I.O.U.S.A.: Byte-Sized - The 30 Minute Version

So basically the movie says that we would need a tax increase to a level of approximately 48% to begin turning the dificit in the other direction. If we continue on current paths what will happen is we will face a political challenge where a future US leader will have his hand forced not by weaponery but by financial mandate. What is going to happen is China will demand Tiwan and Iraq she will get it simply by threatening to liquidate shares in our bonds. Will it stop there highly doubt it?

Raised taxes in economic downturns/recessions/what ever you want to call this is never really a good idea. It causes more panic and economic stress on the lower and middle class; more people will no be able to simply scrape by, and homeless and people on food stamps will dramatically rise. What most people don't realize is that lower taxes actually creates more revenue for the government. Due to a tax break, you have more money. You can now use that money to pay off debts or save it in a bank.

@xRainbowInTheNightx This is what the movie calls the curve and slightly what keynes talked about. Tax breaks in the interest of making you spend more are not working with this size problem: spending more would actually create a fiscal bubble in which americans would believe they have more money but its just a temporary cut down. sooner or later debts have to be payed off. Solution? Probably restructuring debt, important govt spending cuts and income increases. (taxes can be frozen maybe) :S