A surplus of deficits: Numbers show shortfalls in many areas

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Understanding the federal deficit is not easy. There is the confusion between the deficit – the annual shortfall between spending and revenue, and the debt, which is the sum of all accumulated deficits. Complicating matters are the incomprehensibly high numbers, not only billions of dollars, but trillions. This year our annual deficit is expected to be about $650 billion, with a total debt nearing $17 trillion.

UNDERSTANDING THE cause of the deficit is easier. The government spends more than it takes in. The government has been doing that, except for during the late 1990s, for more than 30 years. As a result, a total debt of just under $1 trillion in 1981 has now ballooned to nearly $17 trillion.

The nonpartisan Congressional Budget Office prepares an annual report that provides a more detailed explanation of federal finances. This year’s report includes a graph showing actual spending and revenue from 1962 to 2012, and projections until 2022. Spending and revenue are measured as a percentage of gross domestic product.

What is most startling about the data is that, over a span of 40 years, spending consistently averages 3 percent of GDP more than revenue. The dotted horizontal lines on the graph show spending averaging 21 percent of GDP and revenue averaging 18 percent. Through Democratic and Republican administrations and congresses, war and peace, tax cuts and increased spending, recession and prosperity, the 3 percent gap remains relatively stable. The two exceptions are the budget surpluses at the end of the Clinton administration, and the huge drop in revenue and increase in spending at the end of the Bush administration and the first Obama administration.

HOW DO WE close the gap? Republicans and Democrats could look at this and see simple answers. Republicans would say cut spending, and Democrats say increase revenues. Both solutions, by themselves, are wrong. Neither party’s leadership has the courage to tell the truth to the American public.

Recall that during the 2012 presidential election, President Obama proposed tax increases for those making more than $250,000 a year. Mitt Romney proposed unnamed spending cuts and elimination of tax loopholes while simultaneously lowering marginal tax rates. Both solutions were misleading.

The president’s tax increase was expected to increase revenues by about $700 billion over 10 years, a mere 10 percent of the expected $7 trillion increase in the debt over that period. He didn’t propose tax increases deep enough to close the fiscal gap because that would affect, and alienate, middle-class voters.

GOV. ROMNEY was equally disingenuous in his refusal to reveal the specifics of his plan. He knew that closing the fiscal gap only through spending cuts and closing of tax loopholes would be unacceptable to the middle class once they understood the depth of those cuts and the loss of treasured tax breaks.

Only a combination of revenue increases and spending cuts will close the gap. The electorate will not accept a deficit reduction plan that relies only on one or the other. It is that simple, and all politicians know this. But they continue to spew their brand of partisan babble in order to further their own re-election, while sidestepping the effect on the nation of the massive and expanding debt.

But the body politic is not only made up of the president and 535 members of Congress. We voters are the ones who elect them, and most thinking people understand that fixing the deficit requires both spending cuts and revenue increases. We also are responsible if we accept politicians’ simplistic denial of that fact.

The graph shows a fiscal deficit. But it symbolizes other deficits that haunt our national politics. It is a courage deficit to put one’s re-election ahead of the nation’s interests. It is a leadership deficit to not tell the voters that difficult steps must be taken. It is a trust deficit to not work with the opposite party to reach principled fiscal compromise.

And finally, when we voters tolerate politicians’ deception even when we know better, it is a citizenship deficit. That is a gap we can close.

(The writer is a retired U.S. Navy officer. He lives and writes in Savannah.)

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soldout
1280
Points
soldout 08/18/13 - 04:03 am
2
1
national sales tax

good letter and those who understand math understand. Eliminate IRS and all tax except national sales tax and you eliminate the tax cheats and fairness comes to the system. In most states everything is in place to collect it. Let those who make money moving paper around fooling with taxes do real work that you can see and feel at the end of the day.

