The Truth About the Deficit and Taxing the Rich

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moneyThe United States of America is poised to spend about a trillion and a half more dollars than it will receive in 2011. That’s more than three times the deficit in 2008, when big spender George W. Bush left office, just in case you were wondering.

The national budget isn’t much different than our household budgets. Money comes in, and money goes out. Granted, it’s on a much larger scale, but it’s the same concept, nonetheless. When we don’t have enough money to cover all of our expenses, we either have to cut costs or use credit – same thing with the government. 

We may borrow from different sources (Uncle Sam takes loans from China while most of us use Visa or MasterCard) but we have similar rules. We borrow money, pay interest on it, and hope to pay it all back someday. We also have a cap on how much we’re allowed to borrow. For us, it’s called a limit, but the government calls theirs the debt ceiling.

Occasionally congress will vote to raise the debt ceiling so that we can borrow more money for our children and grandchildren to someday pay back. Because we need money to study shrimps on treadmills and other important things like that.

President Obama (who hasn’t passed a budget in over 800 days, by the way, even though the House passed one in April) says that we have to raise the debt ceiling or else kids won’t get college loans and other bad stuff will happen. He did not, however, explain why it is my responsibility to pay somebody else’s tuition. 

Once the debt ceiling is raised, they can figure out how to pay back some of the $14 trillion plus we owe. Democratic leadership would like to raise taxes on the rich (aka job-creators) to help close that deficit gap. In a town hall meeting in Maryland on Friday, President Obama said, “If we’re going to reduce our deficit, then the wealthiest Americans and the biggest corporations should do their part…”

He’s been into the ‘shared sacrifice’ rhetoric recently. Which is really sort of odd considering that nearly half of all Americans don’t sacrifice at all. Maybe it’s time for those Americans to start feeling the squeeze from the IRS. Maybe when part of their money is being spent on corporate jet tax credits, they’ll be more likely to vote for people that want to cut the spending and get our financial house back in order.


Image via JollyUK/Flickr

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