James Pethokoukis

Politics and policy from inside Washington

Balance the U.S. budget? I did it in under a minute

November 15, 2010

So I took a crack at the budget simulator cooked up over at the NYTimes Web site. It starts out with a projected 2015 deficit of $418 billion and a projected 2030 deficit of $1.355 trillion. My goal was to do it through 100 percent spending cuts.

nytimes

Here is what I did:

1.  Eliminated earmarks  ($14 billion)

2. Cut the pay of civilian workers by 5 percent ($17 billion)

3. Reduced the federal workforce by 10 percent ($15 billion)

4. Reduced nuclear arsenal and space spending  ($38 billion)

5. Reduce military to pre-Iraq War size and further reduce troops in Asia and Europe ($49 billion)

6. Reduce Navy and Air Force fleets ($24 billion)

7.  Cancel or delay some weapons programs ($18 billion)

8. Reduce the number of troops in Iraq and Afghanistan to 60,000 by 2015 ($149 billion)

9. Enact medical malpractice reform ($13 billion)

10. Increase the Medicare eligibility age to 68  ($56 billion)

11. Reduce the tax break for employer-provided health insurance ($157 billion)

12. Cap Medicare growth starting in 2013 ($562 billion)

13. Raise the Social Security retirement age to 70 ($247 billion)

14. Reduce Social Security benefits for those with high incomes ($54 billion)

15. Tighten eligibility for disability ($17 billion)

16. Use an alternate measure for inflation ($82 billion)

In the end, my budget would have a minuscule 2015 deficit of $80 billion and a 2030 surplus of $187 billion. Now I would have preferred an option for deeper domestic spending cuts. The Heritage Foundation has ideas for over $300 billion worth. And I think eliminating hundreds of billions of tax breaks and lowering tax rates across the board would boost growth and revenue. The simulator only lets me use the Bowles-Simpson plan which would lower rates by cutting tax expenditures —  but uses some of the dough for deficit reduction. Plus, the simulator assumes no impact on growth from higher taxes or lower taxes. Also, there is no doubt the Medicare cuts would be rightly labeled as “rationing.”  But Americans really have only two choices, I think: severe government healthcare rationing (since right now healthcare costs are rising much faster than GDP growth) or voucherization.

The simulator also shows how tough it is to balance the budget through tax increases alone. If you went for every tax increased offered, you would still have a slight deficit in 2030. And again, that assumes zero impact on economic growth from a) letting all the Bush tax cuts expire; b) eliminating tax breaks; c) adding a national sales tax, carbon tax and bank tax. That is a fantasy. Letting all the Bush tax cuts expire, for instance, would probably knock 2-3 percentage points from GDP next year.

Comments

It was missing a number of options: closing the Departments of Education, Labor and Commerce; killing the TSA and making Homeland Security much smaller; consolidating various intelligence and law enforcement agencies (do we really need ATF separate from FBI?). Not to mention countless micro-programs enacted out of earmarks and persisting out of inertia.

Don’t trim, kill.

Posted by caseym54 | Report as abusive
 

The way to reduce Medicare costs is to allow balance billing and cap the payments. What would happen is that some doctors and hospitals would continue to accept Medicare payment for the poor elderly but would charge extra to those who could pay. In addition, those who were willing to pay extra would not be limited to those willing to accept the low reimbursement. There could even be a program to forgive student loans for those medical graduates willing to accept lower payments. The French have a similar system that is based on fee for service although there are HMO type clinics for those who prefer that model. The market mechanism avoids moral hazard and fee-for-service keeps the patient at the center of the transaction.

Posted by mtkennedy1 | Report as abusive
 

How about these:

- Cutting lavish White House galas with A-List entertainers to once a month: savings $145 trillion

- Reducing funding to Hamas, Hezbollah and other terror groups: savings 40 quadrillion durkas ($14.95)

- Auctioning off access to Obama’s college transcripts, birth certificate and invoice for ghost-writer Bill Ayers: added revenue $120 million

- Eliminating attendance of globe-trotting Greenhouse Gas Conferences: savings $50 billion (and 120 zillion carbon footprints)

- Burn down the U.S. Mint printing press: value of dollar +$1.00

- Eliminate government mandate of corn purchases for biofuel: cost of food -50%

- Revoke ban on incandenscent lightbulbs: savings on handling toxic waste from CF bulbs $12 billion

- Get the heck out of the way of capitalism: result GDP x2.3

- Have the Pentagon run a bake sale: savings $0 (but long-term liberal bumper-sticker fantasies finally coming true: priceless)

Posted by KorlaPundit | Report as abusive
 

10. Medicare eligibility age to 68 ($56 billion)
12. Cap Medicare growth starting in 2013 ($562 billion)
13. Raise the SS retirement age to 70 ($247 billion)
14. Means testing SS benefits ($54 billion)

919 billion in cuts

http://www.wikipedia.com: 2010 budget
677.95 billion – Social Security
453 billion – Medicare
290 billion – Medicaid

1421 billion in outlays

NO WAY IN HELL THE GEEZERS WILL ALLOW YOUR CUTS TO OCCUR!!!!!

