Issue: Economic: Tax Relief and Budget

[Lauxa]

So, I was just looking over at wikipedia at the 2007 federal budget (click me) (http://en.wikipedia.org/wiki/United_States_federal_budget,_2007). From this breakdown, looks like individual income tax is almost half the revenue, Social Security tax is another third, and corporate income tax is another fifth. This adds up to about 2.2 trillion out of a total revenue of 2.4 trillion.

The combined cost of Social Security, Medicare, Medicaid, and wellfare is around 1.5 trillion. I just don't see how Ron Paul could "eliminate the IRS" without eliminating these programs. :confused: Actually, the interest on the debt is $243 billion, which is about how much revenue is left after eliminating income taxes.

[angrydragon]

Phasing those programs out and allowing younger people to opt-out. Cutting back on the military defense (or adventurism) would save a lot of money.

Look at www.cbo.gov for more accurate numbers.

There's always this too...


The White House and the Congressional Budget Office oppose the change, arguing that the programs are not true liabilities because government can cancel or cut them.

http://www.usatoday.com/printedition/news/20070529/1a_lede29.art.htm

[Montana]

I was going to suggest this: First, get rid of all the unnecessary programs. Second, pay down the debt with the surplus. Third, lower taxes.

However, if you do the math, you have to realize that we can't actually pay off the debt. Ever. Even if we paid a trillion dollars a year, it would take more than a decade once you consider the compounding interest. And doing that would be suicide because of the economic impact -- even just paying the interest on it would severely harm the economy, which is why we don't even do that, we just borrow more money to pay the interest on the money we borrowed.

However, consider this possibility: Transition most of the way to the gold standard. Get everyone using gold, not fiat money. The dollar will crash. It will be bad, but not nearly as bad as if the dollar had crashed when people were still using it as a hard currency -- which it's already on its way toward. Then, pay off the debt using the worthless fiat money, and you don't have any more interest payments.

I'm no economist, and I can't even begin to imagine the long term impacts of that (and I'm sure it would be bad), but do you see any other choices? We can't sustain this debt load but neither can we afford to pay it off without first experiencing hyperinflation.

[Gee]

It would take a while. Paul has said it cannot happen overnight. But the individual income tax is less than half of the total federal revenue. In reality, of course, we cannot expect to eliminate it entirely over the course of 4 or even 8 years. The coming entitlement debt is so massive, I don't think we can stand to lower taxes any time soon...

The interest on the debt is often higher, but the government recently bought up some of their old bonds in exchange for ones which pay less immediate interest.