Reducing the Federal Debt- A few suggestions

Since the Federal Debt has become a big issue, many suggestions have been floating around regarding how to pare down the debt to manageable levels. There is no one solution. Most of the solutions have not touched the sacred cows of Entitlements and defense, but if we don’t have address that, there can be no credible dent in the nation’s debt. As I have been constantly writing here that without an increase in taxes, the debt will remain high, but in the meanwhile there are several ways, we can reduce the debt with a slight touch to the entitlements and defense (if we want it that way).

As I also said before, last semester I took a course in Federal Individual Income Taxation and I was really surprised to see how much we reduce the tax burden by giving people, exclusions, exemptions and deductions to come up with a taxable income. If we eliminate all these we can at least put some dent into the public debt and we should be sincere enough that those savings should not go on to be spent on other expenditures. Although it will hurt most of the people in the short term, but after some years, people will adjust to it and we would not have to face the specter of higher interest rates down the road. Before I start with my suggestions, I would like to point out that tinkering with the taxation code would not be enough and that some kind of changes to the entitlements and defense budgets would have to be tackled if we want to reduce out debt to manageable levels and satisfy the markets and investors.