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Journal jgardn's Journal: How to balance the budget and pay off the debt

This is a very easy plan on how to pay off the national debt and balance the budget. It is quite easy to grasp.

Let's say you borrow $100 from a friend. He asks you to pay back $15 over the next 10 years. At the end of the ten years, your debt will be paid off. If you only make enough money to handle all of your expenses, plus sum to pay off the money your owe on your debt, then after ten years, the debt will be paid. Simple, huh?

All we need to do as a nation is make sure we are making our debt payments. After only 10 years of doing so, the debt will be gone. This is because the money is borrowed with T-bills that expire after 10 years. We don't need extra money to pay off the debt.

Now let's talk about making sure that the money coming in is the same as the money going out - in other words, the deficit.

Our economy is constantly expanding. That means our tax base (the amount of money we can tax from) is increasing over time. We will be able to raise more money in the future with the same tax rate today.

If we can do something to make the tax base expand faster, then we can get more tax revenue in the future. Think of it this way: If I spend $10 today, with the expectation that I will get $50 next year, is that a good investment? Of course! I will gladly borrow money if I have to to put that $10 in.

Whenever we do the following things, the economy expands. These are all things that the Bush agenda stands for.

* lowering taxes on the rich. See, the rich are rich because they know what to do with their money. They make money with money. The poor doesn't have money because they can't make money with money. If we allow the rich to retain more of their own money, they will make even more money, *increasing the tax base*!

* Reducing regulations. Regulations are generally good in that they accomplish good things. Take the clean air act. I mean, clean air is good, right? But regulations cost money to the tax base. Someone has to do something to comply, and it usually means that they have to do something more than what they are doing. We need to balance the benefit of regulation with the cost of regulation. Some things are hard to put a price on - clean air, for instance. But we must know how much we are going to spend for it, and balance that out.

* Eliminating corporate subsidies and welfare. By giving government money to the poor (both corporations and people), we are funding projects that don't have a negative ROI. In other words, we are taking money from people who can make more money and giving it to people who can't. We are reducing the tax base even more so than just taking the money.

The other side of the equation is spending. One way to balance a budget is to spend less.

* Eliminating corporate subsidies and welfare. I already mentioned this, but this is the same as burning money. The people won't go hungry - there are more than enough programs and shelters and charitable people who would love to feed these people (myself included.) I will gladly promise to do my part in helping the poor if government would stop competing with me.

* Reducing responsibility and thus spending. The government should be doing less and thus need less money to operate. By reducing the ambitions of government, and thus reducing the costs of government, we are lowering the amount of money needed to balance the budget.

As the amount of money spent decreases, and as the tax base increases, eventually the two will meet. If we played our cards right (IE, encouraging tax base growth), we can have a balanced budget with a low tax rate. A little deficit now is nothing to worry about because the economy and the tax base grows faster than the interest rate on our debts.

I want to revisit the point that really rich people are better than kinda rich people in our nation. Let's imagine these two scenarios:

(1) We have a low tax rate. Rich people keep a lot more of their money and they get really, really rich. We have thousands of multi-billionaires who have more money than they know what to do with.

(2) We have a high tax rate. The rich are only kindof rich. Maybe one or two people are billionaires, on we only have a few more multi-millionaries.

Would you rather have 50% of a million dollars, or 10% of a billion? Let's do the math:

50% * 1,000,000 = 500,000
10% * 1,000,000,000 = 100,000,000 = 200 times 50% * 1,000,000

Obviously, having a huge tax base with a low tax rate is far superior to a small tax base with a high tax rate.

Air is water with holes in it.