Views and Solutions: How Deficits Impact Individuals

• Government will be in dire straits in 5-20 years.

• Assuming the military is kept intact, and Medicare and Social Security remain as they are, there won’t be money for virtually anything else absent substantial increases in taxes and/or more deficits; there’s only so much money that can be borrowed at low rates; absent deficits, any tax increases would come at a time when the work force will be shrinking relative to the retiree pool, meaning significantly higher taxes.

• The U.S. cannot afford much more debt – debt financing destroys our ability to prosper in the future; by reducing the money pool available for borrowing, the borrowing actions of the federal government cause interest rates to increase for individuals and businesses.

• Means virtually eliminating things like NASA, the SEC, interstate highways upkeep, etc. absent very high taxes.

• Higher taxes would mean reduced disposable income, reduced stock market returns and less prosperity in general.

• The U.S. should not allow itself to be in a position where it cannot borrow at a relatively low rate of interest (but continued borrowing will put the U.S. in such a position).