Debt Debate for Dummies: Six Keys to Understanding the Issue

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Why not just cut government spending?

Just like raising taxes on the rich won't work, cutting spending alone won't work either. The retiring Baby Boom generation will start collecting Medicare and Social Security benefits. Just as most Republicans reject tax increases, most Democrats have rejected cuts to these programs. But short of scaling back benefits, annual cost of living increases, or raising the retirement age, the programs will soon spiral out of control. The trustees for Medicare have said that in its current trajectory, the program's hospital insurance account will run out of money in 2024.

How can the problem be solved?

Both sides, Republicans and Democrats, are probably going to have make very tough decisions. For Democrats that may mean cuts to entitlement programs. And for Republicans that may mean tax hikes. Many believe that both parties have to take part in the solution to get the public on board with it.

"We're going to need both revenue s and spending cuts. Certainly at the higher end of the scale, people are going to have to accept higher taxes," said McConaghy. "They either leap together or they don't leap at all, but if they don't leap at all, the markets will push them into much more difficult choices," said McConaghy.

But that brings us to the closed-door meetings at the White House. President Obama and House Speaker John Boehner and their respective cohorts are trying to find an agreement that averts default -- and may make everyone equally unhappy.

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