If you think about our nation as a shared asset where we all live together, we will simply have to decide what amenities we want and how to pay for them.
We have tapped a lot of equity to maintain our lifestyle and if the interest rate goes up or the loans get unpopular, we are all in trouble.
Ideally, we would have enough income to pay our expenses. That has not been the case for quite a while and doesn't seem likely any time soon. Luckily, we have the ability to borrow to make up the difference, but it doesn't seem like a policy that can go on forever. We are running a Ponzi scheme on our citizens and borrowers, paying them with money we get from future victims.
The prudent course of action would be to increase revenue and reduce expenditures.
We don't want to do either of those things really, so we simply keep borrowing.
This type of economy is not really capitalism although capitalism is the source of the actual income we get. I guess the good news is that the government doesn't stick the money in a vault and forget about it. It circulates and stimulates a lot of economic activity.
Money given to employees and others, such as social security recipients is generally spent rather quickly generating economic activity that benefits us.
So in a state with a large number of federal employees, such as Virginia or a large number of military bases or a large number of Government programs, the payments are a significant source of economic activity.
Other programs, such as Social Security, are also big sources of activity.
The only money not subsidizing our citizens is money spent overseas. If we slow down the spending we will hurt the economy, fairly significantly in some cases. So maybe raising revenue is the better answer?
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