Sunday, December 23, 2018

Funding of the US govt

The US govt has shut down 25% of its services. About 25% of the employees will stop work temporarily due to lack of govt funding.

This has happened before, and is expected to be temporary. The US Congress and the President will have to agree on some compromise to get the agencies funded for another three months.

This circus will continue every three months.

What is the problem with the US govt? They are not collecting enough taxes to pay for their social welfare, health care, military and other federal govt services.

For several years, they have relied on increase the debt. The US govt is now the biggest debtor in the world.

The solution is - collect more taxes. But they can't. The ordinary people can't afford to pay more taxes. Most of them are struggling to meet the high cost of living with low wages.

The people who can afford to pay more taxes are the super rich, forming the top 1%. These people 27% of the total income in the country. They do not need so much. They can afford to pay more taxes to fund the govt.

Instead of asking the super rich to pay more taxes, President Trump had cut their taxes. This has led to a bigger shortfall of funding for the govt. It is ridiculous. It is madness.

How can America solve this problem? It has to increase tariffs on its imports and raise the taxes for its corporations and the super rich.

The tariffs on imports should be applied to all countries and not on selected countries. It is a revenue raising measure.

I share this article on the role of tariffs in the first half of the twentieth century, prior to the move towards globalization and free trade.

I find it strange that the justification for free trade was made by the economist David Ricardo almost two centuries ago. The world economy had changed beyond recognition, but we are still relying on outdated theories.

The problem faced by America is evidence of the problem of the globalized economy. I am in favor of tariffs and a more protectionist world.

Tan Kin Lian

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