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