Will You Elect to Receive Savings Bonds Instead of Your Income Tax Refund Check?
In his regular Saturday radio address this week, President Obama outlined a list of "common-sense steps" that would make it easier for US workers to save for their retirements.
President Obama declared that these changes were necessary due to $2 trillion dollars in retirement savings being wiped out over the past two years.
One of the proposed changes? Allowing people to request that any tax refund be sent as a government savings bond instead of a check.
This change will be active as of 2010, and will require a simple check of a box on your tax return to enroll in the program.
If you opt in to this program, then the government will send you your tax refund in the form of Series I Savings Bonds.
This program will be enhanced even further in 2011, as people will be able to name others (such as their children) as co-owners of the bonds.
An estimated 100 million people receive income tax refunds from the federal government every year. If even a small percentage elect to receive bonds instead of cash, then the United States government will have created a new way of helping to fund its deficits.
Is this a novel new way of helping Americans save for their retirements?
Or is this a desperate attempt to try and raise more funds to help pay for a seemingly endless stream of future deficits?
Let's face facts. The US government has already publicly stated that they expect to post a total of $9.05 trillion dollars in deficits through 2019.
Where are they planning on getting this money from?
China, which owns nearly a trillion dollars worth of US debt, is scrambling to diversify its portfolio. This is not good news for the United States and its future efforts to raise money to pay for its deficits.
Will other countries pick up the slack? $9 trillion dollars worth of slack? I don't think so.
This leaves a few options..
The government can turn to its citizens in an effort to raise more funds.. the tax refund proposal may just be the tip of the iceberg in this regard.
Or, the US government can print more money to fund its eye-popping deficits. If the United States ends up printing too much money, then the "Great Recession" could end up looking like a walk in the park.
But what are the options at this point? A balanced budget seems to be an impossible dream at this point.
The United States faces many challenges over the next decade.
One of the biggest challenges will be raising over $9 trillion dollars to pay for future deficits without completely ruining the economy (and the value of the dollar).
Source: Washington Post - Obama Offers Steps to Make Retirement Savings Easier
Filed under: The Economic Meltdown