The United States Government currently possesses more than seventeen trillion dollars of debt. Billions of dollars are spent each year on paying off interest payments, not the debt itself. Many spending cuts and tax increases must be made in order to stabilize the debt so that our country does not default on its loans. Before beginning the budget simulation, I set out to define my policy goals. Because in the United States, the top one percent earner’s income totaled 21% of the entire country’s pre-tax income (Piketty), I decided that America’s top earners would have to suffer the lion’s share of tax increases.
Understanding the National Deficit The amount of money that the United States government owes as of October 17, 2004 at 03:48:52 pm GMT was $7,435,016,998.21. The debt has increased by an average of $1.7 billion per day since September 30, 2003! From a more individual perspective, currently the United States population is roughly around 294,555,320. With this number of people, each U.S. citizen would have to pay $25,241.50, just to break even. How did the U.S. arrive in such a state where the country owes so much money?
By looking at this on a strictly monetary scale, we are not forced to look at our own accountability. We as Americans have developed this notion that the government should take care of us somewhere along the lines. More government is not the answer. To me, this is the easy way out. Besides, do we really want the government so involved in aspects of our lives they have no business being a part of?
With modern politicians being elected literally to lower the debt and fix the economy how can it continue rise at such a rate? Americans ask this question often, and even protest in Washington about it; But how does a country that has such a large role on world stage get such a high debt? So how did America get in debt? Well America has always been in debt sins the creation of the country. But in recent years its the only thing that is talked about by news channels, politicians, and citizens.
Government, however, often does the opposite, passing intricately complex business rules, adding to the virtually incomprehensible tax code, and spending money on economic stimulus like... ... middle of paper ... ...s could be paid to the government to provide government services such as roads and emergency responses. It is in fact because of people creating successful enterprises that the government is able to function at all, since the government’s tax revenue comes from We the People. Simply put, the solution to unleash the full potential of America’s free enterprise system is for the government to stay out of the free market. Government should not be passing legislation just to make people feel safer, but rather decrease the multitude of regulations drowning our economic capability. Politicians should also simplify our tax code and make filing tax returns actually understandable for someone without an accounting degree.
The United States is a wealthy country harboring a strong economic system. In 2010, the gross domestic product, GDP, was approximately $14.6 trillion dollars which translated into about $2.16 trillion in tax revenue. With this money, the country funds everything from healthcare for the poor and elderly to the education system that will produce our next great minds. However amidst sea of prosperity, there is a whirlpool draining the nation and threatening its survival as a world power. A policy of deficit spending has dragged the United States into deep debt and lawmakers are reluctant to admit there is even a problem let alone address it.
These concerns are uneducated assumptions. Under the proposed plan to invest a portion of the Social Security trust fund in the stock market, only new and previously unanticipated Social Security money would be invested. Part of The President’s plan entails allocating "more than $2.7 trillion in expected budget surpluses over the next 15 years or 62% of the total to directly bolster Social Security's cash reserves. Of that, nearly $700 billion or 25% would be invested in the stock market." This plan would eliminate the risk of losing payroll tax money because only budget surplus revenue would be invested.
A flat tax would not have any loopholes resulting from tax deductions. One of these loopholes for a business consists of using of tax havens which result in “a decrease in debt FPI (Foreign Portfolio Investment) ranging from 0% to 32.5%”(Hanlon, Maydew, and Thornock). Due to the fact that a business’s goal is to sell a product for a profit, any business would strive to save every dollar possible. For instance, businesses can send all their money to a foreign country that does not tax as much as the current American income rate in order to save money. This affects the American economy because these America based companies no longer have to pay income tax to the U.S. Government.
I personally believe the major gap between the income of the rich and poor is a not just, but is not a major concern for the government and society. If the Federal Government addresses other major concerns facing American citizens the inequality will be adjusted due to other changes. The government needs to step in and adjust minimum wage and public education. If the government was to raise minimum wage and give public schools more money to support students educational needs than the income inequality would begin to be adjusted. I strongly believe income inequality is a major problem in today’s society; however, other issues need to be addressed before the gap between the rich and poor in America can be reduced.
Just recently it has breached past the United States GDP, at 100.02% (U.S. Debt Clock.org). The American economy is slowly rebounding from the “Great Recession”, but the federal government is in a constant self-inflicted crisis of debt and deficit. The US government needs to create a surplus in the federal budget by making wise choices such as cutting down on unnecessary programs, blatant waste, entitlements, and internal corruption; and needs to create a smarter tax code, business regulations and benefits, and healthcare system, to maintain prosperity, life, liberty, and the pursuit of happiness. A brief summary of the history of government budgets and expenditures shows that from 1969 to 1999 there was a continued deficit that equated to approximately $5.5 trillion in debt (U.S. Debt Clock.org). The US government had a surplus in the year 2000, but implemented tax cuts and later had to pay for two wars, both aided in adding to the debt.