do to change this systemic trend that crosses party lines? Would you monetize the U.S. debt by increasing inflation targets (debt stays at a certain level while receipts rise due to increased inflation)? Would you cut government services? Would you increase taxation? Or All of the Above? What do you think?
I believe a form of all of the above is the only politically feasible way possible. There is such a gap that focusing on one would be too painful. I think we will monetize ourselves into a stealth tax hike. As inflation goes up peoples’ nominal income will go up and I don’t see the tax brackets being adjusted to account for this. We also need to get serious about paying down the national debt. The amount we spend on interest alone is up there with defense spending and medicare.
Just as a point of reference, FY2011 U.S. budget (this year alone): Revenues: $2.015 Trillion Expenditures: $3.518 Trillion Deficit: $1.413 Trillion or approx. 10% of GDP Interest paid on Debt: $0.187 Trillion Since inception: Cumulative debt held by public is $7.545 Trillion Therefore, we essentially have a $7.545 Trillion bill that’s going to have to be paid down. http://www.gpoaccess.gov/usbudget/fy11/pdf/budget.pdf
This year we are spending $187 billion on interest payments and the defense budget is $787 billion, social security is $678 billion and Medicare is $425 billion.