Can Our National Debt Be Fixed?

This week I read Fareed Zacharia’s article entitled “Defusing the Debt Bomb” where he proposes fixes to resolve our debt.

It was an amazing read (find it here @ http://www.newsweek.com/id/234277). It made me think about his comments and the potential fixes as well.

Now I’m not an economist but I would like to offer up some thoughts on this (because you know, that’s how I roll).

If we were to add a value added tax (VAT) nationwide (as Fareed suggests), yes, we would all then be paying into the system based on our spending habits. That’s great right? EVERYONE contributes (hear that owners of the LA Dodgers?)

The only problem? Lower and middle income earners would need to have some sort of remedy in the tax code to balance out their overpaying into the system. That could work.

However, if we limit the deduction on mortgage interest, as proposed by Fareed, what will happen to the housing market in this country?

It’s already been hit hard and if mortgage interest payments aren’t a tax deduction, how will that affect the housing market. Would it force banks to write everybody’s mortgage down to the prime rate? And fix them for 30 years?

Wouldn’t that give people much lower monthly payments, freeing up disposable income for savings and buying all the crap that us Americans like to buy and need to buy to jump start the economy?

After review, I’ve come to the conclusion that implementing Fareed’s ‘Fixes” (along with tweaks to the overall tax system) we really could make our debt go away and put the American people back on a firm financial footing.

No matter what certain leading politicos and economists are saying about the housing market making a ‘recovery,’ I am down in the trenches witnessing homeowners going into foreclosure because the banks simply won’t work with them.

They don’t care someone lost their job and their wife’s hours have been cut back. They better pay that ‘balloon payment’ or else.

So my advice to our elected officials? Get off the stick and force the banks to deal with this enormous mortgage problem in one fell swoop. Then we can deal with the VAT issues or whatever else we need later.

Of course this will never happen since we need to remember our politicians always look out for themselves and getting reelected.

Screw the people.

Okay, end of rant. You can go back to Fareed’s much more articulate treatise on the issue! ☺