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The Federal Budget Exercise - How to reduce the deficit/debt (1 Viewer)

-jb-

-jb-

Footballguy
Starting a new thread from some posts in the jobs thread. Below are some ballpark numbers based on Trump's proposed budget last year (Biden hasn't produced yet, and has a few months to submit). IF YOU WERE NOT ABLE TO RAISE TAXES, how would you make a dent in our deficit, and potentially our debt? Current deficit is roughly $1t, give or take a few shekels.

  • Revenue

    Income tax - $1.9t
  • SS, Medicare, and other payroll taxes - $1.4t
  • Excise and tariff - $141b
  • Federal reserve earnings - $71b
  • Estate tax and other revenues - $35b

[*]Mandatory Spending

  • SS - $1.2t (100% paid by income taxes and investments, likely to be depleted completely by 2034)
  • Medicare/Medicaid - $1.2t (Medicare is already is already underfunded through withholding, Medicaid is 100% funded by the general fund)

[*]Discretionary Spending 

  • Defense $636b
  • HHS - $96b
  • Education - $66b
  • VA - $105b
  • Homeland Security - $49.7b
  • Energy - $35b
  • State Dept - $44b
  • Nasa $25b

https://www.thebalance.com/u-s-federal-budget-breakdown-3305789

 
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Raise tariffs, make China and Mexico line our coffers until they are overflowing.

Excise and tariff - $1.41t

Bam. Done.

 
BroadwayG said:
Raise tariffs, make China and Mexico line our coffers until they are overflowing.

Excise and tariff - $1.41t

Bam. Done.
Click to expand...
What do you foresee the negative (or not) impact of raising revenues by 10x in this category?

 
-jb- said:
What do you foresee the negative (or not) impact of raising revenues by 10x in this category?
Click to expand...
:shrug:

Raising taxes is out as defined in your problem. Eliminating 100% of the discretionary spending you listed wouldn't be enough, so tariffs it is.

 
I like my idea that I have posted in a few spots waiting for someone to blow it - but it involves taxes......."...

 
Option 2: Sell Alaska (+500t)

Option 3: Day Trade DogeCoin by having Elon Musk tweet the direction we want it to go (+5.8t)

 
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I don't see any feasible way to eliminate the deficit strictly through spending cuts unless we want to make serious cuts to people receiving Medicare and Social Security.  

If we have universal healthcare we could eliminate the Medicare expense, but funding universal healthcare will require in increase in taxes.

 
National sales tax

Stop extending unemployment benefits which disincentivise folks to work

Reduce spending

 
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Gilroy34 said:
Discretionary spending prorated with perhaps a bit more on defense.
Click to expand...
Discretionary Spending includes: 

Defense $636b

HHS - $96b

Education - $66b

VA - $105b

Homeland Security - $49.7b

Energy - $35b

State Dept - $44b

Nasa $25b

Would you cut all of it proportionately?   One more than another?

 
-jb- said:
Starting a new thread from some posts in the jobs thread. Below are some ballpark numbers based on Trump's proposed budget last year (Biden hasn't produced yet, and has a few months to submit). IF YOU WERE NOT ABLE TO RAISE TAXES, how would you make a dent in our deficit, and potentially our debt? Current deficit is roughly $1t, give or take a few shekels.

  • Revenue

    Income tax - $1.9t
  • SS, Medicare, and other payroll taxes - $1.4t
  • Excise and tariff - $141b
  • Federal reserve earnings - $71b
  • Estate tax and other revenues - $35b

[*]Mandatory Spending

  • SS - $1.2t (100% paid by income taxes and investments, likely to be depleted completely by 2034)
  • Medicare/Medicaid - $1.2t (Medicare is already is already underfunded through withholding, Medicaid is 100% funded by the general fund)

[*]Discretionary Spending 

  • Defense $636b
  • HHS - $96b
  • Education - $66b
  • VA - $105b
  • Homeland Security - $49.7b
  • Energy - $35b
  • State Dept - $44b
  • Nasa $25b

https://www.thebalance.com/u-s-federal-budget-breakdown-3305789
Click to expand...
Good topic.  How would you do it?

