Capitol Hill is not going to have an easy time of implementing suggestions from Obama's debt panel. Image from Wikimedia Commons.
A national debt panel has just released findings concerning recommendations for reducing the national debt. The conclusions should be no surprise. The largest national expenditures are for Medicare, Medicaid, Social Security and defense. Those are the programs which are recommended for trimming. The United States won’t be the first nation to undergo austerity measures.
National debts and basic economics
Part of basic economics pertaining to governments is that there are limited ways to deal with debts and deficits. Revenue can be increased, or in other words, taxes have to be raised. Expenditures can be cut, or in other words, programs have to have budgets cut or be canceled outright. There is the middle road, where governments use a combination of those. Most, if not all, Americans, are always dead set against raising taxes, and in fact a tax revolt was part of the reasoning for the American Revolution. The danger, of course, comes when taxes are cut but expenditures are not. In order for tax cuts to be truly effective, the government has to spend less on services.
National deficit panel recommendations are hard
The debt commission convened by President Obama came out with some very unpopular proposals. First, benefits from Medicare, Medicaid and Social Security are recommended for reduction, according to the New York Times. The retirement age is recommended to be raised. Also, according to Reuters, defense spending, like the F-35 program, would be cut as well. Farm subsidies and discretionary spending allotments would also be cut. The panel also is recommending an incremental 15-cents-per-gallon increase in the gas tax. Tax breaks for individuals and on businesses would be done away with, but the overall rate would be reduced.
Payments have to come from somewhere
In order for deficits and the national debt to be paid down, the money cannot be borrowed. Austerity measures aren’t popular, but the tug of war in government is always between revenue and services. Americans don’t like paying taxes, but many want to continue or expand the services rendered. Something has to give somewhere.
