Our Debt and the Federal Deficit
A Brief History of Recent Developments
We all know the basics. To provide services to citizens, governments usually need to spend money. And to have spending money, they also need some sort of revenue. If a planned budget requires a government to spend more than they make in revenue, the excess spending is called a 'deficit'. This is usually covered by loans from citizens and foreign governments. These create a cumulative amount of borrowed money called 'debt'.
Part of the reason our country is in such bad financial shape is because we've been plagued by fraud. The two biggest offenders here are military contracts and healthcare subsidies. Even back in 1986, reports on $37 screws and $7,622 coffee makers provided by contractors highlighted the gross corruption and price gouging taking place. Today, this kind of fraud and waste is still thriving, as recent Air Force reports show. What's worse, lobbying and campaign funding seems to have only spurred lawmakers into further enabling this kind of blatant swindling. Even more appalling, however, is the fact that contractors from private military companies earn substantially more than actual service members for the same exact roles. There's absolutely no basis for this whatsoever, as Department of Defense direct-hire civilian employees make roughly 1/3 of what their private contracting company counterparts are paid. With proper auditing and purging of fraud, we could easily cut our military expenditures in half without having to sacrifice an ounce of quality.
As regards healthcare, there's no question that absolutely every American deserves to have options that they can personally afford. However, healthcare providers and insurers are all too willing to exploit and defraud our government in much the same way that the defense industry has. Health insurance premiums have risen steadily over the past 25 years, despite denying more and more claims at the same time. When taken in concert with record profits, a clear trend appears: insurers are charging more while providing less. This becomes especially disturbing when we look at the ways in which health insurers actively defraud our government under the ACA by modifying diagnoses to tack on high-cost treatments, then forcing improper treatments on unsuspecting Americans. We need to eliminate this deceitful and abusive behavior immediately.
However, inflated expenses are only one half of the equation. The other half is missing revenues, which research has shown as a major problem for years. Currently, the IRS estimates that almost $700 billion in taxes owed for 2022 haven't been paid yet. Of this amount, just over $450 billion is from business and wage income. According to most research on the matter, this tax gap comes from the richest households and businesses in the country paying less than they owe under the law. This shouldn't surprise anyone, considering that some of this nation's wealthiest countries and individuals paid literally $0 in taxes during several fiscal years of the past decade. This is a trend that has continued even through to last year. Making matters worse is that the IRS is so underfunded and understaffed that they can't properly prosecute large companies for tax evasion. As a result, they often have to target less wealthy individuals and small businesses to make up what they can, instead.
This brings up another insane reality: while our country is $37 trillion in debt, it also houses nearly $160 trillion in wealth, of which $157 trillion belongs to the upper half of American society. Broken down further, the top 10% owns $112 trillion of that wealth. That means that the richest 10% of Americans collectively own triple the value of our current national debt. If the whim struck them, they could pay off the federal debt immediately and still have $75 trillion combined. Despite this insane amount of wealth concentration, they continually give hundreds of millions of dollars to lobbying groups to advocate for even lower taxes on big businesses and rich individuals. Given how much wealth the richest 10% in our country own, though, how much sense does it really make to argue that they're the ones who are struggling and need even more tax breaks?
There are very clearly two sets of actions needed to keep our country from defaulting on its debt: cutting costs and raising revenues.
Root Out the Fraudsters
Federal oversight and inspection agencies dedicated to rooting out corruption and fraud need to be strengthened so that they can successfully uncover and prosecute the businesses shamelessly taking advantage of taxpayer dollars. We also need to strengthen the laws so that resulting penalties hit these companies hard enough that they never defraud us again, rather than just serving as a minor annoyance that they can ignore.
Shake Down the Freeloaders
The IRS and associated agencies need to not only have their mission statement redirected toward targeting the most egregious tax evaders, but they also need to be given the resources and personnel needed to win complex, protracted legal battles against unimaginably wealthy tax evaders. We also need to stop buying into the lie that the richest individuals and organizations are somehow the ones suffering the most, and raise their taxes to reflect their true responsibilities.
Limit Aid to Those in Genuine Need
As just one example: the 2017 Tax Cuts cost taxpayers $450 billion each year. $97 billion goes to earners in the top tax bracket. $76 billion is split among earners in all the lower tax brackets. The remaining $277 billion goes mostly to large businesses in the form of tax breaks. We can keep the $100 billion that goes out to people and small businesses who genuinely need it, then cut the remaining $350 billion from our deficit. We can apply this cost-saving strategy to all major legislation.
Give Federal Agencies True Bargaining Power
For many government contracts, the capacity to debate costs with contractors is grossly limited. This leads to preemptive agreements that often upcharge the taxpayers by incredible amounts for materials and personnel. Empowering our military and civilian agencies alike to dig deeper into contract proposal costs and request amendments based on other data would go a long way toward preventing waste before it even happens, in the first place.