Friday, 20 August 2010 00:00
While the story is all over the news, I want to provide some details about our growing debt which should be of concern to all of us without regard to which side the political aisle we belong.
First, take a look at our 50 States. There are only four States which are not in a budget crisis – Alaska, Arkansas, Montana, and North Dakota. The other 46 States are deep in the red! So far, this year, 23 states have enacted tax increases and 13 others are contemplating increases.
And this does not include the number of local governments in deep trouble. When you combine the total debt of State and local governments the figure is over $316 billion and is expected to increase to $384 billion by 2012!
Now, add in the growing debt of the Federal Government, and the figures are chilling. Today the national debt is around $13 trillion and growing with the figure to hit close to $20 trillion by 2015! If you want to check the debt’s growth each second, go to www.usdebtclock.org/. Right before your eyes you can see the debt increase with each passing second.
But, there is more! Our national debt does not include the debts of Fannie Mae and Freddie Mac — estimated to be anywhere from $160 billion to almost $1 trillion.
If you add Fannie and Freddie to our national debt we have about the same debt as Greece per capita! None of this takes into account the healthcare coverage crater. When the details of that new law are finally implemented in 2014, the debt will be much greater. With the jobless rate at about 10 percent and the economy still sluggish, how are we going to pay for our growing debt?
Well, the President has created a new Commission – the Financial Crisis Inquiry Commission – to examine the details and issue a report. Oh, by the way, the report is not to be submitted until December of this year – after November’s mid-term elections. I wonder why?
One approach which is already resonating from the Commission and other insiders is a Value Added Tax (VAT). Such a tax would impose a new tax on every stage of product production. Many other countries have already imposed such a tax. For example, Germany has a 19 percent VAT, France a 19.6 percent VAT, England has a 17.5 percent VAT, and our neighbor Canada has a 5 percent VAT.
Make no mistake. The United States must either cut spending or raise taxes. Some say it will be a combination of both. Whatever you might think, our spending is out of control.