Budget deficit

[David S]

According to Alan Greenspan the budget deficits pose a danger to the nation's long-term economic health. The deficit for 2005  is expected to be $427 billion. The estimated spending for 2005 is $2.479 trillion and the estimated receipts from all sources is $2.052 trillion. http://www.whitehouse.gov/omb/budget/fy2006/sheets/hist01z1.xls If the federal government raised all taxes by 21% that would provide the extra $427 billion to balance the budget. Would you be willing to raise your taxes by 21% to balance the budget or would you prefer to cut spending. The 21% increase would have to apply to income tax, social security tax, medicare tax, corporate taxes, federal excise tax on gasoline, and all other federal taxes.



Greenspan: Budget Deficits Pose Danger
Thursday, April 21, 2005 1:04 PM EDT
The Associated Press
By JEANNINE AVERSA
Bloated budget deficits pose a danger to the nation's long-term economic health, Federal Reserve Chairman Alan Greenspan warned anew Thursday. He issued a fresh call to policy-makers to move swiftly to put the government's fiscal house in order.

[A18]

http://www.heritage.org/Research/Budget/bg1833.cfm

1. Freeze non-defense discretion­ary spending through 2009,
2. Cap farm subsidies for wealthy farmers,
3. Reduce Medicaid growth rate to 5 percent,
4. Replace the Medicare drug bene­fit with the drug card, and
5. Reduce entitlement spending by 3 per­cent by targeting waste, fraud, and abuse.

[Trilobyte]

That 21% figure is silly. Simply roll back the Bush tax cuts and we'd be seeing surpluses again.

[David S]

http://www.heritage.org/Research/Budget/bg1833.cfm

1. Freeze non-defense discretion­ary spending through 2009,
2. Cap farm subsidies for wealthy farmers,
3. Reduce Medicaid growth rate to 5 percent,
4. Replace the Medicare drug bene­fit with the drug card, and
5. Reduce entitlement spending by 3 per­cent by targeting waste, fraud, and abuse.

Thats a step in the right direction but according to the Heritage article that only cuts the deficit in half. It doesn't eliminate it.

[David S]

That 21% figure is silly. Simply roll back the Bush tax cuts and we'd be seeing surpluses again.

The 21% figure is exactly what you would need if you apply it to all federal taxes. Do the math yourself if you like. BTW if there really were surpluses during the Clinton adminstration then the national debt would have been reduced. But the debt went up every year Clinton was in office. So there never were any real surpluses.

[Emsworth]

I would:
1. Temporarily repeal Bush's tax cuts
2. End pork barrel spending
3. Cut funding for and/or eliminate certain programs and bodies: e.g., the Peace Corps, the TVA, Amtrak, the National Ice Center, the Appalachian Regional Commission
4. Cut farm subsidies
5. Abolish the Department of Education. (The Dept does not help build schools, hire teachers, determine curricula, or set educational standards for students; it only transfers money from the federal government to other bodies. I hardly think that we need a department to funnel money from pt A to pt B.)

[opebo]

Get out of Iraq and cut the military budget in half.  Increase taxes on those making over $200,000/year to at least 50%, and possibly add a rate of 60 or 70% over $500,000/year.

[David S]

I would:
1. Temporarily repeal Bush's tax cuts
2. End pork barrel spending
3. Cut funding for and/or eliminate certain programs and bodies: e.g., the Peace Corps, the TVA, Amtrak, the National Ice Center, the Appalachian Regional Commission
4. Cut farm subsidies
5. Abolish the Department of Education. (The Dept does not help build schools, hire teachers, determine curricula, or set educational standards for students; it only transfers money from the federal government to other bodies. I hardly think that we need a department to funnel money from pt A to pt B.)

Any idea how much that would affect the deficit?

[David S]

Get out of Iraq and cut the military budget in half.  Increase taxes on those making over $200,000/year to at least 50%, and possibly add a rate of 60 or 70% over $500,000/year.

