Last August, there was a lot of buzz about the film “I.O.U.S.A.” and I wrote about it for Cabot Wealth Advisory. (Click here to read the full post.) At the time, the U.S. national debt looked pretty bad, but this was before we had failed banks, a stock market crash and a long string of government bailouts.
This week brought the prediction of a 10-year federal deficit of $9 trillion, which is more than the total of all previous deficits since the United States’ founding. The White House went on to say that by the next decade’s end, the national debt would equal three-quarters of the entire U.S. economy.
I don’t know about you, but I find that pretty scary.
According to the Treasury Department, which has a neat Debt to the Penny Calculator on its Web site, the current debt held by the public is more than $7 trillion and the intragovernmental holdings debt is more than $4 trillion, bringing the total to over $11 trillion.
Did you get all of that? It’s a lot to process, but the basic idea here is that the U.S. is buried in debt.
Also this week, the White House Office of Management and Budget said that President Obama would have to struggle to meet his vow of cutting the deficit in half in 2013. This was a promise that earlier budget projections suggested he could easily accomplish.
One of the president’s economic advisers was quoted as saying, “This recession was simply worse than the information that we and other forecasters had back in last fall and early this winter.”
Well, that’s no news flash. And while the president didn’t cause our recession or much of our mountain of debt, he’s the one who has to deal with it. So I’ve come up with some solutions for how the U.S. government can alleviate some of our deficit:
**Instead of holding the usual White House Easter Egg Hunt, have the kids comb the nearest park for lost coins, bills and other valuables.
**Instead of wasting paper by printing out the huge budget books this year, open a Twitter account and Tweet the highlights.
**Use bulletproof, dark-tinted Toyota Priuses to get around instead of the usual large, gas-guzzling SUVs.
**Instead of allowing each state to bring home so much pork, give them each one slice of bacon.
**Rent out extra rooms in the White House to overnight guests. You could charge a pretty penny for a night’s stay in the Lincoln Bedroom!
**Charge admission at each U.S. border. Children younger than five are free.
**Set up a photo booth to get your picture taken with Bo the Dog.
**Open Area 51 as a museum.
**Organize the world’s largest bake sale on the National Mall with Sasha and Malia manning the lemonade stand.
It’s fun to think of these silly solutions, but I hope the people in Washington are thinking of some serious ones. The federal debt is out of control and getting even more so. The recession has taught the average American some hard lessons about not overspending, saving more and investing for the future and it’s about time that the U.S. government learned those lessons, too.
What are your solutions for how the U.S. government can reduce its national debt? Send them to me by email or comment here.
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17 responses so far ↓
1 J. Benedict // Aug 29, 2009 at 5:14 pm
Mr. Obama could start by downsizing gov’t, IE, eliminating some of the 22M people on gov’t. payrolls. Then, get us out of all wars & the multitude of countries we have troops in, not to mention the many millions we waste giving to other countries. We could then have our troops guard the USA by tightening up security here. And lastly, cut salaries of people in Congress by 2/3 rds & eliminate all perks plus get rid of lobbyists completely. Also, initiate term limits on Congressional personnel. These ideas are just for openers which could be a starting point to really eliminate our nat’l debt.
2 Louis Tarver // Aug 29, 2009 at 6:37 pm
We could reduce our National Debt by having the congress to work for free.It used to be a privledge to be ask to represent your state.Now it is about how much you can make from serving!
3 Janet Labbe // Aug 29, 2009 at 8:04 pm
How can we reduce the deficit.
1. Term limits without lifetime retirement benefits at our expense even if you only serve one term.
2. A balanced budget law strictly enforced. If we don’t have it, they can’t spend it.
3. Strictly enforce immigration laws. What is it about the word illegal that they don’t get?
4. Welfare reform like the 3 strikes you’re out policy. It should never be a generational lifetime entitlement.
5. Tax breaks for the small businesses the provide jobs for 70% of our workers. Not more taxes and regulations that strangle innovation.
