Honey, I Balanced the Federal Budget! (And You Can, Too)

Honey, I Balanced the Federal Budget! (And You Can, Too)
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Frankly, I didn't think it would be so easy.

About two months ago, shortly after the election, I took The New York Times interactive "Budget Puzzle: You Fix the Budget" challenge, which lists about 40 choices similar to those Congress faces when deciding what to cut. I thought the survey would give me a host of draconian choices between tossing widows and orphans on the street, abandoning needed infrastructure fixes, doubling taxes, etc.

No, nothing of the sort. You can see my results here:
NY Times Balance the Budget Survey
and take the test yourself here.

By 2015, I had achieved a $730 billion surplus, and by 2030, nearly $2 Trillion, and I was just getting started. If the choices had been more open-ended, I could have saved even more.

I cut most military expenditures, and if I had had the choice, I would have reduced troop levels in Iraq/Afghanistan much more quickly and thoroughly then the Times allowed - only to 30,000 by 2013. In its partial place, I would have supported money for Afghan/Iraq secular schools, microloans (supervised so that excessive levels of interest are not imposed, but mostly using already existing lenders like Kiva, Grameen Bank etc.). These would be built and staffed by local populations as in the model of Greg Mortenson's "Three Cups of Tea." This would obviously add some costs, but far, far less, and would have much, much greater "bang for the buck" in lasting changes, especially for the oppressed female half of the population.

I cut Social Security benefits, but only to the wealthiest, who live longer, have other resources, and take more benefits anyway. This is a debatable cut, and I might be willing to give on this one if there were enough savings elsewhere. What I am NOT willing to do is eliminate the option for retirement at 62 for those who are just too worn out to work longer and need immediate benefits. There is a huge difference, up to 20 years, in longevity between an upper middle class office worker and a lower middle class factory worker, and there has to be a Safety Net below which Americans are simply not allowed to fall. Ever. No matter their bad economic choices in life.

There is also little point in raising the retirement age much more than it is now (67 for the youngest workers), until it can be proven that a substantial number of people will live a healthy life into their 80s and 90s. I did allow for raising the regular retirement age to 68 (but not 70), but only over time (the Times' interactive doesn't say when, but I wouldn't accept it before 2030, and then only if the other options for Medicare and early retirement are retained).

I would also allow payroll taxes above $106,000 for the first time (though the Times survey didn't say how much above; I would eliminate the cap entirely). Since this would provide too much money into Social Security, I would enact a payroll tax CUT across the board that would effectively result in a tax break for 97% of workers making near or below the current cap, while making the top 3% pay their fair share for the first time. The government should only be concerned about keeping this popular and necessary safety net solvent, and should not be in the business of "picking winners" by imposing an arbitrary cap above which no payroll taxes are collected. Imagine if we did that with Income taxes, saying people making more than $106,000 should pay no taxes above that amount! Would that be fair?!

Oh, that's another thing. I rolled back the Capital Gains taxes to Clinton-era levels. We had the most powerful stock market and economy in modern American history in the 1990s; there is absolutely no reason to believe that rewarding money-hoarding millionaires and billionaires by letting them invest in the FIRE sectors at 15% capital gains rates, instead of 20%, (or 10% for low income earners), does anything to help the overall economy. For the same reason, I allowed the expiration of the Bush tax cuts for those making $250,000/year - just 2% of the working population - but generating $100 billion in savings by 2030. Obama was wrong to cave on this.

I indexed Medicare to inflation, which was the biggest savings ($562 Billion by 2030), but to really make healthier Americans, I would direct some of those savings to restoring physical education and/or sports programs to the schools, 5 days a week, 90 minutes a day (to allow for locker room changing times), better nutrition at lunch, and for free too (and organic gardens in schools where possible to teach children about their connection to, and appreciation for, the Earth). Sarah Palin is wrong and her views are outdated. Food today most often comes from a factory farm, and is unhealthy and nutritionally poor. If we want our kids to excel, they must be well-fed, even if that costs a little more.

For the adults, I would direct more Transportation Department funds to cheap bike lanes and other "livable city" options, to encourage both healthier lifestyles and more local shopping and community building, while discouraging use of polluting autos and clogged streets. These are minuscule costs compared to building new roads for cars. Transportation Secretary Ray LaHood is already in favor of this.

I would create panels, staffed by doctors, consumers, and other health providers, to measure medicine by outcome. While these have to be structured carefully so as not to become the dreaded "death panels," they can also be a way to check the growth in me-too pharmaceuticals that are created just to exploit patent loopholes, while providing no health benefits over patent-expired drugs, and doing so at a much higher cost. I would direct Medicare to pay for generics unless there was a medical reason not to do otherwise, which would have to be clearly delineated by the prescribing doctor. I would allow for properly inspected foreign sourced drugs to be imported.
These are major cost savings options and just some of the necessary ways to ensure Medicare is still a viable program, even with cost controls.