Bodhisattva
5603
Points
Bodhisattva 08/18/13 - 06:47 am
1
3
There'll be no black market

There'll be no black market at all with a 30%-40%-?% regressive tax on everything you need to live. No sir, people won't do that. Of course you'll also have to find places for all of the starving people in the streets who no longer can afford rent, utilities, food, etc. since wages have stagnated since Reagan was in office. They might get a little testy so you'll have to hire more police or pull in the National Guard. Probably some runs on grocery stores with people grabbing food and stuff, but just ignore that. But hey, the super rich will love it. They'll be locked in their compounds surrounded by armed guards while everyone who used to be the middle class on down struggles for survival.

soldout
1280
Points
soldout 08/18/13 - 07:32 am
2
1
national sales tax

Once everyone was paying the rate would probably be something less than 20%. We don't have much of a black market on regular sales tax. Almost no enforcement necessary and fair. People who want the present tax situation are looking for ways to control people's behavior. Can you imagine the effect on the economy the first time everyone got their full pay with no deductions. Can you imagine the first year you didn't have to fill out a tax form. Imagine how people and businesses would act when taxes were never a consideration in their actions. Charities would get money from cheerful givers rather than those looking for a tax break. The crooks would pay as much tax as the honest person. The list could go on and on. Those who can't effect you because of their lifestyle choose to pass laws to control you.

deestafford
23648
Points
deestafford 08/18/13 - 08:43 am
2
1
soldout is dead center on target and Bod is out of the range fan

If we went to the Fair Tax our economy would take off and we would have companies from all over the world begging to locate in the US. Taxing people on what they earn versus what they spend is a detriment to economic growth and nearly immoral. Read "The Fair Tax Book" and "Fair Tax The Truth" and one will understand how it would be so beneficial. Any negative comments made by anyone not reading those books are not worthy of listening to because of ignorance.

One thing overlooked in the discussion about our financial situation is what freezing spending and just adjusting for inflation would do. Within just a few years we would have a balanced budget...oh, excuse me I forgot. If we freeze spending that means the politicians of both parties cannot increase their current baseline giveaways to entice more corruption.

History has given us an example of how to get out of this mess and it was done by Calvin Coolidge who CUT TAXES AND SPENDING which led to the greatest economic boom in US history.

localguy55
5477
Points
localguy55 08/18/13 - 10:23 am
4
1
dismantle the IRS

Removing the IRS and replacing it with any of the proposed tax collecting plans would do more to heal this country than anything our present leaders have proposed. The problem is that the IRS is their police force and have more power over us citizens than the military. These politicians would lose a great deal of power if they rid us of the IRS and they know it. So, don't look for any simple solutions from those thieves.

corgimom
27811
Points
corgimom 08/18/13 - 03:13 pm
1
2
"We don't have much of a

"We don't have much of a black market on regular sales tax."

HAHAHA, HAHAHA, HAHAHA!

dichotomy
30521
Points
dichotomy 08/18/13 - 07:22 pm
3
1
Bod......there's always those

Bod......there's always those pesky poor people who can't pay THEIR fair share...but seem to be able to drive cars newer than mine, buy up all the good steaks at the grocery store with MY food stamp money, and waddle their oversized bottom ends out to the parking lot to be sped away by the NON-WORKING male who has been waiting in the Escalade and listening to his thump thump music.

I'm really not too concerned with their ability to pay sales tax...not in the least. Not worried in the least. It would be the best thing that has ever happened to the country........AS LONG AS IT WAS A FIXED RATE THAT COULD NOT BE INCREASED AND SPENDING WAS CAPPED TO THE AMOUNT COLLECTED.

Little Lamb
43827
Points
Little Lamb 08/18/13 - 10:40 pm
1
1
Black Market

I would wager that there is more income tax avoidance in this country than there is sales tax avoidance.

deestafford
23648
Points
deestafford 08/18/13 - 10:59 pm
1
1
How would the sales tax be avoided?

It would be collected the same way it is now by the states and it would be on just new goods and services and would replace all taxes to include Social security, inheritance, income, etc. Another advantage is it would get visitors to the country as well as the pimps, drug dealers et al when they buy anything new at retail. Basically, the cost of goods and services would remain as they are now because there is about a 23% embedded tax in the cost of everything you currently buy and that would be eliminated and as a result it would be a wash.

Go to fairtax.org for a good learning explanation.

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