Balancing the Budget and Paying Down Our Debt ~ The Right Way to Do It

It’s no accident that our nation’s debt as a percent of  Gross Domestic Product (GDP) started to climb precipitously in the 1980s.

April 5, 2011 –– As President Obama meets with House and Senate leaders today to try to find some way to avoid a government shutdown at week’s end, current polls are showing that the same percentage of Americans blame Democrats for gridlock on the budget process as blame Republicans. So, neither party has an obvious political advantage for this budgetary brinkmanship. Notwithstanding, the Tea Partiers must be absolutely ecstatic seeing how much influence their party favorites are having on this process. If the facts were known, however, if sensible voters in both parties understood just why we have a deficit in the first place and who it is that will benefit from all the proposed cuts in government spending, maybe it would be different.

So, before we start cutting essential programs to balance the budget for next year, let’s see why it is that we have a deficit and a debt problem. It actually has little to do with fiscal measures taken to respond to the recent recession. Despite what Speaker Boehner says, it’s not a spending problem as much as it is a revenue problem, and the problem has been with us for decades.

Pay particular attention to the last couple of seconds of animation on the last graph in this video showing the accelerated growth of gross national debt and when this accelerated growth began. It moves pretty quick.

It’s no accident that our nation’s debt as a percent of Gross Domestic Product (GDP) started to climb precipitously in the 1980s. Government started receiving diminished revenues owing to Reagan Era tax cuts while, at the same time, started borrowing more and more to sustain increased defense spending and growing demands on entitlement programs by maturing baby boomers. Promised increases in revenues from an expanding economy never truly materialized. What little increase was realized from this tax cut stimulus (trickle-down economics) evaporated with new government subsidies and tax loopholes for corporations. Deficits then continued owing to the Bush-Cheney individual income tax cuts that overwhelmingly favored the wealthiest of Americans and borrowing to fund the wars in Afghanistan and Iraq.

Today, our tax code is full of loopholes created and exploited by big corporations. They, in turn, spend millions that they don’t pay in taxes to control our government with their army of lobbyists found on K Street in Washington.

Yes, do tell Congress to balance the federal budget and pay down our national debt. But tell them not to do it on the backs of our most vulnerable citizens. Tell them not to do it at the expense of our nation’s health and safety. Tell them not to do it and forego infrastructure and technology investments needed for a brighter, more competitive America. The right way to balance the budget and reduce our nation’s debt is to get corporations out of our nation’s business, reform election campaign financing, and restore the middle class subsidizing real people, not corporations.

Feel free to comment whether you agree or not.

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Published in: on April 5, 2011 at 10:48 am  Comments (4)  

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4 CommentsLeave a comment

  1. I wish someone would get you on CNN or MSNBC and let you present this to the world. I have yet to hear anyone describe the problem as succinctly or as well as you just did.

  2. It’s the folks who watch Fox who most need to understand the problem and it’s causes.

  3. 04/08/2011

    Opa,

    As I write this, we are less than 2 hours away from at least a partial government shut-down with hints of an agreement between democrats and republicans, but nothing solid. I don’t know if there would be any “winners” with a shut-down, but there will no doubt be “losers” until any such shut-down is ended. Seems like a big game of “chicken” with each side wanting the other to blink first.

    With the caveat that I couldn’t watch the imbedded video (the program crashed) I would offer just a few comments. First, your idea of what constitutes “essential programs” may not be what I (or others) think are essential. I guess it depends on whose ox is getting gored.

    I don’t understand (again without having seen the video) how you can say we have a revenue problem – unless its because you think we’re not taxing the so-called rich enough to your liking. Even though President Obama inherited a major problem, he and the democratic-controlled 111th Congress added significantly to the deficit – and from what I’ve heard – added more to it than any other President or Congress all tolled, since before Obama became President. Is this correct? If that’s so, how can republicans be blamed for it?

    We may have borrowed more for defense spending in the Reagan years but you fail to mention that this spending (among other things) was a major factor in the demise of the Soviet Union, bringing down the Berlin Wall, and the end of the “Cold War.” Interesting that you don’t mention that. Additionally, it may be some degree of advance planning that back in the Reagan era Congress, etc. foresaw the need for increased funding for entitlement funding with the maturing of the Baby Boomers (that’s just now happening) and not wanting to cut or end those entitlements (since that would have been a heck of a battle back then as it would be now) that they tried to plan ahead for the future demand. Are you saying that these entitlements should have been terminated back then instead of planning ahead for future funding needs?