 
-jb- said:
. IF YOU WERE NOT ABLE TO RAISE TAXES, how would you make a dent in our deficit, and potentially our debt?
Click to expand...
  • Spend more on infrastructure where every dollar spent brings in about $1.70 to the economy (I'm sure there is a point where the laws of diminishing returns kick in but I'd never be allowed to get close to it.)  
  • Eliminate many of the tax expenditures.  (Rate will be the same, just the refundable credits, various deductions, etc. will go away.)
  • Spend less on defense where every dollar spent only returns seventy cents to the economy (there is a reason why defense spending is used as a proxy for all spending by conservative think tanks when they want to disparage government spending.)


The first and third will help dent the deficit by improving the economy so that we grow our way out of some of it.  The middle option increases revenue and is of course cheating.   If we pretended that there was a one to one relationship between these types of policy changes then we could wipe out the entire trillion here with tax expenditures.  But it doesn't really work that way in the real world.   The best option of course is to raise tax rates (or create new buckets) or change the way we tax to begin with, but that wasn't allowed.  We needed to deal with spending, and yes I know of the "it is insulting to call tax expenditures expenditures as if these are spending" forty plus year old rhetoric, but that is where the "spending" is hidden these days.

 
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Gilroy34 said:
National sales tax

Stop extending unemployment benefits which disincentivise folks to work

Reduce spending
Click to expand...
In the racist USA a national sales tax would only make our systemic racism worse.  So that'll never pass.

We coukd at least try to balance the current budget for starters 

 
Alex P Keaton said:
Good topic.  How would you do it?
Click to expand...
I wholly agree with @Bottomfeeder Sports on the infrastructure and defense pieces. Infrastructure should be an even bigger push than it is given its ability to affect productivity. For defense, we spend more than the next ten nations spend combined. We need less bombs and more technology as that is how I believe our enemies see the opportunity to take us down (cyber). It's a fundamental shift away from what our defense leaders know, and who keeps them greased. It can be fixed if we can fix the political will. On top of that, I would look to healthcare. I've spent some time in the healthcare space (tech), so I've had exposure to a number of programs, both good and bad, that were intended to slow the growth of our healthcare spend. The ones that didn't work were simply managed poorly. Once again, political will - too influenced by the people/companies that benefit from it being broken.

 
Alex P Keaton said:
Discretionary Spending includes: 

Defense $636b

HHS - $96b

Education - $66b

VA - $105b

Homeland Security - $49.7b

Energy - $35b

State Dept - $44b

Nasa $25b

Would you cut all of it proportionately?   One more than another?
Click to expand...
So, so big. 

Also, Homeland Security is probably the sleaziest governmental agent I've worked with. Wouldn't mind cutting their budget a bit to prevent some of the hijinks I've seen. 

 
Reduce defense spending a lot. We could cut the budget in half and still spend more than anywhere else in the world.

Raise retirement age to delay SS benefits.

Eliminate homeland security. Why is this separate from the military in the first place?

Increase taxes on investment income, like capital gains.

Legalize marijuana. Tax and regulate.

Align healthcare spending with other OECD countries.

 
Zow said:
So, so big. 

Also, Homeland Security is probably the sleaziest governmental agent I've worked with. Wouldn't mind cutting their budget a bit to prevent some of the hijinks I've seen. 
Click to expand...
Have a friend pretty high up at HHS now (worked for the Chairman of the Joint Chiefs while serving) and he says the entire agency should be shut down.  

 
IMO...Taxes will have to be raised.

People will kick and scream about it...and it may only be temporary til the next party has the power and lowers them again....but tax reform is needed.

Why?  Because the two sides and American public don't seem able to agree on what should be cut from the budget...and the amount of cuts they will ever agree on will be incredibly miniscule.

That isn't to say spending should not be reined in...it most certainly should as well.

National Sales tax...no thank you.  Its an incredibly regressive tax system...some think it fair, but as a percentage of income, the poor and middle class will be shouldering the burden.

https://www.taxpolicycenter.org/briefing-book/who-bears-burden-national-retail-sales-tax

And other reasons against it...

https://www.brookings.edu/research/dont-buy-the-sales-tax/

 
Terminalxylem said:
Reduce defense spending a lot. We could cut the budget in half and still spend more than anywhere else in the world.

Raise retirement age to delay SS benefits.

Eliminate homeland security. Why is this separate from the military in the first place?

Increase taxes on investment income, like capital gains.

Legalize marijuana. Tax and regulate.

Align healthcare spending with other OECD countries.
Click to expand...
Good list.  How would you accomplish the bolded?