Opebo your tax plans are always neatly crafted to exclude you from any tax hikes. My question was phrased to mean if we all have to chip in to make it work how much more would we be willing to pay.

[○∙◄☻¥tπ[╪AV┼cVê└]

A few things
1. This deficit doesn't count the money borrowed from SS
2. The 21% figure must mean that there would be 21% more in federal tax revenues, not that your income taxes would be going up 21%.
3. We don't even know how $9 billion in Iraq got spent. It was dispursed in unmarked bills. There's definitely ways to reduce spending without hurting anyone but the corrupt.

[Trilobyte]

That 21% figure is silly. Simply roll back the Bush tax cuts and we'd be seeing surpluses again.

The 21% figure is exactly what you would need if you apply it to all federal taxes. Do the math yourself if you like. BTW if there really were surpluses during the Clinton adminstration then the national debt would have been reduced. But the debt went up every year Clinton was in office. So there never were any real surpluses.

You asked "would you be willing to raise your taxes by 21%..." which is misleading. My point was Bush did not cut everyone's tax by 21%. And Clinton did start paying down the national debt; I recall in 2000 it was about $216 billion. It wasn't much but it was a start.

Like it or not, the Bush tax cuts were the cause of the deficit. Doesn't it make sense to tackle the source of the problem?

[Emsworth]

I would:
1. Temporarily repeal Bush's tax cuts
2. End pork barrel spending
3. Cut funding for and/or eliminate certain programs and bodies: e.g., the Peace Corps, the TVA, Amtrak, the National Ice Center, the Appalachian Regional Commission
4. Cut farm subsidies
5. Abolish the Department of Education. (The Dept does not help build schools, hire teachers, determine curricula, or set educational standards for students; it only transfers money from the federal government to other bodies. I hardly think that we need a department to funnel money from pt A to pt B.)

Any idea how much that would affect the deficit?

Broadly speaking, and taking the proposal into consideration over a one-year period only:
1. $200 billion for the tax cuts
2. $25 billion for pork barrel spending
3. Unsure
4. $10 billion for farm subsidies
5. $30 billion - $40 billion for Education
That would meant that, ignoring cuts in programs, the government would have saved approximately $280 billion in one year. The cuts in programs would have to represent about 10% of overall discretionary spending to mean that the budget would be balanced.

I would maintain the level of taxation while continuing to cut spending so that the U.S. could accumulate surpluses, which could be used to pay off the national debt. Once spending is under control, however, I would have no problem with slightly reducing the taxes.

[opebo]

Get out of Iraq and cut the military budget in half.  Increase taxes on those making over $200,000/year to at least 50%, and possibly add a rate of 60 or 70% over $500,000/year.

Opebo your tax plans are always neatly crafted to exclude you from any tax hikes. My question was phrased to mean if we all have to chip in to make it work how much more would we be willing to pay.

Nothing of course.  Why should 'we all have to chip in'?   Just tax the rich.

[opebo]

3. We don't even know how $9 billion in Iraq got spent. It was dispursed in unmarked bills. There's definitely ways to reduce spending without hurting anyone but the corrupt.

Just imagine the mind-boggling corruption that must be going on over there, and in the military, right now!  Makes me think of Milo Minderbinder.  From Catch-22:
"This time Milo had gone to far. Bombing his own men and planes was more than even the most phlegmatic observer could stomach, and it looked like the end for him...Milo was all washed up until he opened his books to the public and disclosed the tremendous profit he had made."
http://www.bookrags.com/notes/c22/QUO.htm

[Emsworth]

Just tax the rich.

Why should only the rich be taxed? Such a system hardly seems fair.

[phk]

Cut Spending and Raise taxes, should be simple.

[opebo]

Just tax the rich.

Why should only the rich be taxed? Such a system hardly seems fair.

'Fair'?  You want to bring up fairness to defend Those Who Own Everything?

Anyway, it is just being pragmatic, value judgements like fairness needn't enter into it.  And it is 'equal treatment', as you or I would also be taxed at that rate if we suddenly became rich.

