10 ways to cut the U.S. budget deficit

December 3, 2009

How to put the budget on a “sustainable path” from Jeffrey Frankel of Harvard (some excerpts):

First, auction off most greenhouse gas emission permits, rather than giving them away to firms (which would confer windfall profits).

Second, raise the gas tax.

Third, cut agricultural subsidies to rich farmers and agribusiness, saving money and improving economic efficiency.

Fourth, continue to cut expensive weapons systems that the military doesn’t want, but have in the past been kept because the suppliers are in the districts of influential congressmen.

Fifth, end manned space exploration.

Sixth, let the George W. Bush tax cuts for the rich expire as under current law.

Seventh, encourage hospitals to standardize around national best-practice medicine – to avoid unnecessary tests and procedures – using levers such as making Medicare payments conditional on best practices.

Eighth, limit or eliminate the tax-exemption for employer-paid health insurance (proposed by Senator McCain), at least the cadillac plans which are very expensive but don’t even pay off in health results (proposed by Senator Kerry).

Ninth, ideally, eliminate the tax deductibility of mortgage interest too.

Tenth, to save Social Security, raise the retirement age (just a little), tax higher incomes (just a little), and progressively index benefits for future retirees to price inflation, rather than to wage inflation (just a little).

Me: As Ryan Ellis of ATR notes, “Jeff frankel has 5 tax hikes totaling $500 bil per year, and 5 spending cuts totaling $50 bil per year. How fair!” Toss in a VAT, which Dems would love to do, and you talking near a trillion dollar in tax increases. I cant see how that is good for growth. More cuts!

3 comments

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I dunno, but by my count that makes $550B in savings when the deficit is well over a trillion… wouldn’t that still leave record-sized (prior to 2009) deficits? It’s time to make tough choices – slash and burn. Balance the budget and let the chips fall where they may. Tough problems need tough solutions and tough men and women to carry them out. Cutting debt – much like old age – is not for wusses. American people seem to have the will, if only some politicians would listen instead of getting side-tracked by re-election campaigns.

Posted by Not_American | Report as abusive

Gripe, gripe…at least he is trying with real suggestions…so you want cuts…define them!!

Posted by Chi Democrat | Report as abusive

Well some of these suggestions are ok but most would hurt. Example: mortage interest would hurt the housing industry as well as the tax payer. If I could not write off my interest I am not sure that I would have a house.
I think I should be able to write off all interest myself. My house hold should be no different than a business in some ways. If you could write off interest on a car load car sales would go up hink about it. What goes around comes around.
We need to cut the size of this monsterous government. 10% to 15% National sales tax for ALL, with NO deductions for anyone. Those making under $25000 a year pay no taxes, get rid of the IRS, WHOA what a savings that would be, get small business and large business back in the positions where the can once again create JOBS! for Americans. Put a halt to out sourcing our work force. Fair trade needs to be demanded. We have helped the other guy out long enough.
I tell you also we need to get rid of those greedy dirt bags in congress and get someone in that listens to the people. Need to cut their wages and benifits to match ours. This would soon make a big change in these greedy people.

Posted by Disacrat | Report as abusive