Seems to me that the Bush tax cuts and war spending is what largely got us into trouble. If we had kept revenues/taxes at their previous rates (maybe even raised rates in order to make up for the additional costs associated with the wars), we would not have had such large deficits. Without such large deficits, we wouldn’t have had to borrow so much money. Without having to borrow so much money, we wouldn’t have such a large debt service burden.
You’re right about interest rates having the potential to blow us out of the water. I just think that in the absence of the Bush tax cuts and wars, we would be in a much better place today. It’s not always about “spending,” but about making sure that revenues match (or exceed) spending. It really is that simple.[/quote]
While I do agree “Bush” started it. I do think that part of the argument has been settled by the election.
Bottom line is it IS spending and it IS revenue.
I think the end product will be along the line of a compromised 37% top rate, some restrictions on amount of mortgage deduction, and loss of tax exemption on some of the 401k contributions coupled with hopefully some overall reduction in entitlement and defense spending.
personally I don’t think going over the cliff is that big of a deal for the long term. we will of course get a lot of short term effects.
