The current financial predicament in which the US Government finds itself is of its own making.  However it can be solved if fast, radical and realistic action is taken.  Here is how it should be done.

1.  Kill Social Security and Medicare.  Not reform them, kill them,  cash out the social security trust fund and place it 50% in short term interest bearing CDs and the rest in stock market index funds to pay persons currently receiving benefits.  This allows payroll taxes to be used to pay down the debt and the cashing in of the trust fund eliminates 2.4 Trillion from the total national debt.

2. Repeal the Community Reinvestment Act.  This is what brought about the sub-prime loan crisis.  Politicians meddling in the mortgage markets.  By no longer forcing banks to give sub-prime loans the can focus on extending credit to people that can pay them back, what a concept.

3.  Cut Marginal Income Tax Rates by 5 % across the board.  It has proven time and again the best way to restart the economy from a recession is to cut taxes and lower spending.  Lower taxes mean people keep more of what the earn, so the wok harder and earn more, allowing the government to collect greater tax revenues with lower tax rates.

4.  Initiate number three above as the first phase in introducing a flat income tax on all earners above a minimum income cutoff floor.  Making taxes neither regressive or progressive but fair will ensure maximum compliance with the Tax Code by streamlining and simplifying the code itself and eliminate many of the loophole now used to by just about everyone to reduce there exposure to patently confiscatory tax rates.

5.  No More Free Money.  Namely a massive elimination of all but  a handful of tax credits, government grants and other spending that does not directly contribute to the powers and duties given to the federal government in the constitution.

6.  Amend the Constitution to Require a Balanced Budget.  Make Congress live within its means, no more deficit spending except in  dire emergencies, and then only with super majorities of 3/4 voting to approve in both houses.

I am not going to pretend that these are the best courses of action, only that they point a clear way toward reigning in deficit spending and unfunded liabilities.  Social Security would need to be replaced by some sort of privatized system of individual accounts, funded by a combination of payroll deductions and voluntary contributions, but whatever replaces it should have an opt out allowing for people to forgo any claim on government benefits to forgo their participation entirely.

Posted by: raging tachikoma at 08:51 AM | Comments (3) | Add Comment
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