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Republicans have argued against the tax hikes saying that it poses potential issues in that tax increases aren't good thing if we want to see job creation. They also argue that "raising top rates would hurt small businesses and cut into cash that might otherwise turn into consumer spending." These tax issues are reigniting the debt ceiling debate.
"The U.S. Treasury issues debt to fund the country's obligations, including interest payments. But Congress sets the limit, or ceiling—currently at $14.294 trillion—and the country has roughly $14.2 trillion in debt outstanding. The Treasury wants the ceiling raised now, believing the country could potentially default on its debt July 8."
Any opinions on Obama's plan to reduce the deficit, implications towards the debt ceiling, or how we can make cuts to entitlement programs without jeopardizing citizens?
The debt ceiling is an interesting concept which our authors for this week commented on. Early on, the author's described how governments reach their debt limits. On page 56, the say that countries must reach a point where "the expected value of repayment on existing debt [is] exceeded by future borrowing." The proposal by the Treasury to raise our debt ceiling says that the value to the government of paying off our debt is not yet greater than increasing borrowing.
ReplyDeleteAs far as entitlements, I haven't read terribly much about the proposed changes to medicare, but from what I understand they are proposing an change in the age at which individuals have access to medicare. I think this may be an effective and rational change. Because people are living older and healthier, they can absolutely afford to hold off on medicare access. Does anyone know of any issues that are being discussed about this right now?
I agree with Beth's notions of the medicare. This budget propsal is a mess, partly due to congressional republicans not knowing how to compromise.
ReplyDeleteAfter seeing Republican Rep. Paul Ryan (WI) on CSPAN yesterday make outlandish claims and speculate 40 years into the future, Obama's plan sounds more realistic to me.
The medicare and social security programs must be changed so they are sustainable.
In general I think it makes sense to attack the deficit problem from two angles, both cutting spending as well as increasing income (taxes). This is what companies do to become more competitive and profitable, there is no reason the Government cannot as well.
ReplyDeleteThe argument against taxes in the article seems to basically that of trickle down economics. I am not convinced that this is a sound idea based on the increased concentration of wealth in the past 30 years.
There is a lot of rhetoric about wanting to prevent future generations from being crushed by this debt but no one seems to actually want to pay for it now. I think we should be more open to higher taxes in general. Their should be a call for doing our civic duty and improving the countries balance sheet.
Excuse my ignorance, but would anyone mind shedding some light on the why medicare and social security are classified as "entitlements"? And, what exactly this means?
ReplyDeleteFor some reason, I have this blurred memory of someone telling me that the only reason Bill Clinton was able to claim that he balanced the budget was because he (or the government at large) took social security and medicare "off the books". Is this true? Is our federal budget not include these programs?
If so, I find that very troublesome. This would mean that even if we were running a budget surplus, we could be increasing our national debt due to these entitlement programs.
Again, I may be completely off base on this, but any clarification would be greatly appreciated.
Yes, Eric! I am totally down with higher taxes. We need to cut down this debt. The tax increases don't need to last forever, but they just need to help us pay off some of the debt. I do not agree that just the highest income bracket should receive tax increases. There should be tax increases all across the board. Everyone lives in America, uses the parks and social services, etc., so everyone should have to contribute to the well-being, not just the upper class who already pay significant amounts towards taxes compared to the other income brackets.
ReplyDeleteI understand the principles that Republicans are citing when they ask for tax cuts; more money in the consumer's and business pockets, more spending occurs, higher GDP, etc., but what the Republicans fail to understand is the cyclical properties of the economy. As we have constantly seen throughout the years, the market goes up and down in trends, we have run budget deficits and budget surpluses (ex. Clinton). The cycles help our country stay in check and not try and grow too quickly. If we keep trying to stick to budget deficit principles, then we will run ourselves into the ground. Things need to change for a while
Dane,
ReplyDeleteThis article talks about entitlement programs in the US. (http://www.auburn.edu/~johnspm/gloss/entitlement_program) Medicare and Social Security are entitlement programs because they are government programs that give financial benefits to a specific group of people. Also, these programs/services are viewed as a right of the people, not a luxury. We view medical care for the elderly or food stamps for those in poverty as the provisions of basic human rights. The article does a pretty good job of explaining entitlements and the reason for their existence.
As far as Clinton and entitlements on the budget, I have no idea, but I'd be interested to know. I heard that Bush did the same thing with war expenses, declaring them unable to calculate and therefore unable to include on the budget. Wonder if that's true as well.
I think this is a classic situation where we CANNOT have our cake and eat it too. There are obvious repercussions to increasing tax rates (they directly pull money from citizens' disposable income) but for the sake of the long term economy and financial stability of the US tax rates will need to increase. Now whether that be through a progressive or regressive system remains to be seen. Republicans do have a strong point by arguing that "raising top rates would hurt small businesses and cut into cash that might otherwise turn into consumer spending."
ReplyDeleteI said it before, and I'll say it again. All levels of government spending have to be on the table for any rational spending cuts to take place. Everyone says that we MUST cut spending now, "across the board spending cuts" is the term being used, I believe. Just as long as those cuts arent from defense? How many fighter jets do we need? I realize that we are at war, but this policy was in place long before. I just think it's hypocritical to tell the citizens that they will have to take less, but the defense department gets all the cash they want for some more toys. Dont get me wrong, I am all for the military, just not for military excess.
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