 
Alex P Keaton said:
Good list.  How would you accomplish the bolded?
Click to expand...
Government-sponsored, universal healthcare. While I realize that costs $, there’s a lot of fat to be trimmed from the current system. I wrote this on another forum a few years ago:

1. Everyone needs to pay into a centralized, government-sponsored insurance. Wealthy people can supplement their care out-of-pocket. If private, "luxury" health insurance evolves, so be it.

2. Insurance should pay for an allocated number of routine visits, important meds (sorry, Viagra and Ambien) + catastrophic care - which kicks in after a certain $ value is exceeded. The rest is out-of-pocket. 

3. Every visit needs a copay. Preventive care visits have reduced fees.

4. One set of rules should eliminate a lot of the coders/billers/admin required by a multifaceted insurance industry. A central EHR should eliminate a lot of the medical records personnel, too.

5. Tort reform to promote less defensive medicine. Should also reduce malpractice premiums, though this hasn't happened when reform has occurred. Establish a central medical panel to review validity of malpractice cases, toss the illegitimate claims early.

6. Somehow limit the "me too" drugs that pharma/device industry devotes too many resources developing, purely for financial reasons. Eliminate drug reps and advertising, too - the use of meds/devices should be based on need and affordability, in that order. (notice this flies in the face of free market economics). Might need to revisit the patent laws as well. 

7. Teach the American public that waiting for noncritical tests/procedures is not tantamount to care rationing any more than basing their availability on ability to pay.

8. Doctors take a pay cut, particularly specialists. We need more primary care and the pay disparity is not justified.

9. Paying for all this can come from income tax, rather than placing the onus on employers. We can cut our military 50%, increase the retirement age for SS and eliminate all foreign aid to help with the bill. Plus up the sin taxes on tobacco, alcohol +/- fast food. And eliminate the Bush tax cuts.

10. Initiate meaningful end-of-life policies which mandate advance care directives and empower physicians in futile situations to stop wasting resources on lost causes.

11. Most importantly promote healthy lifestyle among our lazy, fat, overindulgent society.
Click to expand...
Not all those things still apply, but at least it’s a starting point. Also I like many of the proposals on this site.

 
We don’t need any of the solutions suggested here IMO. 
What we need to do is keep growing the economy of the point where the debt becomes smaller by comparison. How best to grow the economy? Free trade. Open immigration. Capitalism. Let the market have its way. Invest in infrastructure and alternatives to carbon fuels and education. 
 

These aren’t complicated solutions, but do we have the will to carry them out??

 
timschochet said:
We don’t need any of the solutions suggested here IMO. 
What we need to do is keep growing the economy of the point where the debt becomes smaller by comparison. How best to grow the economy? Free trade. Open immigration. Capitalism. Let the market have its way. Invest in infrastructure and alternatives to carbon fuels and education. 
 

These aren’t complicated solutions, but do we have the will to carry them out??
Click to expand...
You guys always trot these things out....I'm sorta surprised, not really, that this "capitalism" shtick keeps coming up in conjunction with "free trade" given the dire results we JUST witnessed with the heating issues in Texas.  Extrapolate that out to the country and all the industry and you can easily see where it would head.  It baffles me that you'd want to go there.

 
The Commish said:
You guys always trot these things out....I'm sorta surprised, not really, that this "capitalism" shtick keeps coming up in conjunction with "free trade" given the dire results we JUST witnessed with the heating issues in Texas.  Extrapolate that out to the country and all the industry and you can easily see where it would head.  It baffles me that you'd want to go there.
Click to expand...
I don’t need to extrapolate it out because I don’t believe in it. At home I want tight control of utilities. With respect to foreign trade I want as much capitalism as possible. I don’t see the contradiction. 

 
timschochet said:
I don’t need to extrapolate it out because I don’t believe in it. At home I want tight control of utilities. With respect to foreign trade I want as much capitalism as possible. I don’t see the contradiction. 
Click to expand...
Because the bold isn't capitalism?  :shrug:  

 
The Commish said:
Have a friend pretty high up at HHS now (worked for the Chairman of the Joint Chiefs while serving) and he says the entire agency should be shut down.  
Click to expand...
For those that probably don't know, Homeland Security is what ICE/Border Patrol/etc. is now essentially called. The have an investigation division (HSI). What's unique is that they are the only investigatory agency to my knowledge that doesn't fall under the Department of Justice (they instead fall under the Department of Defense I believe). Accordingly, they are not bound or beholden to the DOJ's policies and protocols and can, instead, run kind of rogue and unchecked (in other words, they are not blanketly terrible but the lack of oversight allows for them to cut more corners and cross more boundaries).I have encountered this firsthand. Further, I have had informal conversations with higher-ups in other agencies like the FBI and local/state agencies who say the same. 

