The recent increase in spending by the government in the face of a 1 in 80 year economic event is clearly the right thing to have done. I cannot imagine what the state of the economy would be without the necessary intervention. When the economy goes into free fall, the short term remedy is government spending, since the private sector is in no position to remedy the situation.



The issue with debt and deficits has everything to do with the growth in the economy (slow at the moment) and what the US decides to spend the tax receipts on. If the US continues to fulfill the role of world police, maintaining over 150 bases all over the world and spending money on arms that are outdated (borrowing money to do this), then where on earth is the fiscal restraint. Isn’t it obvious that the remedies for overcoming structural problems are to rework the system to stimulate a resurgence of manufacturing in the US and increase the wealth of the middle and lower class? The path is a long one but necessary one. The US has to first start with a national consciousness and decides on what things are in the national interest. Education is paramount and the type of education is even more important. Job mobility, retraining, and appropriate government incentives are the engines for progress. Make no mistake, tax rates can be a negative or positive engine for growth, the argument always is what levels are appropriate. I have always favored the idea of a flat tax rate; it removes all of the mystery and contention from the picture. Clearly tax reform is absolutely necessary; it is really hard to fathom how millionaires can be paying 14% in taxes. This is not an issue of tax warfare, it is simply an issue of overcome the debt and deficit, every citizen has to contribute their share to moving the country off of life support. It is a fact that the US started this unending period of deficits and debt during the Reagan administration, so it is worth a further examination to determine how to get the country back on track, even if it requires more taxes by the rich. There is ample room on the linear portion of the Laffer curve, from zero to close to the peak without disincentivising the rich!

