Tax Bill Will Bankrupt America

 

By Richard Colman

Government cannot manage money. 

The Republican tax bill that President Donald Trump is expected to sign at any time will add about $2 trillion to the current national debt of $20 trillion. 

The highest priority for the survival of the United States is to stop increasing the national debt.  Trump and his fellow Republican cowards in the Senate and the House have no plans to stop the accumulation of debt.  The Democrats are also cowards. 

In 1837, when President Andrew Jackson, a Democrat, left office, there was no national debt.  By 1981, 144 years later, the debt reached $1 trillion.  Today, the debt is over $20 trillion — and growing rapidly. 

To finance its debt, the United States sells what are called Treasuries, which are basically bonds — “bond” is another word for “loan” — issued to lenders to pay for excessive spending.  Buyers of Treasuries are Americans and their government.  Also buying such bonds are the governments of China, Japan, and other nations. 

During World War II, the American government sold “war bonds” to pay for the cost of fighting the war.  Hollywood celebrities urged American to buy war bonds.  With the sale of war bonds, taxes would not have to be raised to higher levels to fight the war.  After the war, bond buyers would get their money back plus some interest. 

Bonds have to be paid back if a borrower is to have credibility. 

What happens if people stop buying American bonds (American debt)?   

There are several choices: 

(1) Raise interest rates to attract money from lenders. 

(2) Cut government spending. 

(3) Raise taxes. 

(4) Default.  With default, the holders of American bonds do not get paid back.  Such people are likely to be very angry. 

(5) Induce inflation.  Inflation means paying a lender back in cheaper dollars.  During the 1970’s, inflation in America was severe.  Today, the 1970 dollar is worth 15 cents.  Thus, someone who bought $100 worth of American bonds in 1970 would get back $15 today. 

(6) Declare bankruptcy.                           

All of the above actions are painful.  However, doing nothing will bring about more pain. 

Both the Republican and Democratic Parties are fiscally irresponsible.  The Republicans cut taxes.  The Democrats increase spending.  Both actions increase debt. 

The time has come for a national leader in America to tell us citizens that our nation is going broke.  Over 200 years ago, Benjamin Franklin warned Americans about the destructive nature of debt. 

The time to listen to Franklin is now — before the America we cherish becomes like a banana republic and cannot pay back people who, with their hard-earned funds, trusted the government to be responsible with their money.

 

Richard Colman, a biochemist, received masters and doctoral degrees from the University of California at Berkeley.  He is the founder and president of Biomed Inc.,  a biotechnology, publishing, and informatics company.  He lives in Orinda, California.  See www.iconnews.org


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3 Responses to Tax Bill Will Bankrupt America

  1. William Hicks December 6, 2017 at 8:11 pm

    NOT if he matches it with spending cuts.

    Reply
    • Citizen Reporter December 6, 2017 at 11:08 pm

      That’s a BIG if. In any case, spending cuts should preceded or coincide with tax cuts,

      Reply
      • William Hicks December 7, 2017 at 9:12 am

        Totally agree. I would have found it completely acceptable to forego a tax cut for a spending reduction in 2017. Then have a tax reduction to match the spending reduction in 2018.

        Reply

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