 
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Zow said:
For those that probably don't know, Homeland Security is what ICE/Border Patrol/etc. is now essentially called. The have an investigation division (HSI). What's unique is that they are the only investigatory agency to my knowledge that doesn't fall under the Department of Justice (they instead fall under the Department of Defense I believe). Accordingly, they are not bound or beholden to the DOJ's policies and protocols and can, instead, run kind of rogue and unchecked (in other words, they are blanketly terrible but the lack of oversight allows for them to cut more corners and cross more boundaries).I have encountered this firsthand. Further, I have had informal conversations with higher-ups in other agencies like the FBI and local/state agencies who say the same. 
Click to expand...
And these are EXACTLY the reason my friend listed...almost verbatim.  I mean, the people INSIDE say it needs to go, get rid of it and begin putting the Chaney legacy behind us.

 
  • Smile
Reactions: Zow
As long as $$ is speech, putting a legislature in charge of fiscal sanity is like making Pedro Escobar a substance-abuse counselor

 
-jb- said:
Current deficit is roughly $1t, give or take a few shekels.
Click to expand...
Might be helpful to use accurate numbers...

* 2020 deficit was actually $3.3 trillion.

* 2021 was already at $1.7 trillion and that was only through March.

The only way out of this is massive inflation and currency devaluation within 10 years. The economy will slow to a crawl for at least a decade.

https://bipartisanpolicy.org/report/deficit-tracker/#:~:text=The federal government ran a deficit of %243.1 trillion in,of the economy since 1945.

 
Stoneworker said:
The only way out of this is massive inflation and currency devaluation within 10 years. The economy will slow to a crawl for at least a decade.

https://bipartisanpolicy.org/report/deficit-tracker/#:~:text=The federal government ran a deficit of %243.1 trillion in,of the economy since 1945.
Click to expand...
I've not really taken a deep dive into macroeconomics in a long time, but I feel like this is what we are doing....without saying it is what we are doing (to avoid the economic downturn).  I believe like the government is fueling inflation to devalue the currency and thereby make the debt less of an issue. 

The trick to pulling this off without anyone objecting is to not report said inflation accurately so as to throw the citizens (and the rest of the world) off of the scent so there isn't panic and outrage.  I'm not  the only one  who thinks this  is going on.

There is a concept in accounting called separation of duties whereby the same employee(s) don't have access/authorization to assets and reporting on those same assets, because then they could commit fraud and cover it up.  The separation of powers in our Constitution was meant to maintain this same level of control, but there is a lot of wink-wink/nudge-nudge going on between the Executive and Legislative branches while the Judiciary is told to sit in the corner and not speak unless spoken to.  As a result, we are basically being lied to about inflation so as to not incite fear. 

And who are the ones suffering for this?  Everyone but the upper class.  And as usual, its the middle and lower classes who are hit the hardest with rising inflation without matching compensation.  Theoretically, those that hold debt should be better off when inflation rises, however...when you continue to run at a deficit, the debt continues to rise with (and faster than) inflation.  Upper class can benefit if they hold debt, because they typically can avoid running at a deficit and benefit from things like bulk purchasing and more advantageous spending patterns.  Middle and lower class citizens are unable to keep their household budgets in the black and thus, their deficits will continue to cause debt increases outpacing inflation.

This is the primary reason I was against the bailouts in 2008.  I know it would have been painful, but there will be a more painful crash coming and it may literally end the US as an economic world power if we continue down the road of $1.9T stimulus packages.

 
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Jayrod said:
And who are the ones suffering for this?  Everyone but the upper class.  And as usual, its the middle and lower classes who are hit the hardest with rising inflation without matching compensation.  Theoretically, those that hold debt should be better off when inflation rises, however...when you continue to run at a deficit, the debt continues to rise with (and faster than) inflation.  Upper class can benefit if they hold debt, because they typically can avoid running at a deficit and benefit from things like bulk purchasing and more advantageous spending patterns.  Middle and lower class citizens are unable to keep their household budgets in the black and thus, their deficits will continue to cause debt increases outpacing inflation.

