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Deficit: The Headline Giveth, but the Text Taketh Away

Written by Gary North on July 12, 2013

The headline was joyous: US budget surplus highest in five years in June. This appeared on the BBC’s website.

Good news! The economic recovery is real. Happy days are here again.

So, I read the story. Halfway through, I came upon this.

Despite that strong month, the Congressional Budget Office forecasts the annual deficit will be $670bn (£443bn) when the budget year ends on Sept. 30.

The rising deficit means the US government is once again expected to hit its debt ceiling – the point at which it must borrow more money to pay for ongoing obligations – in the autumn.

This is like a patient who is told that his cancer is in remission, but this has not done anything to help his Alzheimer’s. He has a short memory.

The voters have short memories.

When QE3 stops, the recovery will stop. But if QE3 doesn’t stop, then the dollar is terminal. Take your pick.

What’s that choice again? I forget.

Continue Reading on www.bbc.co.uk

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One thought on “Deficit: The Headline Giveth, but the Text Taketh Away

  1. albertmaslar says:

    Benefits For All Needs Contributions From All
    7/12/2013 — The divided United States is broken, fiscally, financially, culturally, politically, regionally and morally. Half the population pays no income taxes and most of those pay no payroll taxes. Everything is disconnected as government divides issues, multiplies regulations, adds bureaucracies and caveats with contradictory “Ifs, Ands, Buts,” while subtracting constitutional rights, and refusing to enforce legitimate “Law of the Land.” Congress refuses to defend its constitutional turf from dictatorial Executive Orders and arbitrary policy, conceding excessive powers to whoever happens to be President, while SCOTUS makes law instead of ruling on constitutionality. Every new 1,000+ page solution creates two new problems ad infinitum eliminating any effectiveness from solutions that in turn need to be fixed, causing another two new problems. Consequently nothing fits causing gears to grind uselessly. A real fix for the perpetual related problems of HealthCare, Taxes, Deficit, and Debt, is to change the tax structure in a way that treats all legal residents alike in conformance with constitutional intent. Something must be done, and quickly as the National Debt now stands at an official $17 Trillion, closer to $100 Trillion according to read accounting standards, and the Annual Deficit

    Install a 3% National Sales Tax (NST) with NO exemptions or exceptions, not even for non-profits, government, religious, and education. Dedicate 1% to current budget; 1% to National Debt; and 1% to Universal Medicare (UMC) to cover all legal US residents. All residents having income or not would be required to file an annual tax return to be used for census as well as to determine eligibility and amount or percentage of co-pay.

    To insure there are sufficient funds during the transition, a revised Income Tax Table applying to business as well as individuals would reduce income taxes to a graduated 20% maximum. Stock market Wall Street type transactions would be subject to a 1/2 percent transaction tax. That might put the brakes on High Frequency Trading (HFT) that adds to problems connected with artificial volatility that gobbles up normal investor profits in the blink of an eye, while causing havoc in the market. This creates a cushion enabling small investors to buy and sell on an even par with professional traders.

    The beauty of the NST is that everyone would pay something whether income be legal, illegal, under-the-table income, drug income, welfare income, or crime, would pay 3% of their spending for support of the country, including automatic Universal Medicare for ALL LEGAL residents of the US. States stand to reduce their deficits as UMC payments for healthcare would wipe out the bulk of State Medicaid payments. Government payments of 3% NST would revert back to government for the express purpose of reducing Debt, and not recycled into current budget expenditures.

    NST is based on an available 2008 study touted by Lanny Davis published in the HILL, and would produce sufficient revenue to handle the Debt, Deficit, and National HealthCare that would operate under existing Medicare rules and regulations, thereby containing overhead and regulations.