Tax Tax, Debt Crisis, World Currency Status, Social Security Surplus

Tax talk in Washington; Summary of Article: tax hikes not likely? not sure! debt crisis! world currency status, better off then Greece; social security 2.7 trillion surplus, social security bankrupt 2033, entitlements;  how American debt problem is measured? health care cost in America

Of course we won't really know if there will be tax hikes until after Congress votes and the dust settles.  Talk of closing tax loopholes is on the table, as is arranging the tax system to increase economic growth.  The words "tax reform" are being thrown around in Washington, this time they be more serious then previously.

You may be wondering, what is "entitlement?"  Entitlement is a program that establishes certain eligibility criteria and anyone fitting that criteria may receive its benefits. Medicare and Social Security are the two largest entitlement programs. 

The fact that Social Security an entitlement program which is expected to go bankrupt in 2033, causes major concerns.

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WASHINGTON -- Sharp differences emerged on Sunday between House and Senate Republicans over the prospect for a budget deal with President Barack Obama, with House Speaker John Boehner (R-Ohio) insisting that "the talk about raising revenue is over" even as Sen. Bob Corker (R-Tenn.) said that the GOP is open to increasing tax receipts by closing loopholes.

"I think there, by the way, is a chance on a deal," Corker told Fox News' Chris Wallace. "I think the president is saying the right things. We have an opportunity over the next 4 to 5 months."

"I think Republicans, if they saw true entitlement reform, would be glad to look at tax reform that generates additional revenue. And it doesn't mean creeping rates, it means closing loopholes. It also means arranging our tax system so we have economic growth. And I think we have been saying that from day one."

Other Republicans, however, would not even echo Corker's comments on the same day. Speaking to ABC News' Martha Raddatz, Boehner rejected any deal that includes higher tax revenue.

"The president believes that we have to have more taxes from the American people. We're not going to get very far," Boehner said. "The president got his tax hikes on January 1. The talk about raising revenue is over. It's time to deal with the spending problem."

Both Corker and Boehner, however, acknowledged that the prospect of a "crisis" over the debt is a long-term issue, not an immediate pressing threat. Other Republicans, including House Budget Committee Chairman Paul Ryan (R-Wis.) have characterized the federal budget deficit and debt as a much more imminent danger to the health of the American economy.

“We do not have an immediate debt crisis -- but we all know that we have one looming,” Boehner told ABC. “And we have one looming because we have entitlement programs that are not sustainable in their current form. They’re going to go bankrupt.”

Shortly after the ABC interview aired Sunday, Boehner's press office released a excerpts of the interview that omitted Boehner's acknowledgment that there is no "immediate" debt crisis.

On CBS, Bob Schieffer highlighted Boehner's comments and asked Ryan whether the government faces an immediate debt crisis. Ryan acknowledged that it does not, but warned about an economic calamity if one happens.

"America is still a step ahead of the European nations who are confronting a debt crisis, of Japan. it's partly because of our resilient economy, our world currency status," Ryan said. "So we do not have a debt crisis right now, but we see it coming. We know it's irrefutably happening."

The type of crisis that is happening in Greece, however, is extremely unlikely to occur in the United States. Unlike Greece, the U.S. borrows money in its own currency, giving it far greater power over its creditors. The long-term threat posed by the government's debt is inflation or increasing interest rates -- problems that could eventually create a drag on economic growth, but which would not result in abrupt shocks to the economic system.

"Republicans want to see a 75-year solution to entitlements," Corker said.

A host of conservative figures criticized Obama this week for telling ABC's George Stephanopoulos that there is no immediate budget crisis.

Social Security currently enjoys a $2.7 trillion surplus, enough to fund the program through 2033 without any changes. Medicare's finances are less robust as a result of the uniquely expensive American health care system. Health care costs in the U.S. are roughly double the rate per person in Canada and the U.K.

But the system has years to be reformed before benefits or taxes would need to be increased, and there is no evidence that long-term health care costs are spooking investors in the present day. The severity of the American federal debt problem is measured by the interest rate on U.S. Treasury bonds. The bigger the debt problem, the higher the interest rate that investors demand to be paid for taking on the risk of buying Treasury bonds. Interest rates on Treasury bonds have been near record lows for year.

Original article can be found at Huffington Post