Zen Paradox: Solving the US Fiscal Crisis

The Zen Paradox. 

For example, a box for pieces of string too short to save.  

Another: In the village of whiskers, the barber shaves every man who does not shave himself. Does the barber shave himself?

Why neither The House nor The Senate nor The Democrats nor The Republicans can solve the economic crisis.

First:  Let’s address the Republican complaint of 6 Trillion dollars added to the deficit in 4 years.

$6,000,000,000,000

Second:  We have two solutions.

• Raise taxes (on the top 2% so the wealthy pay a little bit more).
• Cut Spending.

If we try to deal with this over 60 years this is what we get.

$100,000,000,000 per year for 60 years.

We have three options.

• The Republican
• The Democrat
• The Compromise

The Democrats want to raise taxes.

The Republicans want to cut spending

The Compromise is a little of each

From the US Census Web site.

Households: 114,761,359

Population: 313,914,040

If we round of for the purposes of comparison and discussion only

We have 300,000,000 People.  (Three Hundred Million People)

We have 100,000,000 Households.  (One Hundred Million Households)

2% of our population is 6 million people.

2% of our households are 2 million households.

Now let's do some simple arithmetic.

First:  Raise the money through raising taxes.

$100,000,000,000  ÷ 2,000,000 (households) = $50,000 per year per household for 60 years.

If we calculate by people 

$100,000,000,000 ÷  3,000,000 (people) = approximately $30,000 per year per person for 60 years.

Second: Raise the money through budget cuts.

We must cut $100,000,000,000 from the budget per year for 60 years.

Third: The Compromise

Divide the burden in half (for the purposes of comparison and discussion only).

We reduce the budget $50,000,000,000 per year for 60 years.

We raise the taxes on the top 2% an average of $40,000 per year for 60 years.

The Conundrum

In cutting the budget, we must remember that 60 years from now the price of a loaf of bread may double twice.  That should be a big enough hint to those who may have forgotten that we are not allowed to raise Government Spending for 60 years.

The Paradox:

If we cut government spending by that much, our economy will decline.

If we raise taxes by that much, our economy will decline.

If we compromise by that much, our economy will decline.

There is an alternative.

We can grow our way out of the problem.

CI + ED = G

Capital Investment + Economic Development = Growth.

Caveat

Please double check my arithmetic.

Warmest regards,

Slim

Fiscal Crisis Solution Worksheet 

Negotiating the Cliff

slimfairview@yahoo.com

slimviews and thesidestreetjournal are unfunded, unsupported, sometimes unsupportable, non-profit, and--alas--unprofitable web logs by Slim Fairview.

Read my blog today or hear it from experts in a month or two.  Sincerely, Slim

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