Funding the US Government

The US Federal Government runs the risk of being shut down, if Congress does not approve the budget within this week. Although a solution will be found, this episode shows the unsatisfactory situation faced by the US government. The government is not collecting sufficient tax to pay for its operations and to provide welfare and public services to its citizens. Some legislators want the government to cut down its spending, especially on the welfare spending and other entitlements, but this will cause hardship to many poor or elderly people.

 In the past, the US Government has funded its budget deficit by increased borrowings, i.e. issue of government bonds. But there is a limit to this type of funding. Already, the US Government is the largest debtor in the world. Many people are now wary about continuing to buy these debts.

There has been continuing debate in the Congress on how to balance the budget. Some legislators wish to see more taxes being collected, especially from the rich. Other legislators prefer to cut the government spending. There has been no solution to this dilemma. This debate has been going on for years.

My view is that the Government needs to collect sufficient tax to meet its obligations. The tax has to be collected from people with higher incomes. The idea of reducing income tax is not sustainable. 

The government should also reduce its wasteful spending, especially on entitlements. However, there is a need to provide a basic level of support for elderly people and the poor. There is also a need to pay for defense, education and basic health care. 

Tan Kin Lian