Posted by timstevens | Report as abusive
 

Well I tried this but it is written for/by a liberal. I can’t cut the Department of Education, the EPA, NPR, NEH, Department of Commerce, Department of Labor, OSHA or TSA.

It’s worthless.

Posted by bsprowl | Report as abusive
 

Balancing the budget is a good idea, but it does nothing about the future. Bad behavior will eventually surface after the budget is balanced.

The Postal Service sucks. Maybe outsource postal services to the states or Federal Express or UPS.

Shut down one executive department. Maybe Education, Commerce, Interior, Health & Human Services).

Abolish the NEA and the NEH, at least.

Have line item veto.

Stopping future bad behavior is key to balancing the budget.

Posted by subrot0 | Report as abusive
 

This is common sense… therefore, the Federal Government will not do it.

Posted by fastred | Report as abusive
 

You must live in na na land. If you think reducing federal pay and reducing the federal workforce by 10% is going to fix anything good luck. If you have any clue how thew federal works, reducing anything just brings work stoppage to anything else. Try this, reduce the 2100 federal agencies down to 7. Reduce the total federal workforce by 85%. Make each federal agency become a profit center. Finally, only fund military operational locations and increase ROTC funding. Think profit, think security.

Posted by hiscross | Report as abusive
 

Cutting back on defense spending is dangerous, and would leave us exposed to additional attacks. A better way is to eliminate unnecessary agencies. The Department of Education, for example, is a waste of $90 or $95 billion a year. It’s spending may account for the fact that inflation in the education sector has outpaced inflation overall. Since 1964 tuition has increased 28-30x while overall inflation has been 7x. Government programs that flood money into a sector ultimately cause inflation in those prices. Eliminating those programs, and the agencies that run them will reduce prices, and enable businesses to make calculations based on market realities rather than government policies.

So get rid of agricultural price supports, scale back or eliminate the Dept. of Agriculture. Eliminate the FCC. Eliminate most of the Dept of Commerce, Dept of Labor, Dept of Energy, Dept of Health and Human Services, HUD, and you’ll be off to a good start.

Move to a flat tax that is a straight percentage. The IRS can be reduced to a computer programmer and few mainframe operators. Lawyers and accountants who specialize in tax matters can find new employment.

Tear into the budget like Max Perkins editing Tom Wolfe, and you can do for the government what Perkins did for Wolfe.

Posted by tehart | Report as abusive
 

My personal suggestion to cut government spending would be to stop paying Congressman and Senators lifetime pensions for serving only one term in their legislative body.
My Social Security eligibility age was pushed back two years by Congress, why should they be exempt from the sacrifice they ask of us.
Our representatives should be required to be a part of a federal retirement plan for the years they serve, and only get benefits based on those years served, not a full pension with lifetime medical benefits.

Posted by kjatexas | Report as abusive
 

Just a comment on the gadget…

You can “win” with a 100% liberal viewpoint, quite easily in fact…
You CANNOT “win” with a 100% conservative viewpoint.

I wonder why that is? No.. wait… no I don’t.

Posted by TehSinner | Report as abusive
 

I would eliminate funding for the Fed Dept’s of Education, Commerce, Homeland Security (isn’t the Dept of Def’s job?), Labour, Energy (was supposed to wean us away from foriegn oil sources…fail), and much of the same spending cuts as Mr. P uses…and would have been able to deeply reduce taxes to a flat rate for those above the poverty level and a much lower national sales tax…as well as a couple of others…

Rich Vail
Pikesville, MD
http://thevailspot.blogspot.com

Posted by rvail136 | Report as abusive
 

There are regulatory considerations not directly tied to either taxes or budget that are equally helpful or harmful to the economy and the deficit. For example, the ban on drilling and exploration, both off-shore and in much of Alaska, is a huge economy killer. The obstacles in the way of oil shale drilling, building of refineries, and the like are not on the budget-balancing checklist either, but their effects are enormous. Government intrusion into business and technology on a million fronts weigh down the economy, and that is where revenue comes from, right?

Businesses are not going to hire when they are faced with the burdensome prospects of the healthcare bill, cap and trade, card check and all the other economy-destroying statist policies being forced down our throats, not just by the Democrats, but by the GOP as well.

Until enough anger bubbles up in the form of grassroots revolutions like the Tea Party and others, this downward spiral into fiscal insolvency will continue. The robber barrons are in Congress and the bureaucracies these days.

Posted by KorlaPundit | Report as abusive
 

(1) Eliminate the Dept of Education
(2) Eliminate the TSA
(3) Eliminate the USDA
(4) Eliminate or severely scale back the EPA
(5) Cut the Dept of State in half
(6) Eliminate the IRS
(6a) Eliminate the income tax
(7) Implement a national sales tax

Posted by pabarge | Report as abusive
 

Eliminate the United States Marine Corps.
Eliminate the Central Intelligence Agency.
Ban the legal concept of corporate personhood.
Replace regressive taxes on industry and labor with progressive taxes on wealth and property.
Ban corporate PACs and corporate contributions to political campaigns.

