The national debt isn’t a sexy issue in contemporary American politics, but this topic should matter to all of us. America’s debt, at over $20 trillion, hinders economic growth and raises the cost of loans. Our future and our children’s future has been mortgaged in order for former Presidents George Bush and Barack Obama to buy votes.
President Bush’s wars in Iraq and Afghanistan have costed us nearly $5 trillion as of 2016, according to the Military Times. President Obama’s multi-trillion dollar stimulus package in after the great recession further contributed to America’s ballooning deficit. Eventually, someone will have to pay this debt.
We need to be responsible and pay off the debt rather than leave this burden for the next generation. We need to stop believing the lies of politicians who promise us everything but don’t answer questions on funding.
President Trump and Speaker of the House of Representatives Paul Ryan have agreed to a budget that the LA Times projects will increase the national debt by $2 trillion over the next decade compared to existing law. While the budget includes reductions in social spending and includes $1.5 trillion in tax cuts that will help job growth, the current administration’s borrowing is irresponsible at the present rate.
Run on tax cuts, spend cuts, balance the budget, but only run on tax cuts is a recurring pattern among Republicans. Republicans know that they will not be able to cut social programs, or they will quickly realize that they cannot.
This has been the pattern since President Reagan was elected in 1980. To maintain fiscal solvency without crippling tax increases, Republicans need to accept reductions in defense spending. They must also consider cutting any kind of spending, including funding for veterans. Democrats will need to give up their model of tax-and-spend, and they must accept that new programs are unfeasible. We will need to look at eliminating entire departments, such as the Department of Education.
We should ask what programs should be cut and which programs are sustainable. Individual Retirement Account (IRA) funds accumulate an average interest of 7 percent per annum – much more than the 1.5 percent that Social Security accumulates. Furthermore, the program has grown more expensive over time because the average American life expectancy is much higher than when Social Security was implemented in 1937.
The Cato Institute claims 14 percent from your wages goes solely to funding Social Security each year. Replacing the current model of Social Security with a system of mandatory retirement accounts would allow younger workers to save more money and access money more easily if needed.
Alone, tax increases aren’t going to successfully cut the debt. In fact, there are plenty of arguments to suggest that tax increases would stall economic growth. Instead, implementing tax cuts will take less money from corporations, which would leave more leftover money for investment.
Investment money could increase productivity if it is used to upgrade equipment and to hire additional workers, like with the Kennedy and Johnson tax cuts of the 1960s and the Reagan tax cuts of the 1980s. In these cases, U.S. corporate tax rates were cut below the average for developed countries which led many companies to expand business.
However, other countries quickly followed suit; now, the nominal corporate tax rate and the corporate effective tax rate (the actual amount of taxes paid after deductions), of the U.S. is one of the highest in the developed world, according to a Congressional Budget Office report from March 2017.
The best way for the U.S. to increase its competitiveness and to ensure quality American jobs for future generations is to reduce the mountain of debt, to allow individuals to keep more of their money, and to scale back government intervention in the economy. Then, America will have a sustainable future.