This is the primary reason I was against the bailouts in 2008.  I know it would have been painful, but there will be a more painful crash coming and it may literally end the US as an economic world power if we continue down the road of $1.9T stimulus packages.
Click to expand...
You totally get it.

The monetary policies of the Fed are the primary reason for exacerbating wealth inequality in the past 10+ years. Asset and price inflation that is not counted in CPI has disproportionately benefitted the wealthy.

With monetary policy having run out of steam...of course now the classic political countermeasure is the current fiscal policies that target low/middle class. (No coincident that Janet Yellen is now Treasury Secretary). Since the low/middle class have fewer assets...more printed money will be chasing same/fewer goods and services...ergo CPI inflation.

So-called "stimulus" checks are here to stay...they'll just be called by different names like you say to try and pull the wool over the eyes of the public (i.e. American Families Plan/American Jobs Plan).

 
timschochet said:
We don’t need any of the solutions suggested here IMO. 
What we need to do is keep growing the economy of the point where the debt becomes smaller by comparison. How best to grow the economy? Free trade. Open immigration. Capitalism. Let the market have its way. Invest in infrastructure and alternatives to carbon fuels and education. 
 

These aren’t complicated solutions, but do we have the will to carry them out??
Click to expand...
This is the lazy thinking the GOP keeps using every time they explode the deficit with a new tax cut. 

 
The Commish said:
Have a friend pretty high up at HHS now (worked for the Chairman of the Joint Chiefs while serving) and he says the entire agency should be shut down.  
Click to expand...
Are you talking about Health and Human Services or Homeland Security? 

 
Cut defense spending by about 200mm and raise taxes on incomes over $1mm.  Think that won't cover the entire cost but reasonable sized deficits are actually good for the economy.  

 
Stoneworker said:
Might be helpful to use accurate numbers...

* 2020 deficit was actually $3.3 trillion.

* 2021 was already at $1.7 trillion and that was only through March.

The only way out of this is massive inflation and currency devaluation within 10 years. The economy will slow to a crawl for at least a decade.

https://bipartisanpolicy.org/report/deficit-tracker/#:~:text=The federal government ran a deficit of %243.1 trillion in,of the economy since 1945.
Click to expand...
Thank you. The article I posted and referred to was from February of last year. I used for its detail compared to other sources. I suppose (but don't know) the added spend was based on COVID stimulus and vaccine development.

 
This is interesting. 

At a Glance

The Internal Revenue Service (IRS) promotes compliance with tax laws in many ways: It verifies information provided by taxpayers, works to prevent the distribution of refunds that are claimed erroneously, audits tax returns, and attempts to collect unpaid taxes and unfiled returns, among other efforts. In this report, the Congressional Budget Office examines how those activities declined over the 2010–2018 period as the service’s resources decreased and how changes to the IRS’s budget could affect federal revenues.

In its most recent report on uncollected taxes, the IRS estimated that an average of $441 billion (16 percent) of the taxes owed annually between 2011 and 2013 was not paid in accordance with the law. Most of the unpaid taxes were the result of taxpayers’ underreporting their income. Through enforcement, the IRS collected an average of $60 billion of those unpaid taxes annually, reducing the gap between taxes owed and taxes paid in those years to $381 billion per year, on average.

The IRS’s appropriations have fallen by 20 percent in inflation-adjusted dollars since 2010, resulting in the elimination of 22 percent of its staff. The amount of funding and staff allocated to enforcement activities has declined by about 30 percent since 2010.

Since 2010, the IRS has done less to enforce tax laws. Between 2010 and 2018, the share of individual income tax returns it examined fell by 46 percent, and the share of corporate income tax returns it examined fell by 37 percent. The disruptions stemming from the 2020 coronavirus pandemic will further reduce the ability of the IRS to enforce tax laws.

CBO estimates that increasing the IRS’s funding for examinations and collections by $20 billion over 10 years would increase revenues by $61 billion and that increasing such funding by $40 billion over 10 years would increase revenues by $103 billion.

CBO’s estimates are subject to considerable uncertainty and only capture the direct effect of enforcement activities. The IRS’s enforcement activities have an indirect effect on the tax gap by discouraging taxpayers from making misstatements on their returns.
Click to expand...
So, not RAISING taxes...merely enforcing the current code.

 
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