The deficit has grown due to many factor, but the most significant reason for its growth is the economy. The recession has exasperated the deficit due to the lack of revenue coming in from the working class. There are far too many people on the sidelines waiting and wanting to work, but can not do so. The unemployed and underemployed pay little to nothing in taxes, this exaggerates the deficit problem. Yes, the deficit is a revenue problem, not a spending problem.
In a recent report by Reuters Loomis Sayles, an investment company met in New York to discuss various issues facing the economy and the investment world. During this year’s meeting a gentleman named, Dan Fuss, Loomis’ vice president mentioned a statistic that really shed light on our deficit problem. Fuss said, about 56% of Americans over the age of 16 are gainfully employed. If that percentage were to rise to 64%, Fuss reckons, then the budget deficit disappears entirely. No need to cut benefits to the elderly,food stamps or even the military. The only issue is, this is hypothetical and not realistic. This does put emphasis on job creation though. By increasing the employment and cutting on billion dollar subsidies to oil corporation and reducing the waste in the bloated Pentagon, we could actually realize a balanced budget like we had in the 1990s.
Unfortunately the Republicans are looking at the budget backwards. Rather than focusing on increasing revenue through job creation to combat the deficit, they want to cut the lifeline that is helping so many millions of the people who are hurting in this economy.
When they start cutting food stamps and other needs they are taking money out of the economy, and diminishing economic demand.
The Republicans are using this crisis as an opportunity to strip the safety net of its fabric. That’s all this is, an excuse. It is not necessary. The Republicans were elected because of the population’s disgust with the economy. It’s time they started getting serious about our economy and at the same time they will improve the deficit.
The argument that Republicans have used every single year since Reagan is that tax breaks create jobs and the GOP’s budget reduces taxes on corporations. Well the GOP also likes to promote the job growth under Bush until the 2008 recession. The Bush tax cuts are still in effect. Where are the jobs? If the tax cuts promoted jobs growth from 2001-2007, why aren’t they producing jobs now?
In 2009 GE didn’t pay federal taxes,received stimulus money and still laid off 18,000 employees according to GE’s annual report. Now the conservatives will try to pin this on the President, which he does deserve some of the blame. Obama bought into the conservative ideology that tax breaks and subsidies create jobs. They don’t! Wages create jobs, without wages, there aren’t any jobs.
So the Congress, especially the Republicans need to get moving on the economy. Bring factories back to the USA and start building stuff in this country again. This will bring down the deficit through increased revenue, then we can start talking cuts, but until then leave the most vulnerable people alone.
Image: Left Razor Edge