6. Stop funding the U.N. disproportionatly more than the other members. Getting out altogether would be preferable.
7. Get out of the IMF and Kyoto treaties that will take us down a rocky road and ultimately hobble our ability to rebuild to new heights.
These suggestions would only be a start as I am sure others would have more to consider.
4 Jim Thomas // Aug 29, 2009 at 8:17 pm
A serious discussion of the national debt has to start with the fact that we can’t afford to continue to waste untold billions on the military in the name of fighting terror. We should bring our troops home within a year and aim to cut $200 billion a year from the annual defense budget. Then we should consider a tax on gasoline that is targeted strictly for deficit reduction. This would help fiscally and might even lead to less dependence on foreign oil. We should also pass an amendment making it illegal to run deficits in times of peace and prosperity. Recessions should be our only excuse for deficits after a 5-year transition period.
5 D. Adams // Aug 29, 2009 at 8:22 pm
1.How about ALL Congressman earning $1.oo a year until the budget is balanced since they caused this mess. ALL perks suspended.
2. No retirement for new incoming Congressmen. Our forefathers knew the meaning of public “SERVANT”.
3. No government new hires until budget balanced.
6 G. D. Rasch // Aug 29, 2009 at 9:02 pm
RE: National Debt Reduction.
Fire all Czars and staff and put the Cabinet to work!
7 Dave // Aug 29, 2009 at 9:21 pm
Here’s my ideas:
1. This country is broke. Immediately shut down all immigration offices. This country can longer handle other countries refuse. Let China provide for the weel being.
2. Eliminate all health care, free cell phones, security, plane rides, additional staffing and other expense items the Senate and House incur to run their business. They have run their business into the ground so now it’s time to pay up.
3. Tax all lobbyist organizations at the rate of 50% – any politician accepting funds from any organization will be taxed at a 75% rate to ensure any influence will be evakuated.
4. Any politician caught in any illegal activities will have all perosnal property over taken by the US Gov. to help pay for the irrepairable crimes they have committed to the American public. Treason will be the final call for these crooks.
5. Any US corporation hiring H1b’s or other forueign workers will be taxed at a rate to cover the displaced American worked. All off shore compqanies doing business in America will be taxed as if they are state side.
6. Only products made in the USA will be allowed to carry the “made in America” label.
7. All states will impose an additional 5% SALES TAX ON ALCOHOL, TOBACCO and Firearms that will be used for health care.
8. Any state can legalize marijuana as long as a 10% tax is levied to ensure to cover the people that require Gov. assistance.
9. Welfare and other programs that GIVE money awat will be restructered so that any able body that can work will be given a job that will allow them to earn their benefit. Advanced education for these people will be provided and discounted as soon as their employer satisfies a statemement of self reliance.
8 Robert // Aug 29, 2009 at 9:50 pm
Ms. Elyse, Andrews: Greetings.
While there are many steps we can take in reforming our health care system some cost more than they are worth. Lets start with the no cost to consumers and taxpayer items first: Tort reform along the lines of the TX reform of 2003 would work to reduce costs at no cost other than that of doing business in the legislature. Allowing small businesses to form larger risk pools and shop for plans would lower costs with no cost. Letting those who are unable such as the un or underemployed, or the unwilling to volunteer at local government or charity organizations to bank health care hours. While not exactly budget neutral we would get more work done through volunteerism. If they have skills perhaps communities could exchange insurance hours for services rendered. There are a lot more measures that would help reduce costs while preserving quality. Government “Competition” is not one of them.
9 charlie clink // Aug 29, 2009 at 11:23 pm
let’s cut foreign aid to a bare minimum, reduce all these subsidy programs, and take a hard look at the welfare program in the US. Too many able bodied people are on welfare.
10 Carol Blanchard // Aug 30, 2009 at 3:07 am
Put NASA in mothballs for now. WE can’t afford food, we don’t need to get pictures of Mars for the price tag NASA costs the taxpayers. Make it a museum and charge admission until we can get back in the Black Ink again at some distant year in the future.
