Debt Ceiling…What Do We Do Now???

As the United States has now hit the debt ceiling of $14 Trillion Dollars…That’s $14 TRILLION DOLLARS, the United States Government is now deciding on if it should be increased, and if so, by how much.  I cannot speak for all Americans, but I feel that instead of taking so much time and effort in trying to come to a compromise on increasing it, why am I not seeing serious talk on trying to decrease the size of the debt.

Before we go any further, lets discuss some of the recent history of the national debt of the United States.  On September 15, 1981, President Ronald Reagan had signed the legislation that passed in Congress that allowed the debt ceiling increase to $1 Trillion Dollars. 

Throughout the 1980’s, Reaganomics had led to increases in the national debt.  In simple terms, his policies of cutting taxes for the top tax rate, raising taxes for the middle tax rate; which had been done 8 times during his presidency, proved to be a major blow to Main Street America.  The trickle-down theory was just not as effective as it was projected to be.  Keep in mind that when Ronald Reagan was elected in 1980, the top tax rate was at 70 percent.  When he left office it was at 28 percent.           

 

Along with this, government spending was drastically increased.  Areas such as Defense spending would receive blank checks and were instructed by President Reagan to order whatever was needed.   Towards the end of his presidency, the national debt was climbing to proportions never before seen.     

When George H.W. Bush was elected in 1988, he was faced with economic issues immediately after taking office.  Deficits spawned from the Reagan years had forced him to go back on his campaign promise of “Read My Lips, No New Taxes”.  When the Berlin Wall fell in 1989, he felt that for the United States to now be the sole superpower, we could not do that with a massive amount of national debt.  As a result of this, he had crossed party lines to work with Democrats, whom controlled both the houses of Congress. 

As a result, the Budget Enforcement Act of 1990 was passed by Congress and signed by President Bush.  This bill would decrease government spending over 5 years by a few hundred billion dollars, as well as increase revenue by over $100 billion dollars.  This may not sound like a lot of money now, but in 1990 it was a nice portion. 

The part where President Bush was chastised for going back on his campaign promise and increasing taxes was when he increased the top income tax rate from 28 to 31 percent.  Politicians such as Pat Buchanan and Newt Gingrich were against the Budget Enforcement Act of 1990 and did not support George H.W. Bush in the 1992 Presidential Election.   The GAO has claimed that the foundation in which the surpluses and economic growth of the late 1990’s was the Budget Enforcement Act of 1990.  Aside from that, the 1990’s saw the massive technology surge that also played a large part in the economic boom throughout the late 1990’s.

  

Keep in mind that when George W. Bush took office in 2001, he and other Republican in Congress had abandoned much of what his father had put in place during his presidency.  When you look at that in conjunction with the enormous military spending/two wars that took place during the 2000’s, as well as banks becoming too big to fail partially thanks to legislation that was taken out by President Clinton in the late 1990’s, we have arrived at the debt ceiling and economic hardships that are plaguing the United States.

To be on the road to recovery, I feel that lawmakers should be focusing on massive spending cuts, as well as raising taxes.  Many Americans do not like hearing the term “raising taxes”, but we are in such a financial hole, that we as Americans are now faced with the job of sacrificing now in order to preserve this great nation for future generations to come. 

To add to this, tax laws regarding corporations need to be evaluated.  When corporations such as GE and Exxon-Mobil, which have reported record profits over the last few years, are paying nothing in taxes and receiving refunds, the loopholes that these corporations use to get around paying taxes need to be done away with.  When large parts of raising revenue falls on the backs Main Street America in regards to taxes, its time to revamp the system.  With Main Street America being the backbone of American society, what happens if it collapses?