| NC economic forum speakers: pain may last years
Erskine Bowles remarks at Economic Forecast Forum
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Washington has been ignoring the country’s problems for many years. The economic crisis of today was easily predictable.
What we are doing today is unsustainable. The federal government is adding debt at the rate of $1 trillion per year. This is like a cancer eating at us.
We are going to destroy ourselves from within. When the crisis comes it will happen so fast it will surprise us.
100% of the revenue coming into the federal treasury is consumed by mandated spending, such as Medicare, Medicaid and Social Security. All other federal spending is borrowed money, half of it from other countries. If we do nothing the interest on our debt will equal $1 trillion per year by the year 2020.
This buildup in debt is our biggest security problem.
We cannot grow our way out of this problem.
We cannot tax our way out of this problem.
In order to balance the budget using taxes alone the federal income tax rate would have to be 70 percent for high income earners, 80 percent for corporations and taxes on capital gains would have to be 50 percent.
We cannot cut our way out of this problem.
The solution the Deficit Reduction commission proposed includes a mixture of 25 percent revenues and 75 percent spending cuts.
There are several principles which much be observed:
1. We cannot disrupt this fragile economy
2. We must protect the truly disadvantaged
3. We must maintain the safety and security of our people, however we cannot continue defense spending that is greater than the sum of the next 14 nations of the world combined. That is our present defense spending level.
4. We must invest in our nation’s aging infrastructure and education
The deficit commission believes we can reform our tax codes, broaden the revenue bases and reduce income taxes to 8 percent for those earning up to $70,000 per year, 14 percent for those earning between 70 and $200,000 per year, and 23 percent for those earning over $200,000. With this plan the corporate tax rate would be 26 percent.
The goal is for federal government spending to be no more than 21 percent of the country’s gross domestic product. It is currently 24.6 percent.
We have tough choices ahead of us. If we don’t make them and solve our problems we will become a second rate nation
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I don't necessarily agree with Bowles' analysis, but this former Clinton admin. White House Chief of Staff is a past professional bank executive.
I believe he would be wrong about our being able to grow out of the problem were the government to really get out of the way but agree that he is probably right given the current and apparently immutable political realities.
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