YOU Balance the US Budget/Reduce the Deficit SPECIFICS

[Independent]

Quote:

Originally Posted by Htown Harry In the federal budget jargon, the 401 / IRA / Roth revenue foregone falls into the category "tax expenditures". We see them as deductions and credits on our tax forms. It's about $40 billion a year, in the short term. See #7 on this list of 5-year costs: Individual Tax Expenditure and Function Total Amount (2010-2014) (Billions of dollars) Tax exclusion for employer contributions to health insurance: $659.4 billion Deduction for mortgage interest on owner-occupied houses: $484.1 billion Lower tax rates for dividends and long-term capital gains: $402.9 billion Tax exclusion of pension contributions (defined-benefit): $303.2 billion Earned income tax credit: $268.8 billion State and local tax deductions: $237.3 billion Exclusion of pension contributions, 401(k)-style: $212.2 billion Exclusion of capital gains at death: $194 billion Charitable deductions: $182.4 billion Untaxed Social Security and railroad retirement benefits: $173 billion

Good stuff, thanks for posting.

Like you, I'm disappointed and discouraged that Ryan would claim to be "serious" about broadening the tax base, and then forget to list the changes he'd make.

[JOHNNIE36]

Most of this budget and defecit thing goes over my head but heard this on NBC this morning. That "stock expert" guy Jim Kramer and some lady "expert" were telling the audience (us) that we absolutely have to raise the debt ceiling in order to survive as a country. Some of the European Nations didn't do this and it put them in financial trouble. The premise for this statement is that the US has enough resources to cover our total debt but that money is so cheap to borrow we're crazy to not borrow more. Guess it's like being "house poor" where you've got a lot of houses with tons of mortgages but you have to continue to buy more houses because money is so cheap to borrow. Some day you have to pay the piper. I get confused.

[Purron]

Has anyone considered cuts in spending on education? It appears to be one of those "sacred cows" which makes me think we might be overdoing it. So much talk about how education is our future...but I'm just not so sure spending more will yield the desired result.

This link to a Fox News blog (yeah, I know ) indicates we spend more on education than defense. Is that right?

Taxpayer Calculator: Education Spending in Obama's 2012 Budget - FoxNews.com

[FinanceDude]

Quote:

Originally Posted by Purron Has anyone considered cuts in spending on education? It appears to be one of those "sacred cows" which makes me think we might be overdoing it. So much talk about how education is our future...but I'm just not so sure spending more will yield the desired result. This link to a Fox News blog (yeah, I know ) indicates we spend more on education than defense. Is that right? Taxpayer Calculator: Education Spending in Obama's 2012 Budget - FoxNews.com

Here's what the usual replies are:

We need to cut education spending: I guess you don;t care about the kids so you?

We need to cut defense spending: So, you are someone who takes their freedom for granted, I guess........

We need to cut Social Security: So, you're ok with your parents living on the street?

We need to cut Medicare: So, senior citizens should all just die because it would ease the burden on the rest of us?

We need to cut govt: How will we survive, we need all that govt to keep an eye on all those private sector fat cats!

And so on.........

[Purron]

Quote:

Originally Posted by FinanceDude Here's what the usual replies are: We need to cut education spending: I guess you don;t care about the kids so you? We need to cut defense spending: So, you are someone who takes their freedom for granted, I guess........ We need to cut Social Security: So, you're ok with your parents living on the street? We need to cut Medicare: So, senior citizens should all just die because it would ease the burden on the rest of us? We need to cut govt: How will we survive, we need all that govt to keep an eye on all those private sector fat cats! And so on.........

Yeah, I know FinanceDude. This is why we're getting nowhere fast. Our esteemed representatives in DC (both sides of the aisle) spend time going round and round about relatively small $$ stuff that packs a big political punch while ignoring the elephants in the room.

Here's the reality - its political suicide to take the necessary steps as far as taxes and spending so we'll have to suffer through more diversionary antics and posturing. Ugh.

[Midpack]

Quote:

Originally Posted by Purron Here's the reality - its political suicide to take the necessary steps as far as taxes and spending so we'll have to suffer through more diversionary antics and posturing. Ugh.

You're probably right, but isn't that about the same as waiting for another "bubble" of sorts? You'd think we might learn after the one we just went through 2006-2008...

[snodog]

I'm far from an expert but occasionally I dabble in the dark arts of macroeconomics and I've been studying Warren Mosler.



