I would like to begin this post with a brief excerpt from an article in the latest Time Magazine article titled, “The Federal Job Machine” dated sometime in early ‘07.

“President George W. Bush labored to make the case that the economy is “strong,” using the word eight times in one speech in Peoria, Ill. In terms of the basic indicators of economic growth (now 3.5% annually) and unemployment at 4.6%, he’s right. But when you consider that 2% of the current U.S. economic activity is the product of federal deficit spending and more than 6% is paid for with money borrowed from overseas (there is overlap between the two), strong doesn’t seem quite the appropriate word. The bill is coming due – although not in northern Virginia, where the federal spending is forever.” -Justin Fox

United States Economic Model for Growth in One Word: Unsustainable

As a man of economic reality mixed with a splash of idealism, it is my personal belief that the government which serves its people accept the same responsibility as its citizens to balance the checkbook. Given the validity of the statement above, the U.S. is quickly heading on a path of unsustainable growth. Our borrowing thirst and spending will send us spiraling downward in a gradual fashion until the overdose shakes sense into an economic system that has been abused for far too long.

The United States is crying for independent and/or bipartisan budget analysis that believes in pay-as-you-go philosophy, an admirable quality that might also serve to educate Americans about personal finance.

I am not saying that deficits are unnecessary, because spending can be helpful in times of economic depression or severe recession. However, we now live in an era of prosperity and should be saving and investing our money in Americans. In a world characterized by globalization and the sharing of information and ideas, our human capital is one of the last unique qualities that determine the fate of our nation. More importantly, it is our collective responsibility to keep the American dream alive and well.

Consciousness of this problem can lead to early and less painful solutions, ultimately leading to a better life for our children and future generations. Health Care, Education, and Alternative Energy are three such growth areas in desperate need of investment and/or reform. The sooner we come to the reality that lost jobs overseas are never coming back, the quicker we can invest back in our people. In order to develop analytical leaders of tomorrow, we have to set higher educational, standards and keep higher education affordable and open to all. Furthermore, we implement policies that promote highly intelligent people around the world to study, work, and become citizens of the United States.

Some would argue that these programs would cost too much and say that in order to do this the government would have to increase our tax burden. Those in the highest income class could certainly afford the higher taxes. Believe it or not, a balance between policies that allow for entrepreneurial spirit and the distribution of wealth does exist.

Although distributing wealth is one way of finding such funds for investment, Americans in general have no clue just how well they have it. We have some of the lowest personal tax rates in the world. Let me demonstrate in the graph below:

Source: OECD, 2005 data

Still think your taxes are bad?