I knew our budget situation was bad, but I couldn't fully comprehend just how bad it actually is:
- The U.S. is rapidly approaching a national debt of nearly $10 trillion.
- Almost half of which is owed to foreign governments.
- Your share of the total federal obligation is $175,000.
- If things don't change, income taxes by 2040 will consume 42 percent of your paycheck.
One of the most chilling moments in the film was when Former Treasury Secretary Paul O'Neill stated that at the current rate, interest on the national debt will be unsustainable: "When you get extended to the point that you can't service your debt, you're finished."
Our current state and ongoing trend of debt accumulation is terrifying to say the least. But the most depressing thing about our budget situation is the fact that few Americans, especially young American who will inherit the burden, are aware that we're even in a crisis. I think part of the failure can be attributed to the shameful political landscape that seems utterly incapable of addressing these kinds of issues in an honest and meaningful way. I recall a quote in the movie from President George W. Bush:
"I think I got a B in Econ 101. I got an A however in keeping taxes low, and being fiscally responsible with the people’s money."
Even though our President doesn't get it, the message of the film is clear. And we need to demand that our political leaders address this issue in a real way. The U.S. has to cut spending on ALL programs drastically and increase taxes on every American (a lot, probably). This means cutting spending on things that are sacred (ahem, Social Security) and special (ahem Medicare and Medicaid) to many people, cutting back on the consumption of foreign goods, stimulating U.S. exports, and (as hard as it is to hear) big increases in taxes on every resident and business in the US.
The question, as the filmmakers of I.O.U.S.A. point out, is whether people are willing to endure the level of sacrifice necessary to secure the future of the nation.
Oh another great video clip in the movie, and great financial advice for everyone:
via videosift.com
4 comments:
A third thing the gov't can do is print more money. This is basically the same as raising taxes since it decreases the value of the money you already earn/have, but people don't understand that. Therefore the successful future politicians will campaign on a lower tax platform (which will get them votes) and then quietly get the treasury to print more money as a partial solution for this problem.
Excellent point, although it looks like the risk of inflation (at least for now) is dwindling, and we'll probably go into a deep recession instead.
Sadly, it looks like the most trusty savings provider these days is under the mattress.
By the way, printing more money will not really address the debt since it will lead to further devaluation of the dollar.
We need to boost the value of the dollar (primarily by closing the gap on our trade deficit), revert our deficit to a surplus (taxes and cutting programs), and build sustainability by reforming entitlement programs (or blasting the baby boomers to the moon).
I think inflation is worse than our tax rate. The FED continuously prints money into the system. So if you save money, you're actually losing value on it. Why do you think its so easy for everyone to live in debt? The future value of money is severely perceived to be low.
Taxing everyone to cover the deficit won't work, because overtaxing people will cause people to not produce because of dwindling returns, then we cannot bridge the import/export gaps.
The biggest problem in my opinion is the lifestyle of Americans. Most people live beyond their means, which is a reflection of the government. What does America produce anymore? We rely primarily on the service industry. How can we close the gap when we don't produce much the rest of the world needs?
We need to stop letting bubbles occur. The FED continuously tries to control the financial sector by keeping interest rates low. Every president wants to make it look like we're doing fine, while we are continually burying ourselves deeper in debt.
The first thing we need to do is to bring all our military home from everywhere in the world. We are spending too much money on the military. If we reduce that, cut unnecessary programs then we can start to tackle this deficit.
Are we really safe anyway when we owe so much money to the rest of the world? If China decided to get rid of all their dollars, we would really have a financial collapse. Ug. I'm stressed out about all this too.
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