Mosler's views:

• Most people think of government as a family or individual when it is more like a scoreboard. When your team kicks a field goal to go ahead 10-7 does the staduim now have 3 less points to give out? The government never does OR doesn't have any money it just keeps track of who has what.
• Taxes function to regulate aggregate demand, and not to raise revenue per se.
• Deficits are not inherently bad. The government deficit could just as easily be called private sector surplus.
• Surpluses lead to recessions and depressions. The Great Depression followed many years of surpluses. We had a recession in 1958 after a surplus, and we are still paying for the late 1990's surpluses.
• We are not leaving a debt burden to our children and grandchildren. Each generation consumes what it is able to produce. We are not sending cars back into 1948 to pay off World War 2.
• Balancing the budget now is Herbert Hoover economics and would be disastrous.
• High level people like Bernanke and even some politicians privately admit this is how our monetary system works.
• We do have a deficit problem. It is too small and taxes should be reduced and/or spending increased. How High “Should” the Deficit Be? - Mosler 2012

Mosler's 7 Deadly Innocent Frauds is a must read http://moslereconomics.com/wp-conten...oints/7DIF.pdf Mosler explains everything LOGICALLY and in a manner that does not require any prior knowledge or understanding of the monetary system, economics, or accounting. The Center of the Universe

[Independent]

Quote:

Originally Posted by Purron Has anyone considered cuts in spending on education? It appears to be one of those "sacred cows" which makes me think we might be overdoing it. So much talk about how education is our future...but I'm just not so sure spending more will yield the desired result.

I count three "comprehensive lists" in this thread. Two of them mentioned education:

Quote:

Originally Posted by Independent Eliminate most federal education spending, including loan subsidies (keep Pell grants and some education research).

Quote:

Originally Posted by flyfishnevada Trash Obamacare, the Departments of Education and Environmental Protection ...

But, Education is a very small portion of Federal spending. IMO, we can't close the deficit without raising taxes or cutting Medicare and Defense.

[Htown Harry]

It's off-topic to some degree, but I found this new GAO report interesting:

State and Local Governments' Fiscal Outlook: April 2011 Update

The U.S. Government Accountability Office (GAO) has released the latest update on the results of its long-term fiscal simulations for the state and local government sector. According to the GAO, the simulations show that, like the federal government, the state and local sector faces persistent and long-term fiscal pressures.

http://www.gao.gov/new.items/d11495sp.pdf

Yes, it's just an economist's 50-year black box model. Nonetheless, I found it interesting in that the same root issue is making for a cloudy outlook at all levels of government - health care spending growth:

Quote:

The decline in the sector’s operating balance over time is primarily driven by rising health-related costs. Because most state and local governments are required to balance their operating budgets, the declining fiscal conditions shown in our simulations suggest the fiscal pressures the sector faces and foreshadow the extent to which these governments will need to make substantial policy changes to avoid growing fiscal imbalances.....The primary driver of long-term fiscal challenges for the state and local government sector continues to be the projected growth in health-related costs. Specifically, state and local expenditures on Medicaid and the cost of health insurance for state and local retirees and employees are projected to grow more than GDP. The model’s simulations also show that the sector’s health-related costs will be about 3.7 percent of GDP in 2010 and 8.3 percent of GDP in 2060. In contrast, we found that other types of state and local government expenditures—including wages and salaries of state and local workers and investments in capital goods—are expected to grow slightly less than GDP. The model projects that the sector’s nonhealth-related costs will be about 10.9 percent of GDP in 2011 and 7.1 percent of GDP in 2060.

Ryan proposes to put firm federal Medicaid spending caps in place and change expenditures to the states into a block grant. While that move may help the federal budget, it could easily make things even worse at the state and local level. Or better, given the right policy changes by the states.

[Purron]

Quote:

Originally Posted by Independent I count three "comprehensive lists" in this thread. Two of them mentioned education

Thanks for pointing this out. I scanned the tread but didn't catch this.

[GregLee]

Quote:

Originally Posted by Purron Here's the reality - its political suicide to take the necessary steps ...

That phrase "political suicide" is a code. It means that you favor some course of action that most people are against (which in a democracy puts you at a disadvantage).

[Purron]

Quote:

Originally Posted by GregLee That phrase "political suicide" is a code. It means that you favor some course of action that most people are against (which in a democracy puts you at a disadvantage).

Right you are. Most Americans don't want to pay higher taxes or give up government spending programs. Like someone who's overweight but doesn't want to excercise or give up chocolate cake.