Despite all of the panic cries on what would happen should Congress fail to raise the debt ceiling next month, I've come to believe that is just what we need. I believe the government, and the American people, need a wake-up call.
I'm amazed that most people have so little feel for how bad the national debt is. Obama came out with a "smoke and mirrors" proposition for reducing our debt which was no more than a slight reduction in the amount of deficit spending. The Republicans plan, the Ryan Plan, proposes a $6 trillion dollar reduction in "spending" over a ten year period. How many know that, after that ten year period, we will still not have brought our annual debt in balance and will not reduce the $14 trillion of debt at all? In fact, under the Ryan plan that all the liberals claim will destroy our country, the national debt will actually have swollen to $20 trillion because we still will be paying enormous interest on the debt, and will still be running an annual deficit! Under Obama's plan the national debt will have swollen to $26 trillion! Read the neutral Congressional Budget Office's estimates of this on their site!
I believe its time that we get serious about tackling this problem. I just heard a panel of economists lay out a scenario that is likely to occur should Congress fail to extend the debt ceiling next month. First of all, in contrast to to what many are saying, the U.S. would not be in bankruptcy. Nor would we be defaulting on our government bonds and send the markets into panic. Keep in mind that the U.S. is pulling in over $2 trillion dollars in revenue. If the national debt is not raised Congress would be forced to prioritize spending that $2 trillion. Let me present what I would do to budget our limited resources under a complete freeze at current debt levels:
My budget under a debt ceiling freeze:
Scenario: I have $2.2 trillion of revenue to spend
I must cut spending and I must raise revenue
1) Continue paying interest on our government bonds and other debt obligations.
2) Pull all American troops out of Libya, Iraq and Afghanistan immediately; we can't afford to fund Muslim wars. (Savings $450 billion per year)
3) Vote to amend the 14th amendment to stop making illegal children automatic citizens; refuse to pay the hospital costs for their birth, refuse to pay any WIC, food stamp, medicaid, welfare benefits. (Based on Center for Immigrations Studies, a savings of $150 billion dollars)
4) Raise the taxes on anyone making more than $500,000 per year to the 35 percent tax rate ($400 billion in additional revenue based on Obama's economics advisor)
5) Anyone making over $25,000 per year, but less than $40,000 per year, must pay taxes at a 5 percent rate to insure they have skin in the game and begin to care about how government money is spent(additional revenue of $400 billion per year) All other tax brackets would remain the same.
6) End Government subsidies to Planned Parenthood and Public Radio (savings of $1 billion per year)
7) End all foreign aid (A savings of $8 billion per year)
8) End all military assistance funds to foreign nations (A Savings of $40 billion per year)
9) Reduce Congressional pay and benefits by 50% until the budget is in balance
Under the above cited additions to revenues, and reductions in spending, I just proposed a balanced budget without denying American citizens a single benefit that they are enjoying now! Add the revenue additions and spending reductions and you'll see that we just closed the gap between the revenue we take in versus the government spending required. I didn't even touch Obama care! I didn't touch Social Security so our seniors are not eating cat food! I didn't touch Medicaid for American citizens (which could use a good scrubbing to eliminate fraud) and I balanced the budget!
Look at my budget and tell me that you can't live with this. Tell me American families haven't had to do more with a hell of alot less. Tell Congress we don't want the 74th raising of our debt level! Vote no next month on raising the debt ceiling! Then Congress will have to actually live within a budget. The markets will love this, we will, once again gain respect with our foreign friends and, without the government crowding out all other borrowers in the loan markets, more money will be available in the economy to create jobs which would actually boost tax revenue!
Note: There are several charts sources to show revenue gains should the bottom 50% of Americans pay even a marginal 5% income tax (currently the bottom 50% of all wage earners pay no federal income tax; payroll taxes are returned to them at tax time). The best source is from the Independent Tax Foundation of America:
If you care to read it you'll find the old liberal cry of "tax the rich" is moot; the top 3 percent of wealth in America pay 70% of all government tax revenue.