Even with Increased Tax Revenue Debate Continues

House Speaker John Boehner
House Speaker John Boehner

Our national deficit has been casting its black shadows over the political landscape for years, resulting in some draconian measures of late, mostly in the form of “sequestering.” Now that the government is experiencing a rise in tax revenue and the debt is ever so slightly receding lawmakers need to decide whether to: continue with budget cuts, end them, or make some other changes?

Revenue is up 14 percent through June as compared to the same time last year. Expectations are that this trend will continue. July’s numbers will be released next week, and data for August will be published on September 12, just three days after legislators return to work from their summer recess. At that time there will be pressure coming from many conservative lawmakers to close down the government as of October 1 or to face default on the national debt just a few weeks later, a threat to the economy of potentially disastrous proportions.

Since the government is seeing income rising Republicans in Congress have dug in their heels even more in their opposition to tax increases for the wealthy, something the Obama government and his fellow Democrats have been demanding.

“This year the federal government will bring more revenue in than in any year in our history,” says House Speaker John Boehner of Ohio. “We have a spending problem in Washington. It has to be addressed.”

But Obama and the Democrats who back him would prefer to get rid of at least some of the spending cuts and are set against any further cuts to save money and reduce the deficit, unless there is concomitant increase in revenue through more taxes.

“Democrats know we must do more to reduce the deficit,” says Senate Majority Leader Harry Reid of Nevada. “We believe in a balanced approach that pairs spending cuts with having those that can afford it pay more.”

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About Alison Meadows

Alison Meadows has a PHD in Economic Trends in Modern Times and is a known writer who focuses on hedge fund investments. Meadows, her husband, and three kids live in Boston, where she grew up and attended college. Contact Alison at alison[at]businessdistrict.com