US Budget

Were it only possible for any of us as individuals to live and spend as if we were the federal government, it would be such a different world. The current year budget deficit for the US is somewhere in the trillions. The cumulative budget deficits – often referred to as the national debt – is somewhere in the 30 trillion dollars or more range. Truly numbers that boggle the mind. Before anyone jumps on a political platform, this horrendous situation has been created by both parties (for the moment accepting that there are only 2 parties of any relevance). It used to be that the Democrats were the big spenders and taxers, whereas the Republicans were the small spenders and low taxers. That’s no longer the case – but we kind of have the worst of both worlds. The budget deficit and the debt has soared – with it being bad under #45, worse under Biden, and absolutely atrocious currently. Both parties have consistently misled and lied to the public. 

In my humble (not so humble?) opinion, there are 2 absolutely critical steps that must be taken to rectify this abominable situation. They are:

• Raise taxes – yes, stop jerking everyone around, and raise taxes. This needs to be done on all levels of income (except for the lowest level where you are not going to be able to get any more taxes), and especially from the upper middle class and higher. There is simply not enough depth in the tax base to raise taxes to the level we need them to cover the budget deficit without reaching into at least as low as the upper middle class (whatever that is). By the way, this also will likely mean greatly reducing the estate tax exclusion, which right now is so high, almost no one pays an estate tax, 

• The other critical step sounds initially almost counter-intuitive – and that is, we need to spend more. However, we need to focus that spending – giving it to the IRS. I may not make any friends with this, but funding the IRS at the level it needs to be funded is what we need. The IRS is the one department in the US government (I believe the passport department is another, but we’re talking small potatoes there) that really makes money. The ratio varies but think in terms of 5 to 10 times. That is, for every billion dollars we spend on the IRS, we get back something between 5 and 10 billion dollars in increased tax revenue. And these revenue increases are just a matter of enforcing the existing tax laws – it’s not taking from anyone something to which they are entitled to keep. By not funding the IRS, the politicians are giving away money to the tax evaders. It is nonsense to restrict the IRS funding the way it has been over the last X number of years. That has only encouraged more tax avoidance – and more tax evasion.

Until the politicians accept the reality, and until the general public accepts the reality and demands recognition of same by its representatives, our deficit situation will only get worse. At some point, to use an overused expression, “all hell will break loose”.