Bob ‘Sully’ Sullivan: Repaying stimulus spending in America
SAN DIEGO (KUSI) – During the last two months, Congress has passed $3.6 trillion in stimulus spending, with more probably on the way.
Washington’s annual deficit was likely to be around $1 trillion before the COVID-19 pandemic induced a recession.
The deficit will now hit at least $3.7 trillion this year and $2.1 trillion next year, according to the Congressional Budget Office.
That debt this year will be the highest since World War II, and possibly higher if there’s more stimulus spending.
According to Sully, there are likely three outcomes when you flood the economy with “dollars out of thin air” like we are witnessing with incredible velocity from the Fed.
“New taxes could be coming to finance stumbles spending related to COVID-19,” said Sully.
Repeal the 2017 Tax Cuts and Jobs Act: This was a landmark tax cut If the corporate rate went back to 35% from the current 21%, and tax rates rose for most Americans who got a tax cut under the law, it would only raise about $1.5 trillion, which is $1 trillion less than the increase in U.S. debt in the last two months alone.
A value-added tax: Frankly most advanced nations have a VAT, which is like a national sales tax imposed at various points in the production of goods and services. A 10% VAT would raise around $1 trillion per year, but Congress would have to design it with protections for lower-income Americans, small businesses and other vulnerable groups.
A wealth tax: Bernie Sanders and Elizabeth Warren have both proposed annual taxes on the wealth of rich people who earn most of their money from investments taxed at a lower rate than ordinary labor.