[Emsworth]

'Fair'?  You want to bring up fairness to defend Those Who Own Everything?

And why shouldn't they own "everything"? In a capitalist society, the right to property is a very important one.

[opebo]

'Fair'?  You want to bring up fairness to defend Those Who Own Everything?

And why shouldn't they own "everything"? In a capitalist society, the right to property is a very important one.

That is true.  But there is no reason for the non-owners to support capitalism unless there's a good deal of progressive taxation and redistribution by the government.  Keynesian liberal capitalism is a good compromise between laissez-faire and socialism.

[Dave from Michigan]

I would cut spending, raising taxes/repealing Bus's tax cuts would hurt the economy.

[Emsworth]

I would cut spending, raising taxes/repealing Bus's tax cuts would hurt the economy.

I would respectfully suggest that this is only a short-term view. In the long term, debts and deficits are far more important concerns.

[cwelsch]

Rich people represent a mythical bottomless well that continues to give water no matter how used it is.

The economy is not infinite.  You can't simply tax everyone over and over again and expect the economy to take it in stride.

Just cut spending, especially agricultural intrusions and corporate welfare, and give savings accounts to augment retirement and health care.  Agriculture is heavily protected, which costs taxpayers on April 15 and costs consumers every day.  If we pull back our artificial protections of agriculture we'd see a drop in the price of goods (most agricultural programs are intended to RAISE prices, so that farms are more profitable) and a drop in the budget costs.  We'd also see relative poverty decline, as the same amount of money would buy more goods.

And then if we use MSAs and personal accounts we could move a lot of health care funding into personal hands.  Rather than taxing people and sending some of that money back to them in the form of welfare, it would be easier to simply not tax them in the first place and let them decide how to spend it on health care or whatever.  This would ential a drop in tax collections, most likely, but would also ideally cause a drop in budgetary expenses.

And personal accounts for Social Security would generate wealth for retirees without requiring a budget albatross around our necks.  Instead of taxing that wealth and eventually giving people back less than they pay in, thanks to inflation, we could let the market generate the wealth to support our retirees.  We'd see a drop in taxes as the money went into Social Security, but we'd also see a drop in costs.  Ultimately it would satisfy the requirement of providing for retirees but without a major budget-eater that will eventually lay claim to even discretionary spending (if not reformed).

One of the biggest problems with the budget is that entitlements are mushrooming and are about to grow massively in scope.  Medicare/Medicaid and Social Security are going to require nearly all of the budget in the future, absent some key reforms.  Aside from putting entitlements into more market-based solutions (negating the need for much taxing and spending) we should start cutting into stupid ideas like agricultural price supports and corporate welfare.

After that, we should spin off a half-dozen Cabinet Departments and get rid of them - let the states deal with it if they want those bureaucracies.  We should axe Labor, Commerce, Energy (moving its national security jobs over to DoD), Agriculture, Education, and HUD.   We should move Veterans' Affairs into HHS, because they have substantively similar tasks.

Also, some of the Departments could not be eliminated without many other reforms.  For example, to cut HUD we'd have to restructure the FHA - my own suggestion would be to make FNMA (Fannie Mae) a private group without special protections or regulations and to let the market take a more active role in aiding the housing market.  In fact, we should fully privatize all of the GSEs eventually, because the government should not get to set up the rules of the investment game and then also be a player (that's like making the referee the center player for one of the teams).

Anyway, I'd keep going, but I'm pretty much past the point where this is politically feasible for the near term.  Once I mentioned VA it was pretty much done (simply changing something like that is like an invitation to be voted out, even if you improve it).

But the least we could is cut pork, corporate welfare and the Department of Education - which is nothing but a bone thrown to the teacher's unions for helping out Carter.

[A18]

Doesn't the Department of Education give out grants to the states?

[Emsworth]

Doesn't the Department of Education give out grants to the states?

Yes, it does. However, I don't think that we need a Department simply to distribute money. The Treasury could directly supply the money to the states.

[A18]

I'm glad most people said cut spending.