In May, according to CNN, the United States Government hit the debt ceiling. This is the national version of maxing out your credit card, however the government isn't having their lines reduced or even closed like many Americans have suffered.
Treasury Secretary Tim Geither allegedly was able to suspend investments in federal retirement funds until August in order to create room for the government to continue borrowing in the debt markets.
The main reason that Americans should be concerned is that the federal funds that go to state charities will now be paid later than normal. The government won't have the ability to pay, unless the Obama administration raises the debt ceiling.
Many lawmakers claim that financial chaos will result if the debt ceiling isn't raised. According to a Yahoo Finance article America could lose its triple-A rating.
"In addition, a new recession would come at an "enormous cost" to taxpayers because of the need for additional payments on unemployment benefits, food stamps and other social safety net programs; along with decreased tax revenue due to less economic activity, that would result in even higher long-term deficits," leaving Mark Zandi, chief economist at Moody's Analytics to wonder: 'As a global investor do I really want to hold the stocks and bonds of a country in deep recession?"
As I talk to financial counselors, I talk to them about their clients and the response is very similar. "Dave, there are three types of clients, those with a spending problem, those who are in an income crisis, and those who have both."
Unfortunately, the United States is experiencing both. Bruce Bartless published on his site Capital Gains and Games that Americans support higher taxes. He listed 19 recent polls that prove Americans want higher taxes to reduce the deficit.
Higher taxes will fix the income portion of the equation, but the bottom line is that America still has a spending problem.
Before we debate on what programs should be eliminated, let's give Mr. Bartlett another poll to add to his list?
Do you support raising taxes to help eliminate the national deficit?
Disclaimer: Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.