A similar set of analysis needs to be undertaken with respect to surgeries or other therapies. To make up for the reduction in incentives to discover new therapies these changes would entail, I would beef up the FDA and improve the approval time by one third. I would also consider lengthening the drug patent time by up to 25% for truly new and novel therapies that enhanced treatment outcomes significantly (the phrase "25 for 25" comes to mind - as in "approve a drug for a 25% longer patent if it provides a 25% longer survival rate"). I support the recent Appeals Court decision not to allow patents on genes. These are products of nature, except where created anew, and should not be patented, only the inventions using them should be.

I imposed a carbon tax to encourage development of renewable energy sources.

I taxed banks according to a riskiness assessment of their investments (this has to be worked out).

I reduced the mortgage-interest deduction by converting it to credit. This benefits moderate-income people more by taxing higher income people who own larger mortgages, sometimes on multiple homes. While I have nothing against people who have done well owning bigger, or even more, homes, they should have to pay their own way and not depend on the support of other taxpayers.

I did not impose a millionaire's tax, because it is arbitrary, production-inhibiting, and subject to bracket creep due to inflation, like the AMT.

I did restore the estate tax to Clinton-era levels, because the heirs of great fortunes did little or nothing to deserve them, even if their parents did, and it is reasonable to tax large estates at a higher level. This $104 billion (by 2030) savings reward people while they are alive but still allows a reasonable inheritance by their loved offspring.

I cut government contractors because:
A. There is so much outsourcing that government has lost its core competency, and
B. Relying on contractors breeds both complacency and dependency

I eliminated farm subsidies because these go mostly to agribusiness that encourages monoculture crops with unhealthier HFCS and CAFOs, and discourages small, organic, healthier farming, and "locavores." If the Times had offered me the option, I would have reduced the bloated Transportation bill, by cutting highway subsidies that build roads to nowhere (while instead I would encourage toll roads). Instead I would have redirected some of that towards livable cities and high-speed mass transit, though in both cases, I would promote Land Value Taxes at the local and state levels as a way to pay for these projects by offering matching funds.

I support raising the gas tax to encourage more fuel efficiency and to pay for the roads themselves.

Overall, I saved about half through spending cuts and half through taxes, and I was WAY into surplus territory (1.975 Trillion).

Now, in reality, I would spend more on R&D, universal health insurance, and infrastructure, but I would also re-issue Greenbacks (aka U.S. Notes) to pay for these, thereby eliminating interest payments on debt. This money would NOT be paid back at all - just allowed to circulate in the economy as new money, creating new wealth - ACTUAL wealth in energy grids, healthier Americans (who are more productive) etc. Denis Kucinich's N.E.E.D. Act does similar things.

A significantly reduced military would discourage the "use it or lose it" philosophy behind so much of our military adventurism. If I had the choice, I would probably build up the National Guard and Coast Guard and protect our borders and enable our First Responders to respond better to emergencies (e.g. Katrina).
A mixture of private and public facilities should be partly funded by the government to serve as temporary housing in the event of catastrophes, to dispel the notion that there are government-sponsored FEMA concentration camps waiting for Americans who act up. These facilities should be staffed by ready-to-go First Responders and First Shelterers because you never know where catastrophe will strike.

Of course, beyond these in-the-box choices, I would look outside the box and taxshift away from taxes on production (sales, capital, wages) and towards taxes on resources, which would encourage greener industries, usage of fewer resources, and collection of the "rent" from private developers and application to community needs.

The Land (ALL of nature's resources) belongs properly to all of us, and use/abuse of it should be taxed accordingly.

I would double the EPA budget by creating a new office to measure economic losses from pollution and determine appropriate taxes and penalties (REAL penalties) on a scientific basis. No more BP Deepwater Horizons or Massey coal mine collapses, or coal pond breakouts as we had in Tennessee. Better inspection, and truer cost evaluations, while allowing actual profits from production to go untaxed. I would tax bads, not goods. Properly applied, Land Value Taxes could eliminate ALL other taxes that mainly discourage production. I would keep sin taxes for social and fairness reasons (why should the general public pay for people to smoke/drink/daredevil themselves to death?)

My top 7 ideas are here: We have to Rescue our own Darn Economy because Obama and the Party of No won't, but this is only a beginning.

Why can't our politicians make these kinds of choices without getting caught up in endless debates about cutting puny earmarks (a mere $14 billion by 2030, hardly worth arguing over)? Well, you need look no further than the military/banking/medical-industrial complex for answers to that. Or to politicians who are locked into a pay-to-play model for their election campaigns. Or to poorly educated, ideologically hidebound extremists, both inside and outside the beltway.

Perhaps the citizens should be in charge of the budget.

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