The U.S.National Debt grows because the Federal government consistently spends more than it collects in revenue. This persistent gap between spending and revenue has existed for over two decades.
As of 8:40 am on August 19, 2024 (https://www.usdebtclock.org/)
Excessive fiscal spending and changes in tax policy play a significant role. Policies like the Inflation Reduction Act, the Chips Act and Obama Care, impact government spending, extensions of tax cuts and new tax legislation, like the Tax Cuts and Jobs Act of 2017, impact government revenues.
Essentially, new federal spending without offset taxes to pay for it and tax cut without correlated cuts in spending are the root causes of increasing deficit spending and skyrocketing National Debt
Lawmakers must focus on long-term fiscal sustainability. Delaying action will make addressing the debt even harder. A gradual, spending-focused approach is essential, including reforms to mandatory programs like Social Security and Medicare.
Tax increases must be part of the solution, and policymakers should prioritize less distortionary taxes (such as consumption taxes) or tax reforms that broaden the tax base. For instance, returning to Clinton-era policies could bring more working families back onto the tax rolls.
In summary, addressing the debt requires a balanced approach, thoughtful policies, and a commitment to fiscal responsibility.
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