Carol Perry: Major fiscal changes needed soon

I worry about America. I pray for America. Most of its citizens seem oblivious to the danger of borrowing almost half of every dollar currently spent.

If America were a person, it would promptly be sent to debt-management class. It would be told to stop spending more money than it makes and to cut up those credit cards. It would get a Suze Orman smackdown, for sure.

Do American citizens really want to know what will likely happen if their country does not take seriously the biggest problem facing them in recent history?

I am guessing no. From the president on down, we spend, spend spend. What part of "we have no money" does no one understand?

It is really not a complicated issue. It is simple adding and subtracting. As of Sept. 9, U.S. gross debt was $14.71 trillion. Of this, about $10 trillion is held by the public, and $4.6 trillion is in intergovernmental holdings. Our annual Gross Domestic Product is only $15.03 trillion. That puts our total debt this year at 98 percent of GDP.

What does President Barack Obama suggest we do?

First, spend a lot more, then tax millionaires who do not pay their fair share. What exactly is "a fair share," anyway?

Oh, by the way, only one quarter of 1 percent of taxpayers made more than $1 million per year, and even if we taxed every cent these people make, it would not put even a small dent in our debt.

Warren Buffett says he pays a lower tax rate than his secretary. Well, Buffett claims his income as long-term capital gain rather than ordinary income. Mr. Buffett, if he chose to do so, could pay himself a salary just like he pays his secretary, and then he would be paying his "fair share." He chooses not to do so, and even if he did, his principal invested to earn those capital gains has already been taxed, so that extra 15 percent in capital gains in not all the tax Buffett has really paid on any dollar he has made. All of you in the 47 percent of the population who pay no federal income tax at all should realize that it is not possible to support nearly half the population on the wealth of a few fellow citizens who are lucky enough to earn the big bucks.

How is that a fair share, I have to ask?

I sure don't see anyone putting their money where their mouth is and making that extra payment each year to help out the Treasury. Not even Warren Buffett.

Are there people and corporations that get away with paying little or nothing? Yes, and that is not OK.

Are there many of them? Not really.

While Republicans and Democrats were arguing about the national debt ceiling, the Congressional Budget Office was issuing a dire warning calling for large and rapid policy changes to put the nation on a sustainable fiscal course.

How long can we print money and buy 70 percent of all the debt issued at our Treasury auctions?

Currently, the interest we pay on bonds held by the Chinese supports 80 percent of their military. Soon we will be supporting the entire Chinese military machine. Alarm bells should be going off everywhere.

If you watch the news, you see what is happening in Europe. No one wants to give up the goodies, no one wants to cut back on their lifestyle, no one cares that the money being used to pay their entitlements is borrowed. It cannot go on much longer, and yet we look at Europe's problems as somehow different from our own. They are not.

The Euro is not the world's reserve currency, so they must initiate austerity for the EuroZone's bad players right now, and it is not going over so well. The same is going to happen here when entitlements get cut in order to satisfy the Chinese that we can indeed pay debt service on the largest amount of debt not just owed by any single country, but the entire planet. These numbers are so huge, they are numbing. Perhaps that is why Americans pay little attention. That freight train is coming, and unless we make major changes in spending soon, it will hit us square between the eyes. That might get people's attention.

• Carol Perry is a retired financial adviser and has been a Northern Nevada resident since 1983. She can be reached at Carol_Perry@att.net.

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