    Tax loopholes were not created by big corporations – Congress created them with the approval of whichever President. Granted, lobbying probably was a major factor in it, but in and of itself, did not create the laws. Once created, business took advantage of them. I’m sure that there are numerous examples of various laws that were enacted that are favorable to liberal/progressive goals that were also at least an indirect result of lobbying efforts. Be fair here about lobbying!

    With regard to how we should balance the budget, I’m not sure exactly what you mean by getting corporations out of the government’s business. How could the government operate without corporations that provide products and services it uses? When you refer to reforming election campaign financing, I assume you’re referring to the recent Supreme Court decision regarding corporate campaign donations that President Obama rebuked the Supreme Court Justices for, while they were sitting there, in his State of the Union address. The President may have disliked the decision, but for him, as President, to make such a public declaration was unprofessional at best (and unprecedented – as far as I can remember) and repulsively political at worst. The answer there is to either get Congress to pass a new law associated with it to “fix” perceived problems, or bring another related case to the Supreme Court in hopes that its original ruling will be overturned. I think that either method would be very time consuming and very costly. I’m also not really understanding what you mean by “restore the middle class subsidizing real people, not corporations.” Any additional explanation you could provide on this would be appreciated!

    Regards,
    Curtis

  4. Yes, Curtis, the budget brinkmanship last week was a big game of “chicken”. And the American people were disgusted by it – most Americans were anyway. I suspect, however, that the Tea Partiers were delighted to see how much influence their candidates elected to the House of Representatives had on the larger Republican Party. They seem driven to shut down the majority of government anyway.

    No, without watching the imbedded video or studying the graphs I sent to you from the Coffee Party, you might well not understand why I say that we have more of a revenue problem than we do a spending problem. Looking at the Gross National Debt graph, it is obvious that our deficit spending started getting way out of hand at the same time as massive tax cuts and loopholes for individuals and corporations were instituted. Yes, massive defense spending during the Reagan years undoubtedly had a part in bringing down the Berlin Wall and collapsing the old Soviet Union. Most people would agree that that was a good thing. However, we borrowed massively to do it and kept on borrowing. The tax cuts contributed little if anything to the expansion of our economy as supply-side economists of the day predicted. One can readily see this in the graphics of the video you failed to watch. You can watch it on YouTube at http://www.youtube.com/watch?v=JexhPlx32LA&feature=player_embedded.

    Yes, President Obama and the democratic-controlled 111th Congress did add significantly to the deficit. But no, it was President Bush and congresses during his tenure that increased the national debt more, as a percent of our Gross Domestic Product (GDP) than at any time since the end of the Second World War. And they did so while the economy was expanding. Check out the graph at this URL http://www.lafn.org/gvdc/Natl_Debt_Chart.html. He more than doubled the national debt adding over 5 trillion to it.

    Tax loopholes were in fact created by Congress. You are correct. But they did so under the influence of corporate lobbyists. Tell you what – you want me to be fair about lobbying, how about you do some research on tax loopholes, subsidies and credits that favor liberal/progressive goals? I can think of only two off hand, farm and dairy subsidies.

    When I say that our government should restore the middle class by subsidizing real people, not corporations, I mean that governments should help American middle class families retain more of their earned income and help with education and health care expenses rather than cut deals with big business to ensure continued obscene levels of profit such as the petro-chemical industry enjoyed during the worst of our recent recession. Corporations, have all the rights and privileges of citizens http://en.wikipedia.org/wiki/Corporation, yes, but they should not, in my opinion, be afforded tax code favoritism while they’re shipping American jobs overseas. Perhaps they could be encouraged to invest more in creating and maintaining jobs for Americans with “conditional” tax code incentives as President Obama has proposed. But I do not see that happening as of yet.

    Yes, I agree – the president did act inappropriately dressing down members of the Supreme Court as he did during his first State of the Union address. But, referring to that in your recent comment in response to the idea of needed real campaign finance reform is, at best, a Red Herring. The deep pockets of corporate and other special interests do buy influence with the government at the expense of private citizens’ interests. Accordingly, government of, by and for the people, real people, is diminished.

    It will be interesting to see what the “Gang of Six” congressmen come up with this week in contrast to Congressman Ryan’s plan to balance future budgets and pay down the national debt.


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