Tax Hikes Won't Solve Anything

Our national debt is nearing 63% of GDP, and will hit 90% of GDP within a decade. For those who haven't been following this, it's a bad thing. There are three major methods that can be used to address this growing problem.

1) Dramatically grow the economy while spending grows less than that. Thus the national debt doesn't decrease, but as the GDP grows then our debt is a smaller percentage of it. I don't see this kind of growth happening anytime soon, so we'll leave this one out of future discussions.

2) Close the budget gap (yearly deficit) primarily by raising taxes.

3) Close the budget gap (yearly deficit) primarily by reducing spending.

So the big battle is, should we address the yearly deficit and national debt by increasing taxes or by reducing spending? Most politicians seem more likely to respond by raising taxes... but this won't work.

How many times has Alabama had budget shortfalls or had to go into proration? Usually, taxes went up in the following year... and yet they still had similar problems after raising taxes and had to go BACK to the taxpayers again and again. A politician friend of mine once told me that "we can ALWAYS spend more money."

And that's the problem.

You see, our difficulties aren't caused by being under taxed. They're caused by our politicians overspending. So increasing taxes doesn't do anything to solve the problem, because the politicians continue to increase spending and, sooner or later, need even MORE taxpayer money.

In fact, raising taxes actually makes our problems WORSE in the long run.

So to address our national problem with out-of-control debt, we have to address what caused the problem in the first place: spending. If we don't get spending under control, we'll end up bankrupt. Just like Greece.

Any solution we adopt MUST feature spending cuts and controls on future spending in order to be even marginally effective. Without those controls, things will continue to get worse in the long run, even if something is done to make things better "for now."

The only solution to massive debt caused by overspending is to CUT SPENDING. And that means all spending... including social security and medicare. Those entitlement programs have grown to unsustainable sizes, becoming so large that they consume a large and ever-growing chunk of our yearly budget.

So when the President's "Deficit Reduction Panel" comes out and endorses a "flat tax" to raise more revenue, please remember that this will NOT accomplish the goal of reducing our national debt. Our politicians in DC WILL increase spending as the new revenue stream comes online.

And that's a path to disaster.