$845 billion in the red, what's the true cost and what's the solution?

Yesterday, the Congressional Budget Office’s budget and economic outlook predicted that the federal government will end this fiscal year $845 billion in the red.

But what is the real cost of continuing to accumulate debt?

In a new article based on an American Enterprise Institute study, economist Aspen Gorry and Matt Jensen calculate how much lower taxes could be if the government were not paying the interest on America’s existing debt, and if we headed off the next ten years of debt accumulation.
"Households earning $10,000 to $20,000-around the federal poverty line for an average-size household-could pay $33 less in taxes every year without the existing debt. Households earning $100,000 to $200,000 could pay $4,179 less, and households earning $200,000 to $500,000 could have a $10,472 lower burden.

Even after the recent fiscal cliff tax hikes, the country is expected to add another $3.8 trillion to the debt over the next ten years. If spending were reined in to head off that debt accumulation, households earning $100,000 to $200,000 could see their long-term tax burden lowered by $1,354 every year and those earning $200,000 to $500,000 could see savings of $3,392."


AEI experts frequently write on the need for tax and entitlement reform, and several are available for interview.

Contact [email protected] (202.862.5829) to set up an interview.

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About the Author

 

Aspen
Gorry

 

Matthew H.
Jensen

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The Constitution as political theory

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Speaker of the House John Boehner on resetting America’s economic foundation

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