Is tax increase, the EOD of the US budget?

The global economy is plagued with several disasters and event risks all over the world. The European Union is a forming a bubble, Japan is under the tremendous shock of tsunami and the US economy is facing the threat in the form of high oil price. In the middle of all these dampening factors of the economy’s growth, the American citizens find the discussion of US budget the favorite topic to discuss. The discussion on budget among the mainstream media is now in full throttle and all of the discussions settle to the possible tax increase in the US.

The present situation of the US is very hectic as it is heaped with a burden of $1.5 million as budget deficit for the fiscal year 2011. Besides the Republicans are in an attempt to fulfill their political objectives by shutting down the government. In fact any attempt to slowdown the economy will go in favor of the Republicans and will ensure that Barak Obama is vested with a single term in his present position. The political benefits work behind any decision or proposition presented by the republicans.

The Budget Committee Chairman, Paul Ryan (leader of the Republicans) has proposed directives that are not descriptive in paying off the current debt of America. The present budget, according to his proposition, can only be balanced in case there is any tax increase. Since his proposition is not supporting repaying of the debt, a budget without tax increase will continue to take the debt ceiling till 2030. Although Ryan’s proposal of reducing the Medicare benefits is a good option but the present retirees are not included in this rule. This again making no savings for the government and tax increase becomes the next best option to pay off the debt.

There are high chances that the citizens of America will be facing the painful tax increase in the coming years. However, in the present scenario the best action by the government will be to cut off spending to a large extent.