WI Crippler

To whom do we owe our deficit?

Also, if an increase in taxes are necessary to pay down the deficit, this would have impact on consumer spending in a negative way which is the engine of the American economy. A slow down in this sector affects everything, to include unemployment which invariably increases government spending on welfare programs. Is there a way out of our large deficit, outside of raising taxes. Is there a way to increase revenues to the government outside of an increase in taxation? We all know spending is the problem with our government, but if they aren't going to stop, we need to find a way to get money to them without grinding our economy and workforce to a halt via heavy taxation.

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"What Jesus fails to appreciate is that it's the meek who are the problem."- Reg

SouthernDemocrat

Roughly 85% of the National Debt was brought to us by Reagan, Bush Sr, and Bush. So you can thank them.

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Charles Krauthammer describing Obama:

"He's got both a first-class intellect and a first-class temperament."

WI Crippler

That wasn't my question.

Mentork

Well, I had an idea that no one liked...

The government could seas control of big oil, along with all it's assets, that's a pretty reliable revenue source...

donsutherland1

For a list of major foreign creditors: http://www.ustreas.gov/tic/mfh.txt

It should be noted that of the $9,437.6 billion federal debt, $4,108.2 billion is held by other government agencies. Of the $5,329.4 billion held by the public, $2,438.6 billion (45.8%) is held by foreigners.

Since 2004, foreigners have financed 63.4% of the increase in debt held by the public.

Right now, the best one can hope for on the spending front is a slowdown in new spending at a rate that is below overall economic growth. Washington has shown no ability or willingness to do so in recent years. The emergency measures being undertaken to address the present financial crisis will add to the federal government's debt burden. Ultimately, the fiscal imbalances associated with the nation's mandatory spending programs will need to be addressed or very tough decisions will lie ahead. In some ways, the present financial crisis may be an appetizer for the main course of what could happen if its imbalances associated with those programs are not addressed.

Given the size of the nation's federal deficits and general absence of spending restraint, my guess is that some of the 2001 and 2003 tax cuts will not be renewed when they expire. What cuts are permitted to expire and which ones are preserved will likely have an impact on consumer spending and investment.

In the end, at least in my view, much as I would prefer to minimize tax hikes, I suspect that a combination of tax hikes, spending reductions/slower spending growth, and entitlement reform will be needed to put the nation on a sustainable fiscal course. Attempts to tax the nation's way out of the problem will fail on account of its adverse economic impact. Notions that the nation can "grow" its way out of its fiscal problems are Pollyannish folly. Trade temporary reductions in short-term growth for carefully targeted tax hikes (can't be too great so as to minimize the adverse economic impact), transitional pain from slower spending growth/entitlement reform in exchange for a long-term budget fix is probably the way to go.