Stabilize the Debt

One of biggest financial crises that we face today does not come from Enron, WorldCom, Tyco, Madoff, or Lehman Brothers.  It comes as a result of the fiscal spending and budget of the United States Federal government.  The national debt effectively consists of “national credit” that we have borrowed against ourselves and discretionary spending, including military, healthcare, and tax savings.  As of Thursday, 5:06:45 p.m. February 9th, 2017, the U.S. national debt is at $19,974,163,375,278 dollars and by the time I finished typing this sentence it is at $19,974,163,764,686 dollars, according to US Debt Clock (usdebtclock.org).  It is astounding at how much our deficit is and what is needed to reverse it.  At this rate, if the clock was stopped now with spending it would take approxametaly $61,553 per citizen to pay off this debt.  The question then is posed, is it fiscally responsible to continue to spend as much as we do as a nation?  Who is responsible to pay off this debt?  Are we? Our grandchildren? Our grandchildren´s grandchildren?  It is a question that has been debated on House and Senate floors for the past decade, with many fingers pointed and many budgets that have not passed the floor to curb the spending.  Regardless of what occurs in Budget Committees, the House and the Senate, the fact is that the national debt keeps going up, every second, of every hour, of every day that we debate this and go back and forth over who is to blame.  
        The Stabilize the Debt simulation was an eye opening activity.  For many, it is as simple as saying “stop spending!”, but the activity showed that it is much more than that.  It is a “give and take” spending game that those that represent us have to play in order to achieve this nearly impossible scenario.  The activity allows us to reduce spending through enacting revenue acts or continue by introducing new reforms and bills to the floor.  I personally subscribe to the belief that every single citizen of the United States has a responsibility to pay back when it is due, whether or not, it imposes on my own quality of life.  I do not believe that is is fiscally responsible to continue to spend more every year and allow for our children and grandchildren to be born already in debt.  Furthermore, when one looks at the financial crises that many countries have faced in the past few years, one has to wonder how much more debt the United States can take before facing a similar situation like Greece, and Iceland.  Who will bail us out? Our national debt dwarfs most of the other countries´ debts combined.  We have more spending than most of the other industrialized countries with similar economies.  
        If we are solely responsible for our national debt, and if our goal is to stabilize and slow it, what will we have to compromise in order to achieve this goal? In my simulation in the activity, I was able to achieve 57% of spending limitation by 2024 and 60% of spending limitation by 2022.  
        One of the first items on the budget that I cut was the reduction of troops in Afghanistan to 30,000 by 2017 (-$680B).  One can say just by turning on the national news, that the war in the Middle East was a catastrophic failure and in turn spurred more terrorism across the globe with American distrust and dissent.  Why must American soldiers stay in an area where they are at continued risk, and their use would be better at home on U.S. soil for national security.  I also chose to “maintain the Sequester” and halt further budget spending (-$0).  As of the past decade or more, the U.S. government has continued to expand the budget past its deficits.  In the real world, a bank would cut off a customer, or issue a stop to future spending if we overdrew the limit, why shouldn´t a taxpayer paid government not be held to the same standard.  Cutting the troops in Afghanistan led to my next choice of “Canceling the ground combat vehicle and defer development of the long range bomber” (-$50B).  In my opinion, the scope of war has changed,  it no longer entails number of men on the field but the number of planes you have on the battlefield.  It would be pointless spending to continue issuing new orders for further expansion of ground troops and facilities.  
        When it came to domestic social and economic spending, I chose to keep all funding.  It is my belief that if we invest in our own people´s well-being they will be able to live fuller lives.  In this regard, I chose to “enact increased transportation funding” which increased the budget by $100B.  Without proper infrastructure, the nation will crumble and lead to more economic effects in the future.  This spending will also spur job growth and lead to further GNP creation.  
        I also chose to keep all provisions for Social Security, but enacted a more realistic approach to spending with a “more accurate measure of Inflation for cost of living adjustments” (-$150B).  This might lower the amount of social security benefits for recipients, but it is a cost that we must do in order to prevent future economic crisis.  I also chose to expand social security to include all new state and local workers.  I believe that if we have a social program such as social security, everyone must invest in it (-$90B).
        Many of my activities in adjusting the budget included changes to the HealthCare reform.  The biggest of these was to repeal the Health Care Reform Law and many changes that took place with the Affordable Care Act. (-$1010B) and “Block Grant Medicaid and row with inflation plus population growth (-$860B).  Although healthcare programs are necessary for a healthy nation, it is imperative that new legislation is introduced to curb the spending.  I feel that through reduction in military spending in the future, more money can be allotted into programs that invest in our own domestic policies, in terms of healthcare.  I also chose to “Require manufacturers to Pay a Minimum Drug Rebate for Medicare low income beneficiaries” (-$170B) and Replace Traditional Medicare with Premium Support (-$380B).  I believe that pharmaceutical companies and insurance companies have allowed healthcare costs to rise exponentially to spur greater profits through higher premiums with little push-back from the U.S. government for too long.  I also chose to keep all other social domestic programs, such as farm subsidies and Fannie Mae and Freddy Mac in place, as they invest in the public well-being.
        Most of my changes came in the way that we collect revenue and taxes.  Those of us in the accounting field know that balancing equation of Assets= Liabilities and Equity, and realize that if no balance is in place in terms of cash flow vs. cash outflows, there will be a deficit.  Many of the changes in revenue collection meant more taxes on the country.  We have been inundated for years to where it is almost truth, that we are the most taxed nation in modern history.  The truth is, that is far from the fact.  The nation has experienced higher tax rates in decades past, with lower incomes, in order to attain a goal in mind.  In World War II many tax rates for many people including businesses went up to almost 70%, in the 1950s and 1960s the top         tax brackets and rich were taxed almost 90% and the country still experienced a boom in the economy.  the fact is that trickle down economics does not work and people must learn to live with higher taxes in order to achieve national goals.  I chose to introduce an “excise tax on alcohol” (-$80B), “impose a financial crises responsibility fee (-$70B), “enact carbon tax” (-$450B), “increase gas tax” (-$160B), “enact the buffet rule” (-$90B), “raise cap to cover 90% of wage earnings” (-$550B), and “improve tax collection” (-$70B).  I believe that increased revenues from introduction of these tax “benefits” will allow the nation to control their spending.  Although some might disagree, it is impossible to keep spending beyond our means without compromise.  In this same regard, I eliminated tax incentives to increase Treasury funding to the national debt, including “elimination of state and local tax deduction (-$970B) because it is our responsibility to pay these taxes, and eliminate the tax incentive and reduction of costs to oil and gas companies by “eliminating LILO accounting in their inventory systems (-$170B).  And although some might disagree and go in an uproar, I eliminated the provision to deduct charitable contributions (-$250B).  There is no point of giving to charity if you are just going to deduct it on your taxes.  
        These changes again allowed me to achieve the goal of 60% by 2022, two years before the goal date.  Although I think that these changes are appropriate, I also believe that many Americans are grossly uninformed and not allow these changes to take place.  One can only hope that the tide will turn in terms of spending and lessen the burden to our descendants.