View Full Version : How to Fix the Federal Deficit

Keith Wilson
11-16-2010, 11:38 PM
Do it yourself. Pretend you've just been appointed king. Here's an interesting interactive tool (http://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html) which allows you to pick various combinations of spending and tax law changes, and shows you the effect on the projected deficits in five years and 20 years. If you don't like their choices, come up with your own, but you need to have good evidence for the dollar amounts. It would be interesting if people posted how they'd do it. I managed to do it with about 60% spending cuts, 40% tax increases. It was a little easier than I thought it would be.

Now what the model does not do is factor in the effect of the various changes on the rate of economic growth, and hence tax revenue, over the next 20 years. OTOH that's very, very hard to predict. There's also something of a ringer; a "magic asterisk" change to Medicare policy which saves a lot of money. OTOH, health care costs are a very large part of the problem.

11-17-2010, 12:22 AM
King me.

Very illuminating.....thanks.

Best you don't 'King' me.....there wasn't much defence force left and all of Bushco's legacy had been cast down.

Mind you, Russia had a big whoopsie a few years back and they ran their forces right down....and they live right next door to China.

David W Pratt
11-17-2010, 09:59 AM
I got the 2015 shortfall down to zero. My choices were 80% spending cuts and 20% taxes.
If Social Security eligibility rises, won't that increase unemployment as younger workers have to wait longer to move into/up?

11-17-2010, 11:57 AM
Piece of cake., eliminated both deficits 68% spending, 32% tax cuts. Everyone of these seems reasonable to me.

Other cuts to fed governement,
Reduce nuclear and space
Reduct Nave and Air Force fleets
Cancel and delay some weapons programs
Reduct troops in Iraq and Agh to 60,000
Enact Medical malpractice reform
Increase Medicare eligibility to 68
Reduct tax break for employer-provided healthcare
Cap medicare growth starting in 2013
Raise SS retirement age to 70
Reduce SS benifites for the wealthy
Lincoln-Kyl proposal on estate tax
Return cap gains to CLinton era levels
Payroll tax subject incomes above 106K
Reduce loopholes, reduce rates
Bank tax

11-17-2010, 12:30 PM
When I was looking at the single-payer national health plan, one of the things that made the most sense was eliminating all those insurance costs. Then it occurred to me that huge number of people--the ones that fiddle with all those insurance forms, and related stuff--would be thrown out of work. The same is true if we had a sane defense posture: the industries making all the stupid super-aircraft and ultra-weapons would go down. How many of those jobs have been outsourced, I don't know.

Then I thought about unnecessary stuff outside the health racket. Suppose we could get over the "need" to wrap consumer products three or four times over. Suppose we could wave a wand and establish useful public transportation and start to fold up the highway system. Etc., etc. And to get down to specific suspect endeavors, look at the manufacture, distribution and sale of plastic vomit and fake dog turds. A stupid way to use resources, right? But of course not much in the way of resources is burned up by plastic novelties.

But when you keep thinking, most of the commercial activity in the US falls into the same category (silly and unnecessary) as plastic vomit and whoopie cushions. The economy depends on a proliferation of unnecessary stuff.

Naturally it will be objected that people have a right to buy some plastic vomit if they wish. Slightly more complex objections no doubt apply to other products and systems I’ve dumped into the same category. But do people have any other rights? It’s funny that the only right usually claimed in this context is the one to buy—or not buy—whatever merchandise is offered. Wowser.

So what can be done? Pretty much nothing. I live in a stupid and wasteful time, and I don’t see any way of dropping out. I can make small gestures which make no real difference, and would still make no real difference even if everybody made the same small gestures.

11-17-2010, 01:10 PM
Mind you, Russia had a big whoopsie a few years back and they ran their forces right down....and they live right next door to China.

And now they are slated to become one of the top 5 wealthiest countries in the world while the US slides toward the other end.

Tom Montgomery
11-17-2010, 01:27 PM
I did it with 41% tax increases and 59% spending cuts.

Evidently, Keith, you and I think a lot alike. I would make the wealthiest 2% and the military-industrial complex unhappy.

My choices:

Domestic Programs and Foreign Aid
Cut foreign aid in half
Eliminate earmarks
Eliminate farm subsidies
Cut 250,000 government contractors

Reduce nuclear arsenal and space spending
Reduce military to pre-Iraq War size and further reduce troops in Asia and Europe
Reduce Navy and Air Force fleets
Cancel or delay some weapons programs
Reduce noncombat military compensation and overhead

Foreign Troop Levels
Reduce the number of troops in Iraq and Afghanistan to 30,000 by 2013

Health Care
Enact medical malpractice reform

Social Security
Reduce Social Security benefits for those with high incomes
Use alternative measure for inflation

Modifying Estate taxes
Return the estate tax to Clinton-era levels

Investment Taxes
Return rates to Clinton-era levels

The Bush Tax Cuts
Allow expiration for income above $250,000 a year
Payroll tax: Subject some incomes above $106,000 to tax

New Taxes and Tax Reform
Millionaire's tax on income above $1 million
Eliminate loopholes, reduce rates (Bowles-Simpson plan)
Reduce mortgage deduction and others for high-income households
Bank Tax

This exercise seems to verify my belief that our Federal deficit crisis is the direct result of George W. Bush conducting two unnecessary wars while cutting taxes.

It also encourages me. This is a problem that can be solved.

11-17-2010, 01:31 PM
And now they are slated to become one of the top 5 wealthiest countries in the world while the US slides toward the other end.

Just who got paid that "Peace Dividend"?
Remember that term?

Keith Wilson
11-18-2010, 09:00 PM
Interestingly, neither Tom's nor my plan is vastly different from peb's. I bet if we sat down for two hours we could come up with a plan we could all agree to. Here's mine, which actually goes a little farther than necessary, giving about a $5 billion surplus in 2015 and $900 billion in 2030. It's about 40% tax increases, 60% spending cuts.

Reduce nuclear arsenal & space defense
Reduce navy and air force fleets
Cancel or delay some weapons programs
Reduce troops in Iraq an Afghanistan to 60K
Cap Medicare growth starting in 2013
Raise Social Security retirement age to 68
Reduce high-income SS benefits
Obama’s estate tax proposal
Obama’s capital gains tax proposal
Allow Bush tax cuts to expire for income over 250K
Make more income subject to payroll tax
Higher tax bracket for income above $1 million
Reduce mortgage deduction and others for high-income households
Bank Tax

Michael D. Storey
11-18-2010, 09:20 PM
Lets us do start with some clear thinking here. We should fix the budget. The deficit is doing fine.