The capacity for savings in the US is enormous, especially now that savings hurts mostly other countries' industries. Don't look at Detroit, if you want to assess the savings potential of the US. Look at the $44,000 per capita income, more than 5 times that of China on purchase power parity basis.
How much of that income can be saved? I think 20% of it, if push comes to shove. Edit :)
The easiest way to save is to genuinely balance the budget, by stopping meaningless interventions abroad, and modestly increasing taxes. This is not only doable, it is easy. Clinton did it by simply increasing marginal tax rates on higher incomes by 3 or 4 percentage points. If we simply impose a gasoline tax equal to what you pay in HK, the budget will be balanced overnight. A VAT at a level half of that in Europe, will produce huge surpluses, even at present spending levels for the military -- and it will fall mostly on imports by excluding food and medicine. And, of course, we can always reverse the Bush federal income tax cuts, which will still leave the US as one of the most lightly taxed developed countries.
So, the US has a plethora of options to fix its problems, if it gets good governance. Don't look at the dark ages of the Bush Jr governance as typical US. |
