Posted on 01/26/2007 8:19:40 AM PST by Toddsterpatriot
Many economists have been warning against the ramifications of high U.S. debt levels for a long time. Now even the Comptroller General of the United States Mr. David M. Walker is sounding the alarm. The Comptroller recently warned that if the country continues on its current fiscal path, it will gradually erode and have an adverse impact on the economy, the nation's standard of living, and, over time, America's national security. He also went on to say that U.S. taxes would indeed have to double to account for the Bush budget in 2040.
Recently, a hearing that took place in the nation's capitol, a government economic consulting firm indicated that there could be terrible repercussions for the U.S. economy if a serious effort is not attempted to restrain spending. In fact, if action is not implemented relatively soon, that large tax increases will certainly be required down the road.
Mr. Walker heads the Government Accountability Office, which is designed to be an independent watchdog of Congress that evaluates spending of U.S. tax monies and advises Congress on how to improve government programs, painted a dismal picture for lawmakers. He conveyed that since the year 2000, the net social insurance commitments and other fiscal obligations in the United States have surged from $20 trillion to $50 trillion, which is quadruple this country's total economic output. He noted that rising health care costs was the biggest reason for this stunning increase.
He also reiterated what many leading economists have been asserting for a long time now, which is that if nothing is done to take control of government spending, then large tax hikes would have to be the alternative. To put it in perspective, Mr. Walker pointed out that just to balance the budget, by the year 2040 the government would require either actions as big as reducing total federal spending by 60 percent or increasing federal taxes to almost 2 times the current level.
As far as the big spending going on with the war, and in particular the cost estimates produced by the Bush administration for sending 21,500 more troops to Iraq this year, Mr. Walker had serious concerns. The Comptroller General emphasized that the money earmarked for spending on the troop escalation was much more than needed for the number of troops involved.
The bottom line for all of us is that economic and fiscal responsibility is more paramount than ever when it comes to our elected officials. Otherwise, not just the nation's economic health and the standard living of the citizenry that's at risk, but the country's national security as well.
Happy Trading. Jeff Neal Senior Writer, Options Strategist & Profit Strategies Radio Show Market Correspondent Visit Jeff's Forum Listen to Jeff at www.ProfitStrategiesRadio.com
I think we know which way the dems will go...
The deteriation of medicare and social security is the primary problem.
2040 is 33 years away. For tax revenues to double over that period, they must grow at only 2%+- per year. That seems right on target.
He's talking about doubling rates not revenues.
by the year 2040 the government would require either actions as big as reducing total federal spending by 60 percent or increasing federal taxes to almost 2 times the current level.
He doesn't say rates, he says taxes and that usually means the amount collected. If he thinks raising rates will increase revenues, he is an idiot.
I have to disagree with your assertion.
He also went on to say that U.S. taxes would indeed have to double to account for the Bush budget in 2040.
Do you really think he meant tax revenues would have to double by 2040, without knowing that revenues (and spending) will have increased greatly over the next 33 years with no new action by the government? He is a liberal, but he's not that stupid.
If he thinks raising rates will increase revenues, he is an idiot.
Raising rates will increase revenues, just not as much as he might expect.
People like David Walker must not understand the difference between tax RATES and tax REVENUE anyway. Even if he did, he probably thinks they always move in the same direction.
By that logic, cutting taxes (rates) would not spur the economy and would reduce tax revenues over time. I am afraid the evidence doesn't support that thesis.
You misunderstand. I do not think raising rates is good for the economy. I do think cutting rates boosts the economy. That doesn't mean that raising rates doesn't raise more revenue.
Take the case of taxes on cigarettes. Here in Chicago, Cook County doubled the cigarette tax to $2.00 per pack. I'm sure Cook County will collect more in cigarette taxes. I'm also sure they will not collect twice as much.
I am afraid the evidence doesn't support that thesis.
Perhaps you have some of this evidence? I'd have no problem with the idea of cutting Federal tax rates in half. I also have no problem saying that revenues would be reduced, just not by 50%.
Accumulating Debt Levels Could Push Greedy Geezers Back to Work at Wal-Mart. ;)
That said, there is a point in terms of rates below which the law of diminishing marginal returns takes effect.
True (except capital gains) and true.
That said, there is a point in terms of rates below which the law of diminishing marginal returns takes effect.
You bet.
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