The federal government has floated another trial balloon reminding American’s we’ve got some serious obligations to pay out in the next few years. They seem to be softening everyone up for tax increases and entitlement cuts.
As noted yesterday, White House adviser Paul Volcker mentioned pending obligations and suggested a value added tax (VAT) may be appropriate. During prepared remarks yesterday, Federal Reserve Chairman Ben Bernanke did not mention a VAT, but did note the obvious.
“To avoid large and unsustainable budget deficits, the nation will ultimately have to choose among higher taxes, modifications to entitlement programs such as Social Security and Medicare, less spending on everything else from education to defense, or some combination of the above.”
Bernanke said quick steps to balance the books would hurt the fragile recovery, but that a credible longer-term plan could spark economic growth today.
“A sharp near-term reduction in our fiscal deficit is probably neither practical nor advisable,” he said. “A commitment to achieving long-run fiscal sustainability could lead to lower interest rates and more rapid growth in the near term.”
Speaking to the Dallas Regional Chamber, a business group, he said the US economy was improving but “far from being out of the woods,” as he expressed particular concern about long-term unemployment rates, which rose to record highs in March.
Yet he still urged political leaders not to take the seemingly “easier” option of delaying action on the deficit.
“Unless we as a nation demonstrate a strong commitment to fiscal responsibility, in the longer run we will have neither financial stability nor healthy economic growth,” he said.
Then my plan to incrementally shift power from the federal government back to the state legislatures and the people should work correct? I’ve never asked to make this move overnight since I know it can not be done, but by restructuring the powers of government from the current “I want my free stuff from President Obama” mentality to one of personal responsibility and local government control fits, and will work.