Really? Why??
If you cut taxes on income, both corporate and personal, both have more money to spend in the economy, thus driving up consumer demand, augmenting hew hiring and putting unemployed workers on the payroll. Since those workers are once again paying taxes, tax receipts actually go up, especially if the private sector views the cuts as permanent.
The current tax extention is a mistake only in that they put an expiration date on them. This alters the psyche of the consumer from one of greater purchases in the market to one of taking that temporary income and using it to pay off debt, or save it for a rainy day...neither of which kick-starts the economy. Nope...permanent tax cuts for both corporations and individuals are what's desperately needed.
Think about it. Think about it like a business, not a state. Credit is tapped out, debt is piling up, and the creditors are getting nervous.
The first step is to cut costs, and layoff people. Which the states have been doing. After that, the bank will demand you raise prices (increase income) to try to bridge the gap. If that fails, you go bankrupt.
The fedgov is in trouble. Deep trouble. The massive measures that are causing riots in Greece and the UK will be here soon, and that means cuts and higher taxes. Sooner or later, that is what will happen.
It is going to be very painful, and it will deepen the depression, but you need to discharge debt, not try to inflate another bubble.
Exactly.
Right now the debt servicing load to federal government revenue is 20 percent. This means that in order to prevent an irreverseable debt spiral, the government must collect 20 percent of the current taxes that it collects.
Tax revenue from it’s height has dropped by about a third. So even though tax revenue has dropped, debt servicing load is still only 20 percent.
Total Federal tax revenue is about 18 percent of the GDP of the US, so about 18 cents of every dollar goes to pay for the Feds.