If we're spending the money on "credit", I'm assuming that one day we'll have to pay it back with interest. Would you say that this is the same thing as a tax increase?
2007-09-27 09:44:59 · 9 answers · asked by Jason 4 in Politics & Government ➔ Other - Politics & Government
Most likely but not necessarily. It could also be paid for by cutting back on all the pork and most of the welfare. But most politicians don't want to be known as the guy that cut off social security so yeah, most likely there will be a big tax increase.
2007-09-27 09:56:59 · answer #1 · answered by Nianque 4 · 3⤊ 1⤋
Since the debt is owed to a private institution (The Federal Reserve.....it's not a part of the U.S. Government), then it will eventually have to be paid back, with interest.
Does it represent a tax increase? It either means a tax increase (eventually) or a reduction in government spending (and the so-called "services" resulting from that spending) at current levels of taxation, or some combination of those two.
Deficit spending is spending money that you don't have which, at least in theory, is supposed to be paid back in the future, along with interest, when the need for the deficit spending has vanished.
2007-09-27 09:57:17 · answer #2 · answered by Don C 3 · 3⤊ 0⤋
Ideally, that's not how it works. The goal is to increase investment by decreasing taxes and therefore increase profits to such an extent that when it comes time to pay back the deficit, your earning power is so ridiculously high that the debt is a drop in the bucket. A reckless policy to be sure, but a capable one if managed correctly. When it fails the alternative is a tax increase, but it breaks America because our rate of gains decreases as the country buckles down to take on paying back its debt.
America has never defaulted on a debt. We have perfect credit, and we've allowed other countries to default on money they owe us with no penalties. It's not like there's a history of defecit spending being a problem in the US.
2007-09-27 10:02:53 · answer #3 · answered by Pfo 7 · 0⤊ 1⤋
Is Deficit Spending The Same Thing As A Delayed Tax Increase? >>
you could also look at it as a delayed benefits reduction
2007-09-27 09:48:34 · answer #4 · answered by civil_av8r 7 · 1⤊ 2⤋
No.
Because government budgets are predictions based on previous years, with cost or living raises and inflation figured in base on the gross domestic product and the interest rates, you get what is call deficit spending because based on the current budget prediction the government doesn't predict having that money.
So in turn the government cuts spending on projects, sending payments to states and makes other reductions to meet the deficit budget.
2007-09-27 09:56:40 · answer #5 · answered by Randy W 5 · 1⤊ 1⤋
Sure, the same game played for years. The Republicans have a big deficit, then the Dems come in and have to increase taxes-back to the level before the tax cut. The Republicans leave a mess to be cleaned up.
2007-09-27 09:48:58 · answer #6 · answered by Middleclassandnotquiet 6 · 2⤊ 5⤋
a tax increase
May be sooner than you think.
2007-09-27 09:48:41 · answer #7 · answered by ed 7 · 2⤊ 0⤋
wow i would a said no until you put it that way. thats one way of looking at it
2007-09-27 09:48:35 · answer #8 · answered by fishshogun 5 · 1⤊ 1⤋
you bet ye.
2007-09-27 10:12:22 · answer #9 · answered by theo c 6 · 1⤊ 0⤋