Quote from piezoe:
Obviously, several ways of raising government revenue can be implemented -- and are being used in various countries. I suppose you meant "politically" feasible. If the U.S. was not a plutocracy then these alternate forms of taxation could be implemented. Any tax scheme that preserves lower rates for the wealthy is implementable, any other is not, barring some kind of crisis that leaves the wealthy without choice.
You really would not like the result of the government cutting spending. At present Government spending is responsible for roughly 24% of GNP --largest component after consumer spending. Even though the U.S. is the most capitalist large nation, by far, the government's subsidy of corporations, large and small, is very significant. We aren't completely capitalist, just more capitalist than other nations -- many of which are doing better by the way.
Cut government spending and the U.S. goes right back into recession. Cut it even more and it's a depression. This is why you'll start seeing recommendations to get out of equities now while you can, just in case the morons in Congress can't reach an agreement and the auto cuts take effect.
What is clearly needed -- the least worse of the options available-- is a redirection of priorities -- keep or even increase the current levels of government spending, but stop spending on wasting assets --military, homeland security, fancy gas hog cars, drug enforcement, prisons. This requires that a lot of things done in the past be undone. The defense industry must very gradually be shifted to building infrastructure -- mass transit, communications, IT. At the same time as illicit drug use is decriminalized and begins being treated as a medical problem, mandatory sentencing has to be eliminated and prisons socialized again - the experiment with privatization has been disastrous. The government needs to spend massive amounts subsidizing energy, communications, robotics, biotechnology, molecular biology, materials, physics, and outer space research, development and deployment. Huge numbers of workers will be shifted from doing one thing to doing another that they are already trained for -- and massive numbers of new jobs need to be created at the grade school level in mathematics, languages, and in the musical and visual arts, i.e., the things that belong in grade school. Many additional jobs must be created in immigration services as well. The medical cartel must be broken -- either by deregulating and opening up medicine, going to single payer, or very highly regulated private insurers and providers, i.e. the German way -- they're the only ways to bring down costs. The first step in this process is to recognize that someone is going to make less money. There is no win-win solution in this instance, no magic bullet.
In summary, we can keep doing what we are doing but reduce spending and go into recession or depression or we can change what we are doing, and spend more wisely on investments that will pay big dividends and put huge numbers back to work. Any big change has to be phased in slowly, of course, to prevent chaos.
