The National Debt: The Long Term Consequences of Current Policies

The focus of this article is not the foreseeable future. The focus is where our current policies will lead our nation in the long term. We will not have to face the consequences of our actions or inactions. But our grandchildren and our great grandchildren will.

The public and Congressional resistance to any increase in government revenues will cripple any Congressional effort to reform the IRS tax codes without deepening the national debt.

Our current trade agreements leave our businesses at a distinct disadvantage in the world markets. The trade agreements do not adequately account for lower wages in other nations, foreign government funding businesses to give their businesses the competitive edge nor currency manipulation to give foreign businesses the competetive edge. The evidence of this is the outflow of US jobs and US businesses.

Without concrete steps to give our businesses a real competitive edge in the global market, the economy will not recover and lowering business taxes will only add to our national debt.

We have our choice: Gain the competitive edge in the global market to increase the number of US jobs thereby compensating for the lower taxes; or increase the taxes in one area to fund a decrease in taxes in another area.

So where will the current philosophy about taxes lead us in the long run? If we continue decreasing government revenues, every recession will put us further into debt because the only way out of a recession is to pour money into the economy via either the Republican or the Democratic method. During the recession, both methods will add to the national debt.

In the foreseeable future, drastic cuts in Entitlement programs may yield a balanced annual budget. But sooner or later; as more and more tax cuts, tax incentives and subsidies are implemented; we will have to cut vital programs in order to balance the annual budget: especially during future recessions.

This future crisis will leave us with the same problem we have today: raising the debt ceiling to pay the national debt principal and interest due. This future crisis will mandate major tax increases that will be detrimental to our economy.

In order to avoid this future catastrophe, we must rise above our aversion to increased government revenues. We must compensate for the inadequacies in our free trade agreements. We must make it clear to all nations that our market policies regarding their exports to us will mirror their market policies regarding our exports to them. They close their markets, we close ours. They fund their firms, we fund ours. They manipulate their currencies, we respond with our markets accepting less imports.

It is high time we defended our firms from unfair trade practices and gave our firms a true competitive edge in the global market. When we do this, we will see more jobs returning to the US.