... is to, for now, continue to increase it! Huh? Yes, I'm serious, and let me tell you why.
First of all, most of you lean to the Republican point of view because you are equating our national debt to your personal debt. We are conservative in this respect and want to minimize what we owe. You feel that our government has irresponsibly built up a $14.3 trillion burden and can't any more tolerate this travesty, for just the interest in this loan is crippling our economy. Wrong! Or, at least, suboptimal.
The global society is essentially a free enterprise economy. If you owned a very large company, you borrow at low interest to make a profit. This is exactly what the USA is doing.
Contrary to popular opinion, President Bill Clinton's administration never had a budget surplus. The last time our country was in the positive was in 1969. Our president was Richard Nixon, of course, a Republican.
So this is not a Republican versus Democratic issue. Yes, George Bush the younger did lower our taxes, got us into an expensive Middle East war and seemed to be tolerant of whatever Wall Street wanted. More than anything else, then, the Republicans got us into our present economic predicament, which compromised Barack Obama when he came into office. Remember, we were oh-so-close to another Great Depression just over two years ago. Today, we are the only supreme power. How lucky? No, how smart.
How many of you realize that Americans are paying the smallest share of their income tax since 1958, while we are spending at the highest level since the end of World War II? Our tax percentage has dropped to 23.6 percent of our income. It was around 27 percent from the '70s through the '90s, until the reign of George W. Bush.
That hypothetical $100,000 per year rich person paid an income tax of $27,300 in 1990, and will only lay out $23,600 this year. In 2011, our average income tax will be around $10,500 per year, almost exactly what we paid in 1990. However, our federal government will this year spend a little more than $18,000 per person. That is a good part of the problem, if you want to call it that. Adjusted for inflation, our tax should be $17,600 (if based on the Consumer Price Index) or $26,700 if on relative share of the GDP, and we would be running a surplus. If history means anything, we are not paying enough to run our government. By my calculation, all our Congress need do is to triple the average income tax and that would at least stop increasing our national debt. Budget cuts would further be needed to reduce this debt. But these draconian measures are totally unnecessary, for, remember, my solution is to raise the national debt.
Let us return to this enterprise called the USA. Our debt as a percentage of the Gross National Product is around 60 percent, very similar to Germany. Japan is at 190 percent, but this is mostly owed to their citizenry, for which the government has always paid out at less than one percent. Worry about Fukushima, but that debt percentage is not Japan's problem. For the past decade, the USA has borrowed at an almost constant 3 percent. A terrific rate, if you're a company. As long as this interest remains at this relatively low level, surely, this "borrowed" sum must be accruing a higher percentage of "benefits."
So what are the Republicans trying to do in Congress? It's all about politics. They want to embarrass President Obama and the Democrats because most voters feel that we are borrowing too much and must cut our burden. If he chose to, our President could brag that people like to lend us money at low interest rates because we are so dependable. Of course, we cleverly take this money and invest in enterprises to keep our economy humming (relative to the world, that is). Mind you, I can come up with a dozen ways to reduce spending, like on defense, for example. But that was another posting.
Thus, the simple solution to our national debt is to keep increasing it, but only as long as the interest rate remains low. As the money we borrowed at 3 percent would continue to be paid off at 3 percent, we would still be ahead, for these funds can be reinvested at those future inflated percentages. Of course, when inflation comes, we shift gears and simply lend rather than borrow. It's possible that taxes might need to be increased, but maybe not.
So stop worrying about all those national debt histrionics surely to come this summer from our U.S. Congress. Instead, be entertained and secure with the knowledge that we are in a commanding global position to orchestrate the world economy. Comments?
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