Posted By RichC on September 29, 2010
There are two opposing mindsets when dealing America’s deficit and correcting America’s struggling economy; it is pretty black and white when it comes to opinions. There’s the liberal Democrats position, expressed by the Nobel Prize winning New York Times columnist Paul Krugman, who recommends dealing with our deficit by raising taxes and continuing to increase in public spending in order to re-kindle the sputtering economy. The opposing position expressed by conservatives like Republican congressman Paul Ryan (R-WI) believes raising taxes will slow the economy further while public spending digs a deeper hole. His answer is to lower taxes (proposing a two tier flat tax), cut spending and reduce the size of the federal government while reforming Social Security for those under 54 years of age. I suspect that if we are serious about saving the economy and preventing an economic collapse, we’ll need to meet somewhere in the middle … I only hope it will not be too late.
CNBC’s Becky Quick shared some numbers about a week ago which should concern all of us: “From 1948 to 2008, the federal government spent about 19.6% of our gross domestic product, while taking in tax revenues of about 17.9%. But now we are spending 25% of GDP and taking in closer to 15% in revenue. That gap has to be narrowed.” David Walker, comptroller for the United States under President Bill Clinton and President George W. Bush, has been expressing deep concern that we’re not moving fast enough to correct this growing deficit and that our real debt is already worst than Spain, Britain and Ireland. He says the numbers we’ve all seen, $13 trillion and growing debt is not telling the truth and that the numbers are too low. That should frightened both liberal progressives and fiscal conservatives considering that we don’t even include the extra $4 trillion we owe to Social Security and the deficits facing states, municipalities and some public pension funds.
So how long do we have to get our house in order? What would you say to Walker’s warning … “we are within three years of becoming the next Greece.”