Tuesday, October 21, 2008

Tax cuts? ...Now?

What if any is the connection between the fiscal policies of both John McCain and Barack Obama and the continued growth of our national debt?

As of 5:00 pm Wed. Oct 28 2008, the national debt of United States of America is $10,470,986,318,222.51, and increases at a rate of $3.75 billion per day. According the United States Treasury Department at some point between 2030 and 2040 the interest payments on the national debt, along with other mandatory spending will exceed the revenue of the United States Government. At some point the people and nations who buy American debt, and thus finance our current spending are going to realize that American debt may not be the safest investment in the world (which they are currently considered). Loosing this designation does not mean that the United States Government will no longer be able to borrow money, it just means that the government will have to pay a higher interest rate. If the latest financial is any indication of what happens when large organizations have to pay more than expected to borrow money, the day treasuries loose their aura of invincibility the world of credit will once again change forever, but at this scale a bailout would be impossible.

Now that we have established that the growth of the national debt is on the path to have some rather disastrous consequences lets take a look at where the candidates stand on the three issues which affect the national debt the most: What programs they have announced they would be willing to cut and what they would do with tax policy. On the issue of spending cuts both McCain and Obama have said that they would cut pork barrel spending, which is very nice and symbolic but pork only accounts for $17.6 billion out of a budget of $2.66 trillion according to the 2008 Pig Book. Unfortunately aside form the willingness to cut pork the candidates had no other identifiable areas in which they were willing to cut. Both John McCain and Barack Obama have suggested new tax cuts. McCain has suggested a tax plan which cuts taxes across the board with decreases essentially in proportion to the amount of taxes you pay. Obama also has a tax plan which will cut taxes for 95% of Americans. With both proposals, neither one including defined spending cuts to pay for the proposal, I am left wondering; what are we doing taxes when the government is in so much debt?

1 comment:

Lynn Clark said...

John McCain keeps Country First by trying to give tax breaks to ALL Americans across the board, thus creating a much more fair environment and a boost to our economy. On the other hand, Barack Obama wants to penalize Americans that have worked hard to be part of the top 5% percent in America by taxing them like none other. The other 95% of America only pays roughly 20% of the taxes, so how would Barack Obama's plan of giving tax breaks to 95% of Americans be effective? It would not.