Saturday, November 6, 2010

Look at the budget and tell me what you want to cut and how much.

So says our friend Eric.

I wwould to freeze discretionary spending at 2008 levels.  I want to privatize the post office, Amtrak, and PBS.

I would eliminate earmarks and corporate tax breaks.

I would reduce the Federal government work force, in real terms, 5%.

I would significantly down size the department of energy and education.

I would raise the retirement age to 69 and while being revenue neutral, have medicare recipients pay 5% of their first $10,000 in charges.

I would limit, by shortening and eligibility, Federal Unemployment insurance.

You have other good ideas? I'm listening.


Eric Martin said...

I don't think you've saved 5%. You need 35%.

I would cut every single line item by 35%. Everything. My grandmother's social security. Military pensions. Head Start. The FBI. National Parks. Agricultural subsidies.


In the end there will only be one way to fix this problem.

Baxter said...

The Republicans NEVER come up with meaningful spending cuts. They are good complainers and can always offer platitudes. Thoughtful, coherent economic policy is not on the GOP menu.

That said, there is only "one way to fix the problem"? What about revenues? The lowest tax rates in the western world don't have room on the upside? We can argue about the timing of tax hikes, but there is no good argument to spare them once we are in recovery.

sara p said...

I would eliminate social security for those of us grossing over(pick a number) say @250,000; grandfather SS for those over fifty (under 50, drop it); get out of Iraq & Afghanistan & do all the "hunting" covertly and with drones; get rid of Bernake & get on a gold standard; get out of the UN & get the UN out of NYC; and, get more tolerant:
I am truly perplexed that so many of my friends are against a mosque being built near Ground Zero.

I think it should be the goal of every human being to be tolerant. The mosque should be allowed, in an effort to promote tolerance.

That is why I also propose, that two nightclubs be opened next door to the mosque thereby promoting tolerance within the mosque. We could call one of the clubs (which would be gay) "The Turban Cowboy" and the other being a topless bar “You Mecca Me Hot".

Next door should be a butcher shop that specializes in pork and adjacent to that have an open barbeque pork rib restaurant, called something like "Iraq o' Ribs"!!

Across the street there could be a very daring lingerie store called
Victoria Keeps Nothing Secret with sexy mannequins in the window modelling the goods. Next door to the lingerie shop, there would be room for an Adult Toy Shop (Koranal Knowledge), its name in flashing neon lights and on the other side a liquor store, maybe we’ll call it "Morehammered"? Then the Muslims could be allowed to show their tolerance. Problem solved!!!!!!!!!

Sara P.

Baxter said...

Welcome back, Sara P!

Baxter said...

Highlights from my May 8, 2010 post comments:

The Democrats have not made any material spending cuts that I am aware of during this Congress. When one is fighting the worst recession since the Great Depression, spending cuts are not the order of the day. One doesn't fight a severe downturn by pulling still more money from the system. Herbert Hoover (R) taught us that - even if the lesson was lost on his political descendants.

"The Tea Party wants smaller government which spends less money" except, that is, on Social Security and Medicare - the largest expenses in the budget, save for Defense. They shout about spending cuts without specificity. Sadly, the vast majority have absolutely no clue where they would cut or what it would add up to. Yet polls show they are very fond indeed of our two principal entitlements. Hypocrisy and ignorance rule the movement. It is the manifestation of what is wrong with our country and why we have a gaping hole in the federal budget.

The deficit will be beat primarily through new taxes and economic growth. We need to arrest the growth of entitlement spending and cut where we can. The improving economy should allow for material spending cuts in 2011 forward.

Defense needs to be gradually reduced to approximately 3% of GDP (from 5%). This should be a 5 - 10 year plan, as modified by events.

Discretionary spending should be cut 10% and frozen until the budget is balanced (not including any Social Security surpluses).

The entitlement age for Social Security and Medicare should be gradually raised (perhaps 4 months per year) to 72 +/- with a formula attached that will continue to gradually raise the age if we keep living longer.

That's it for my spending cuts - achievable IMO in a grand bargain that also calls for new revenues.

My one favored tax cut: Treat dividends as expenses for corporations. This will eliminate double taxation as well as perverse incentives it creates. This is a biggie, guys, pay attention.

My revenue neutral tax change: Cut FICA to 2.9% for both employer and employee and eliminate the Medicare tax. Completely replace the revenue with broad based carbon taxes - all effective 1/1/2011.

My preferred tax hikes:

Scrap the current federal estate tax and replace it with the capital gains tax on the estate, taxed as though the deceased sold everything at death, with a $1mm exemption. The revenue from this will be off budget and applied straight to debt reduction. A 20% rate will hardly be worth doing back flips to avoid. Let the generation that ran ran up the debt pay it down.

Incorporate an inheritance tax. Any inheritance proceeds shall be taxed as ordinary income, with a one time $1mm exemption. Any receipts from a trust or other historical silver spoon tax dodge shall be taxed as ordinary income.

VAT - I would phase in a 15% VAT over three years in three equal increments. According to Bruce Bartlett, this will be applied over a base of 33% of GDP thus yielding$50B +/- per point, or $750B +/- per annum. This is also the amount that we are spending on Medicare/Medicaid. I would tie the revenue to the expense such that the VAT rate would rise or fall according to said spending. Thus, we will effectively pay as we go. VAT too high? Then lower Medicare/Medicaid costs rather than simply handing the tab to the next generation.

I think my proposals would balance the budget in 3 - 5 years and create substantial surpluses to pay down the debt thereafter. I have obviously given a great deal of thought to this topic. Can the same be said about the conservatives on this board?

Hags said...

I think it is helpful to think about what is actually doable in the coming Congress. It seems to me that returning all discretionary spending to 2008 levels should be doable. People recognize that something must be done.

I think that increasing the full benefit age for Social Security is a salable idea is you kick it in for people under 50 (or something like that). I think means testing for eligibility is also something that could be implemented. I don't know the number, but the principle seems reasonable.

The notion of having people pay something for each and every medical benefit seems right to me. When something is free people behave badly. When they share in the cost they act in a more mature manner.

Draconian cuts won't work in the real world.

Eric Martin said...

I don't know, Sara. You might want to sell some of that gold and take the gain.