By the year 2012, the American economy has crossed through large paths of downfall and unsustainability. Many aspects of such inconsistency surround this issue; foreign debt, public spending, and real state price drops are some facts that indicate an unstable economy. Furthermore, current president of the United States Barack Obama has approved a plan that will help stabilize the economy in the long run; this plan has targeted to reduce the federal deficit by cutting spending and raising taxes.
Moreover, this plan was introduced in 2010 by co chairs Alan Simpson and Erskine Bowles of President Barack Obama’s deficit commission as stated above, to raise the economy in the long run. As of now, revenue isn’t much of a problem, but spending is. Since debt is rising due to spending (taking only this example), the private sector is put in risk of being put out of the market. This would affect small businesses, which are a strength in the American economy since they will not be able to grow and create more jobs, which simultaneously helps the economy.
Indeed, the goal of this plan is to reduce deficit to 2.2% of the gross domestic product by 2015, reduce deficit growth between now and 2020 by 3.8 trillion dollars, and reduce debt as percentage of GDP to 40% by 2037. All this is being linked with the reduction of spending and tax rises.
Accordingly, this plan induces a huge tax reform due to the fact that the current tax rates would be modified. In addition, the alternative minimum tax would be eliminated, as well as the child tax credit and the mortgage interest deduction. It is calculated that if this is taken in mind, there would be a deduction of $ 1.1 of tax expenditures and in should increase tax revenues. Consequently, it seems that eliminating the mortgage interest deduction would mark a difference positively since it is one of the key elements funding an overemphasis on homeownership in the United States. On the...