|Conservative ColinBy Colin French
This summer, a long overdue battle to attempt to reign in government spending took place as the Republican Party, strongly influenced by the support (and threats) of the increasingly influential tea party, used the upcoming need to raise the debt ceiling as a political tool against the democrats. The end result was a deal that did not nearly do enough to combat this problem, and left us in a situation where the national debt will continue to skyrocket.America’s debt is a problem that essentially builds upon itself. Even if we were to balance the budget tomorrow (Impossible under the current presidency which saw yearly deficits skyrocket to record highs) a massive portion of our GDP would be sucked up merely from interest payments on the debt that we have. In 2007, the payments merely on interest required approximately 9.5% of our government spending, and will continue to rise. To be clear, there is no real danger of China, tomorrow, coming to America’s doorstep and demanding all of their money back. Such worries are inconsequential. It is unlikely that any of our lenders want their money paid back in the immediate future at all, considering as long as it exists, we will continue to supply them with an endless stream of income.As long as we continue to run a deficit, this is a self-compounding problem because the more money that is borrowed, the higher the interest payments become. And the longer we continue to run a deficit the tougher it is going to be for regular Americans to cope with the problem when it is finally addressed. If America was a citizen using a credit card, he/she would have declared bankruptcy a long time ago. Unfortunately, for us as a nation no such move is possible. The problem continues to be that Americans want a large number of social programs that they do not want to pay the adequate tax rates for. So in the end which goes? Social programs or low taxes?
For the most part, economists understand that in a period of recession for this country, raising taxes on citizens, businesses or otherwise would be disastrous for recovery efforts and would likely raise unemployment further. This would slow the economy, and very likely end up lowering tax revenue as a result. But Obama’s Keynesian economic policies of bailouts have failed to fix unemployment and get the economy back on track, which was unsurprising to most of us. The United States must cut, and do it immediately. Cut entitlement programs. Cut military spending further and stop spending on nation building exercises and invasions overseas. And most importantly, balance the budget so that the nation can begin to live within its means, lest we drown ourselves
|Liberal LauraBy Laura Stewart
As former President Ronald Reagan famously asked, “would you rather reduce deficits and interest rates by raising revenue from those who are not now paying their fair share, or would you rather accept larger budget deficits, higher interest rates, and higher unemployment? I think I know your answer.”The truth is Reagan not only increased tax revenue under his presidency, he also raised the debt ceiling nearly 18 times. As difficult as it may be to face, the current Republican party is much different than that of the one associated with the Reagan administration twenty years ago. Instead of championing fiscal responsibility, Republicans refuse to raise any tax revenue on the wealthiest to help reduce our nations debt.The debt deal, which cuts $1 trillion in spending over the next decade, is no compromise.
Speaker John Boehner responded to the debt deal in saying, “I got 98 percent of what I wanted. I’m happy.”
Speaker Boehner’s contentment with an agreement responsible for a downgrade in the U.S.’s credit rating reaches far from the fiscal responsibility Reagan championed.
Simply put, the debt-reduction plan is bad economics to begin with. Rather than an intensive focus on reducing our debt immediately, the deal instead delays the majority of the cuts for another 5 to 10 years. The White House says this gives the U.S. economy enough time to recover, however, a reduction in spending later will likely throw us back into another recession. Spending cuts usually cause higher unemployment and slower economic growth. To prevent an even more drawn out period of economic recovery, it’s better for the U.S. to solve its debt problem now rather than later.