11 chris // Aug 30, 2009 at 7:57 am
Drastic problems call for drastic solutions. This will work and the US will regain financial gravitas within 5 years.
1 Beginning tax year 2010, move to flat tax of 20% for everybody, for everything. No deductions.. period. This means earned income, unearned income and capital gains, except for gains on primary residence.
2 Beginning tax year 2011 initiate a 10% VAT nationally, administered as it is in Europe. Commence a 5% stamp tax on all real estate purchases as of Jan 1 , 2010
3 Beginning tax year 2012, raise the VAT from 10% to 15%
4 In 2013 Raise the VAT to 20% as it is in France, Sweden, Ireland, etc
In 2013, begin selling gold from Fort Knox. Gold will be 30% higher in USD than it is now. Sell in a controlled fashion until gold price starts settling back under $1100/ounce and then stop.
Start selling gold again when it hits $1500/ounce and stop when it gets to $1300.
Stop selling gold when gold backing of US$ is still higher than the gold backing of any other major country.
You can laugh about this all you like. but it will cut out massive destructive bureacracy and tax loophole noodling by congress. Stamp tax up front replaces capital gains on residences.
Propsect of future VAT increases will stimultate consumer spending for 3 years..
No one except maybe the top 1% of income earners ( who spend fortunes evading tax ) will end up worse off in take home pay or living standards.
I have MBA from Harvard Business School[ 1968]
and have run multinational businesses for 30 years. I am no crackpot. I have flown the Atlantic at least 600 times and have been to Tokyo 130 times over my career. I have read every issue of the Economist since 1983 and have done business in over 100 countries.
I own residential property in Massachusetts, New York, California, Bermuda and London.
12 Harold Lester // Aug 30, 2009 at 8:51 am
Your solutions were beyond silly, particularly the one about the government using bullet-proof Toyota Priuses to get around, which would only send MORE money overseas (taxpayers money at that). I do, however, like the idea of government using hybrids. The Ford Fusion Hybrid is a much better choice.
13 Norm Maloney // Aug 30, 2009 at 11:47 am
Cut the defecit by 1) pull out of the United Nations and kick out the no goods and rent out the building. 2) pull out all the united states forces that are protecting other nations and bring them home to close our borders. 3) cut goverment payroll in half. Half are not working anyway. 4) do away with the give aways programs to foreign goverments. 5 )discondinue the NASA funding and sell all the scrap to China. This would put us back in the black.
14 Mike Timlin // Aug 31, 2009 at 2:39 am
Elyse, here are some suggestions for generating additional tax revenue:
Let all of the Bush tax cuts expire; we had a surplus before he took office (uggh)
Tax all oil at the barrel (not the gallon) level when it is first produced or imported; since most of our oil is imported, this also helps the trade imbalance
Tax all toys when they are first produced or imported; since most of our toys are imported, this also helps the trade imbalance
We should be able to come up with other ideas that get the job done (cars, consumer electronics, other products that are mostly imported).
I don’t think we can balance the federal budget unless we also balance the trade budget. We are offshoring way too many jobs and importing way too much stuff. So, reduce consumption of mostly-imports and increase tax revenue.
Other subscribers will probably have great ideas to reduce spending; I wish them luck, because they never seem to actually happen.
15 Belmarque // Sep 2, 2009 at 11:11 pm
Wednesday September 2nd, The markets returned to the bear market side on August 31st. The first two days of September have confirmed the down trend.
16 Belmarque // Sep 3, 2009 at 6:43 pm
Thursday September 3rd, While the markets gave us a small green wave today, the bear market got a little stronger.
Tomorrow should be interesting.
17 Readers’ Sound Off on the National Debt // Sep 8, 2009 at 9:56 am
[...] having a very lively discussion on the blog lately about the national debt. You can read about it here and here. I received a few more comments in my inbox this morning that I wanted to share with you. [...]
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