Reducing the Federal Debt- A few suggestions-2

To start with although it will hurt the most but for the sake of the greater good, we should eliminate Mortgage interest rate deductions. This is immediately cut according to one calculation more than 100 billions in immediate revenue. Another one is we should reduce the personal exemptions to only 1000 dollars and that should remain constant yearly. We should also increase the gasoline tax from the current 18.4 cents to 40 cents which would immediately cut our oil consumption and increase the revenue to build more and better roads and other means of transportation. Medicare should be restricted to only certain levels of income and higher income (which can be debated) should be eliminated.

Social security taxes should be on every level of income. Corporate tax should be reduced from the current 35 percent to a more acceptable 25 percent and it should be across the board. Health insurance benefits should be taxed. Cases won in the Federal lawsuits should be tax at ordinary income and special tax rate on capital gains should be eliminated. There is also no need to provide tax exempt status to some inheritances and estates and every thing should be taxed at ordinary tax rates. Defense expenditure can be reduced by eliminating our so called security interests since in this current financial environment we cannot defend our interests everywhere and the most important security interests should be defended with of course financial help from the countries involved. Although most of my suggestions can be broadened or even curtailed but I am sure that we can reduce our debt if we can take bold and unpopular steps.

Reducing the Federal Debt- A few suggestions

Since the Federal Debt has become a big issue, many suggestions have been floating around regarding how to pare down the debt to manageable levels. There is no one solution. Most of the solutions have not touched the sacred cows of Entitlements and defense, but if we don’t have address that, there can be no credible dent in the nation’s debt. As I have been constantly writing here that without an increase in taxes, the debt will remain high, but in the meanwhile there are several ways, we can reduce the debt with a slight touch to the entitlements and defense (if we want it that way).

As I also said before, last semester I took a course in Federal Individual Income Taxation and I was really surprised to see how much we reduce the tax burden by giving people, exclusions, exemptions and deductions to come up with a taxable income. If we eliminate all these we can at least put some dent into the public debt and we should be sincere enough that those savings should not go on to be spent on other expenditures. Although it will hurt most of the people in the short term, but after some years, people will adjust to it and we would not have to face the specter of higher interest rates down the road. Before I start with my suggestions, I would like to point out that tinkering with the taxation code would not be enough and that some kind of changes to the entitlements and defense budgets would have to be tackled if we want to reduce out debt to manageable levels and satisfy the markets and investors.

On the lighter side- Movies- Surrogates

Bruce Willis and Radha Mitchell stars in this futuristic action movie regarding robots running daily life while the real people stay indoors secure. Then one day a murder happens and our heroes (both FBI agents) start to investigate and find out that the creator of the Surrogates is behind the killings since his son has been accidentally murdered before. Intriguing idea and entertaining. I enjoyed this movie and so would you. Recommended.

The new unsustainable Deficit numbers

So now that the new deficit numbers have been released which are mind boggling what the politicians are going to do? Maybe start taking some action or the same old bickering and fighting about how to cut the deficit. The tax cutters and tax raisers will log horns with each other and it will go on. Since the sacred cows will be protected at any cost, we will have to look at other ways to reduce the deficit. But are the politicians brave enough even at the risk of losing the next elections take bold steps to stop this ever rising debt. There are so many questions but the solutions are few and far between, but even when they are there, the bipartisan politics come in between.

The sacred cows (Medicare, Medicaid, defense and social security) are not touched and the remaining we can’t reduce either which is the interest on the ever growing debt. If we don’t take bold actions now, our future generations will see the reduction or even elimination of entitlements since our debt will be assumed by other investors at high interest rates. And it is not just that but other long terms interest rates on car loans, mortgages, credit card and the like will see higher levels of it. Although it is nice to see that finally every body is talking about debt but the solutions are very distressing and nasty to say the least.