As more and more people come to realize that debt and a growing debt will crush the nation; steps are now being taken for relief of the burden. The Proverbs advises that the borrower is the servant to the lender. Well, we are sitting records in borrowing. Half of what we borrow comes from foreign governments. Bottom line; our debt is not sustainable.
Last week, the President, by executive order, established a debt commission to offer suggestions to Congress on how the debt problem might be alleviated. I say alleviated, because the goal is that our annual deficit will not exceed 3% of GDP. Now, it is at 11% of GDP. It should be noted that this 3% excludes debt service on the existing debt. So, all in all, it has modest goals.
The new commission is constructed to give either party a veto, as 14 members of the 18 member commission must approve any recommendation sent to the Congress.
Some people have offered criticism of the commission as it usurps the responsibility of Congress. Of course, that is true. Yet, the reality is that the current Congress, with its low quality of membership, cannot assume this type responsibility. This Congress, can barely deal with the menial work, much less correct a threatening debt.
If the commission forwards any proposal to Congress that does not include entitlement cuts you will know immediately it is unworkable. Should the commission offer a European-style VAT tax it will be time to batten down the hatches. The adoption of a VAT tax would sentence America to a poorer and more turbulent future. The ingredients that make America, such as; self-reliance, economic creativity, cultural independence, and entrepreneurship would diminish, as in Europe. America’s uniqueness and power would soon follow.