Spend money saved and raised on education, health, and infrastructure.
Lower the retirement age to 60.

Posted by Yellow105 | Report as abusive
 

(1) Eliminate the Dept of Education. Let the free market determine the quality of education.

(2) Eliminate the TSA. Let the free market determine how many planes crash each month.
(3) Eliminate the USDA. Let the free market determine how many deaths from salmonella and e.coli are acceptable.
(4) Eliminate or severely scale back the EPA. Let the free market determine how much mercury in the air and water is acceptable.
(5) Cut the Dept of State in half. Kick the AIPAC agents out and you have a winner.
(6) Eliminate the IRS. Hmmm. OK!
(6a) Eliminate the income tax and tax wealth and property instead.
(7) Implement a national sales tax. (On items that are made by non-union factories.)

Posted by Yellow105 | Report as abusive
 

Reduce SS benefits for the wealthy? Are you going to cut their contribution and their company’s contribution too or do you plan on just stealing their money and giving it to someone else?

Posted by SmarterThanLibs | Report as abusive
 

1. Eliminated earmarks ($14 billion) —Good Idea

2. Cut the pay of civilian workers by 5 percent ($17 billion) —Not enough—try 10%, and this will bring fed pay back to private industry standards, $34 billion.

3. Reduced the federal workforce by 10 percent ($15 billion)—Not Enough—Try 15% and you will be approaching pre-2000 levels.

4. Reduced nuclear arsenal and space spending ($38 billion)—Are you daft?— Remove your only real deterrent and remove the ONLY successful government program which brings in $7 of business and taxes for every $1 of taxpayer money?

5. Reduce military to pre-Iraq War size and further reduce troops in Asia and Europe ($49 billion)—The reason the US had such a problem with the terrorist wars is because Clinton cashed in on the “peace dividend” and gutted the military. In fact your military is still 25% smaller than it was in 1989 when the Soviet system collapsed. All the experts (Democrats) thought that the military was unnecessary since the Soviets collapsed, instead, one of the 2 controlling influences on the globe ceased to have power and all it’s satellite countries had the restraints removed that the Soviets instilled to keep them under control. Now, the world is 10 times more volatile and you want to reduce the size of your military? Have you been asleep since 1990?

6. Reduce Navy and Air Force fleets ($24 billion) See response above, and add to this if you cut anymore, you might as well give up.

7. Cancel or delay some weapons programs ($18 billion)—not a bad idea, but do you want the most “cost effective” military, or the most advanced one. I will pick the most advanced over cost effective any day of the week.

8. Reduce the number of troops in Iraq and Afghanistan to 60,000 by 2015 ($149 billion)—LOL—Again, wars do not follow policy. Cut the troops and just admit defeat, or keep the troops and try actually winning a war.

9. Enact medical malpractice reform ($13 billion)—About time.

10. Increase the Medicare eligibility age to 68 ($56 billion)—Again, about time.

11. Reduce the tax break for employer-provided health insurance ($157 billion)–why have it employer provided in the first place, just let insurance companies sell across state lines and give a credit for low income earners. Probably save the US $250 billion.

12. Cap Medicare growth starting in 2013 ($562 billion)—again, about time.In fact toss medicare and go the private market route.

13. Raise the Social Security retirement age to 70 ($247 billion)—Add to this, means testing.

14. Reduce Social Security benefits for those with high incomes ($54 billion)—See above.

15. Tighten eligibility for disability ($17 billion)—See above.

16. Use an alternate measure for inflation ($82 billion)—Yeah, try inflation based on a house wives budget. If she can only afford beans and weenies, the inflation is too damn high. If she can afford smokies and deluxe BBQ baked beans, inflation is low.

Posted by Eh2Zed | Report as abusive
 

Get rid of Fannie May and Freddie Mac.

Posted by ConcernedVoter | Report as abusive
 

Privatize the space launch industry. NASA can’t or won’t do it in a cost-effective or timely way. This would replace large costs with large tax revenues from the private launch companies, and we would encourage private innovation, which is the engine of a super economy. It’s the opposite of bureaucracy. Then NASA can focus on its prime directive: making Muslims proud of their contributions to the aerospace industry.

Posted by KorlaPundit | Report as abusive
 

KorlaPundit is a genius! Look it up.

Posted by Sioux | Report as abusive
 

I think there is a much better way to balance the budget.

1. Outsource all Goverment jobs to China
2. Creat Chinese outsourced Medical Centers at Walmart for all medicare and even consider using Chinese hearbal medicnes for Medicaid.
3. Sell Las Vegas to china in exchange for all the debt we owe them and all previous casino owners can divide up JP Morgan Chase.

Posted by MrHooHaa | Report as abusive
 

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
  •