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60 minutes: looming fiscal crisis for the United States

Last night on 60 Minutes, Steve Kroft presented a report called "U.S. Heading For Financial Trouble?" It is a depressing report on the financial reality this country is facing, after decades of deficit spending and promises by legislators that simply can't be kept in the long term.

The piece revolves around David Walker, who is the Comptroller General of the United States, and the head of the Government Accountability Office, which "audits the government's books and serves as the investigative arm of the U.S. Congress." So he probably knows what he's talking about. Here's how Kroft introduces the piece:

[Walker is] the nation's top accountant, the comptroller general of the United States. He's totaled up our government's income, liabilities, and future obligations and concluded that our current standard of living is unsustainable unless some drastic action is taken. And he's not alone. It's been called the "dirty little secret everyone in Washington knows" – a set of financial truths so inconvenient that most elected officials don't even want to talk about them, which is exactly why David Walker does.

Shortly thereafter, Walker says this to the editorial board of the Seattle Post Intelligencer:

What's going on right now is we're spending more money than we make...we're charging it to credit card...and expecting our grandchildren to pay for it. And that's absolutely outrageous.

You should really watch this piece. And contact your representatives to demand action. Both the transcript and the video are available at the link above. If you don't have time, here's a recap from Steve Kroft on YouTube. This should be of concern to Democrats, Republicans, and independents.

Time to raise taxes (especially on the wealthy and corporations), and reduce spending. It's the only way out.



"Time to raise taxes (especially on the wealthy and corporations), and reduce spending. It's the only way out."

Paging New Mike...

Hey, it's just like the Reagan years all over again! (Except Reagan didn't spend $2 billion a week on a militarily unwinnable "war".)

Ah, good old Reagan. I miss him.

Heh. Define "Wealthy"

Therein lies the rub, eh?

Ooops. Hit return before I meant to...

In my experience thus far, "wealthy" is often defined as "Whoever makes more money than I do."

My definition of wealthy, for tax purposes, would be household income over $250,000 a year. I think that's about 2.5 million households, if memory serves... And there are probably other ways to slice it, too...

And then you have to define "income" as flat taxers constantly remind me whenever this comes up.

In the old days, I never would have thought that one day I would look back on Reagan's presidency as relatively normal and actually kind of miss it, at least compared to what we have now.

If nothing else, Reagan and his team understood that there are things that America's military can reasonably expect to accomplish and there are things that are little more than wishful thinking.

Taxable income for individuals? Off the top of my head, I would say wages, interest on investments, and capital gains. What do flat-taxers think should be defined as taxable income?

Jude, you're not the only one pining for the, in comparison, halcyon days of the Reagan presidency. In April, Bruce Bartlett, a former Reagan official, took Bush to task for poisoning supply-side economics in an NYT op-ed:

Today, supply-side economics has become associated with an obsession for cutting taxes under any and all circumstances. No longer do its advocates in Congress and elsewhere confine themselves to cutting marginal tax rates -- the tax on each additional dollar earned -- as the original supply-siders did. Rather, they support even the most gimmicky, economically dubious tax cuts with the same intensity.

The original supply-siders suggested that some tax cuts, under very special circumstances, might actually raise federal revenues. For example, cutting the capital gains tax rate might induce an unlocking effect that would cause more gains to be realized, thus causing more taxes to be paid on such gains even at a lower rate.

But today it is common to hear tax cutters claim, implausibly, that all tax cuts raise revenue. Last year, President Bush said, "You cut taxes and the tax revenues increase." Senator John McCain told National Review magazine last month that "tax cuts, starting with Kennedy, as we all know, increase revenues." Last week, Steve Forbes endorsed Rudolph Giuliani for the White House, saying, "He's seen the results of supply-side economics firsthand -- higher revenues from lower taxes."

This is a simplification of what supply-side economics was all about, and it threatens to undermine the enormous gains that have been made in economic theory and policy over the last 30 years.
The piece was called " How Supply-Side Economics Trickled Down." Because it's older it's a Times Select article. If you don't already, start getting the Sunday times delivered to your home so you can get "free" access to Times Select.

Clarification - I meant income from investments would be taxable.

It's just the question that's always posed. Does inheritence fall under income? I say yes, ANY money coming INTO your home is income. That seems simple to me.

But the tax code and ideas for making it simpler and equitable are above my pay grade. I'll leave that discussion to those who can balance a checkbook.

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