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Business News/ Economy / Billionaire Elon Musk is worried the US will go 'bankrupt' for this reason...

Billionaire Elon Musk is worried the US will go 'bankrupt' for this reason...

‘Overspending must stop’, Elon Musk wrote while responding to a post by an X user who warned that over time 100% of US taxpayer monies could be used to pay interest on national debt.

File image of billionaire and Tesla, SpaceX and X owner Elon Musk (Reuters)Premium
File image of billionaire and Tesla, SpaceX and X owner Elon Musk (Reuters)

Billionaire tech CEO Elon Musk has in a post on social media platform X (formerly known as Twitter), expressed worry that the United States will go "bankrupt".

"Overspending must stop or America will go bankrupt," he wrote early on March 13. Musk was responding to a post by X user @WallStreetSilv who warned that over time 100 percent of US taxpayer monies would be used to pay interest on national debt.

"This is an amazing number to watch in the next few years. Individual income taxes are about 1/2 of the govt revenue. For February, the US govt collected $120 billion from individual income taxes. They had to spend $76 billion in February to pay interest on the national debt. We are not that far off from a day when 100% of individual income taxes are going to be required to pay for interest on the debt," he said in the post.

User Wall Street Silver's back-of-the-paper calculations followed a post by another X user EJ Antoni (@RealEJAntoni) who warned that it took 63 percent of all personal income tax in February 2024 to pay interest on national debt.

"It took 63% of all personal income taxes in Feb to pay the interest on the debt - no roads, no military, no schools, no social security - JUST INTEREST," Antoni said.

The big worry discussions on all three posts highlighted was that taxpayer money was being used to repay debt instead of investing in public infrastructure or initiatives.

US President Joe Biden Unveils $7.3 Trillion Budget Proposal for FY25

President Joe Biden revealed his ambitious $7.3 trillion FY25 budget proposal, outlining plans for increased services, tax breaks for the middle class, and price controls on March 11. This is part of Biden’s strategy for a potential second term and comes on the heels of his State of the Union address delivered last week, as per a Bloomberg report.

However, with a divided Congress, much of the proposed budget faces uncertain prospects of becoming law.

Biden’s proposal includes provisions for monthly tax credits to assist homeowners with high mortgage rates, subsidies for childcare, and measures to lower prescription drug prices. These initiatives would be financed through significant changes to the tax system, including raising corporate taxes and implementing a new minimum tax rate for billionaires and large corporations, it added.

A Look at the Key Proposals Included

Political Strategy: The budget is strategically crafted to appeal to voters, though it risks criticism from Republicans due to the mounting deficits it entails. Biden aims to garner support for his agenda ahead of the November election and throughout 2025, a year marked by debates over the debt ceiling and the expiration of Trump’s tax cuts.

Budget Breakdown: The proposed budget allocates $1.671 trillion for discretionary spending, including $895 billion for defence-related programmes and $621 billion for domestic spending. Notably, this marks a 1.6 percent increase in non-emergency funding per agreements reached with Congress.

Additional Measures: Biden also proposes a $63 million increase in the Justice Department’s antitrust budget and plans to discuss his vision in various states, including New Hampshire, Michigan, and Wisconsin.

Taxation: The budget ensures that individuals earning under $400,000 annually will not face increased federal payments. Instead, they stand to benefit from various tax credits. To offset the costs of these programmes, Biden intends to raise the corporate tax rate, implement a minimum corporate tax rate for large corporations, and increase taxes on capital gains for high-income earners.

Addressing Climate Change and Energy: Biden’s budget redirects funds from tax incentives for the oil and gas industry towards combating climate change and supporting the adoption of zero-emission power by rural electric providers.

Concerns and Criticism

Republicans have criticised the budget for its projected deficits and debt, exacerbated by higher interest rates. They argue that the proposed spending reflects a lack of fiscal responsibility.

Despite a projected decline in the deficit for next year, Biden’s budget anticipates adding $16.3 trillion to deficits over the next decade. While the annual deficit is expected to decrease as a percentage of the economy, US debt owed to the public is projected to rise significantly, the Bloomberg report added.

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Published: 13 Mar 2024, 08:24 AM IST
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