Deficit = Income - Expenses

Here is going back to the basics. We run a deficit because we spend more than we take in.  The Congress and the President are focused entirely on the spending side of the equation. How about the revenue side?  No no no, it is the sacred cow. We can not increase taxes under this bad economic times, but it is alright to cut spending. Increasing taxes or cutting spending are fiscal policy equivalents. Both of them independently will reduce the GDP. Increase in taxes reduces personal consumption, but either increases government spending  or reduces deficit while maintaining spending on essential government services and programs.
My previous blogs focused on reducing spending, but can that be a viable solution. It reminds me of corporations seeking to increase earnings by cutting costs. These firms realized that such a strategy assumes excessive waste that can be eliminated without adversely affecting the operating efficiency of the organization.
The level of spending cuts advocated by the republicans is akin to a firm shuting down the research and development program in other to increase profitability. Education is the research and development arm of the economy.
Corporations sometimes have to raise prices even though economic theory says that increase in prices will lead to a loss in revenue. This is possible because of the existence of the concept of elasticity: the responsiveness of quantity demanded to price increase. If the demand is inelastic, raising prices results in an increase in revenue.
The goverment should increase tax revenues by targeting the segment of the population whose consumption is not elastic. These are the high income earners and these are precisely the people whom the republicans have decided to bestow with all the tax breaks and cuts imaginable. What an oxymoron.