The Moment Of Truth

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The Moment Of Truth
Introduction
The debt denial era is over and there is no possibility of turning back for America. It is therefore the era of facing the truth about the fiscal debts and lay out the plan to help get off the debt burdens off our back (The National Commission on Fiscal Responsibility and Reform p. 5). This is for the benefit of thee future generations and the citizens of the nation. It is the time to replace the old ideas with new and better plans. Therefore, president and the two chambers found it worthy for the National Commission on Fiscal Responsibility and Reform to come up with a plan that would help in solving the problem of fiscal debts once and for all. The American people expect the leaders to pull things together and not apart. For the sake of the nation the leaders should put politics aside and consider what the government can do without and what needs first priority (The National Commission on Fiscal Responsibility and Reform p. 5). This will surely help many Americans who struggle in the kitchen tables trying to figure out what their families can live without. This is because of the hardship caused by the nation’s fiscal debts. Therefore, here in is the examination of the general reasons for the debt crisis, the over view of the proposed solution to the problem and the argument on the efficiency of the proposed solutions.
Reasons for fiscal deficit
The fiscal deficits may arise because of various attributing factors. The nation is trending on unstable fiscal path (The National Commission on Fiscal Responsibility and Reform p. 11). This is mainly caused by the rise in expenditure and declining revenues. This pushes the government towards borrowing huge amounts of money annually in efforts to make up the difference. There have been staggering deficits from year to year. For example, between year 2001 and 2010 the federal debt had dramatically moved from thirty-three percent (33%) of the gross domestic product (GDP) to sixty-two percent (62%) of GDP.
One of the major reasons for the increased fiscal deficits is falling revenues. The government’s revenues through the taxes have been going down all through. This makes it difficult for the government’s budget to balance. From the example mentioned above, the escalation was because of the country’s involvement in two wars. Further, it was because of fiscally irresponsible policies. When people and businesses are not safe, the business goes down hence affecting the contribution of taxes into the government’s revenues.
The other reason is the government expenditures. The government expenditures are governed by poor fiscal policies (The National Commission on Fiscal Responsibility and Reform p. 18). Most important aspects are not prioritized. This leads to spending of revenues in the areas that do not benefit the economy. This lowers or rather affects economy and the country’s revenue. The policies that do not lead to income generation of the country’s economy such as involvement in wars may affect the country’s GDP hence affecting the fiscal deficits of the country. Federal expenditures increase faster than the revenues. This will force the government to borrow the more in order to cover up the budget.
It is therefore, for this reason that the national commission had to propose solutions that would possibly change the country’s current situation of fiscal deficits. In order to put the country back into its path of fiscal health, to promote economic development, and to cover the most vulnerable in our midst, the commission has come up with a six-part plan proposal. The commission aims to achieve the following through its plan; reduce deficit to 2.3 % of GDP, reduce tax rates and abolish AMT, attain almost $4 trillion by 2020, unsure social security solvency that lasts, and to stabilize the debt by reducing it to 60% come year 2023 and to 40% by 2035.
Overview of the plan
The plan comprises of six major components. This is not the final product but an opening that initiates talks seeking the best and policies that would benefit that nation at large. Therefore, it would involve dialogues with other departments. However, this is the guideline into reducing the fiscal deficits as proposed by the commission. The components of the plan include discretionary spending cuts, the comprehensive tax reforms, the containment of health care cost, mandatory savings, process changes, and the social security reforms that would ensure long-term solvency and eventually reduce poverty.
The first proposal is the discretionary spending cuts. The base discretionary spending of the nation has been increasing in the last decade reaching up to 34% (The National Commission on Fiscal Responsibility and Reform p. 20). The president’s fiscal year projects that the same may grow with 6% by the year 2015. This therefore calls for the government to follow suite of its citizens, to be willing to achieve more with little and live to its means. In order to reduce the country’s deficit calls for deliberate and planned reductions in defense and domestic expenditures. The commission’s expenditure recommended plan is not merely numbers on a page but it is a vision that reflects values and priorities of the American. The following are some of the recommendations made under the discretionary spending cuts. Cut the security and non-security spending, cap discretionary spending by 2020, enforcing ...