Thursday, May 31, 2012

Cuts, Cuts, Cuts!

I had some ideas for budget reforms.  What do you think?
  • End all wars and military operations in the Middle East, Asia (Korea, Japan, etc), Europe (Germany, France, Poland, Italy, etc), Africa, and South America. Permanently shutter all bases in same countries - return equipment to the USL48, and sell bases to those countries. Cancel all contracts for new weapons programs. Replace them with maintenance programs for existing equipment. (Save $500-600B+/yr)
  • End all foreign aid. (Save $50-60B/yr)
  • End all energy, agriculture (sugar, corn, etc), military-industrial, prison-industrial and big-pharma subsidies. (Save $37-40B/yr)
  • Abolish the TSA, FDA, ATF, DEA, EPA, FCC, FTC, DOE (edu), HUD, FHA, Fannie and Freddie and all rules and regulations created by those departments or by the executive branch in the name of those departments. (Save $190.5-200B/yr)
  • Abolish the US Postal service - or spin it off completely. No subsidies. (Save $12-15B/yr)
  • End the drug war. (Save $15-20B/yr)
  • Leave the UN and NATO. (Save $0.5-1B/yr)
  • All other department budgets frozen - all increases cancelled, all federal wage hikes cancelled.
That's $805-931B in cuts right there. Now if the decrease in regulations encourages businesses to start up or expand, then the economy may pick up and federal revenues could go past the highs of 2007, maybe to $2.7 or $2.8 trillion. That is a lot of money, but even with that and all of the cuts, we'd still be something like $200B in the hole every year.

Can we do better than that?  Well I have another idea.  The federal government employs 2.1 million civilian workers.1 Total wages and benefits paid to executive branch civilians amounted to $236 billion in 2011.2  Thus the average annual compensation for a federal employee is $112,381.  Let's knock that down to the median US household income of $50,000,3 and eliminate all benefits (no healthcare, no retirement). 

That comes out to about $130B, but since I've already cut 21 percent of the government above, let's reduce these savings by 21 percent to account for that.  This knocks a further $103B off of our annual deficit, and should heavily reduce the number of career politicians and bureaucrats too.

Cutting $908-$1034 out of the budget, our deficit could go down to around $100B.  Not a bad start!


  1. Budget of the U.S. Government, Fiscal Year 2012, Analytical Perspectives (Washington: Government Printing Office, 2011), p. 110. Excludes the U.S. Postal Service
  2. Budget of the U.S. Government, Fiscal Year 2012, Analytical Perspectives (Washington: Government Printing Office, 2011), p. 112. Excludes the U.S. Postal Service.
  3. 691 - Money Income of Households--Median Income by Race and Hispanic Origin in Current and Constant (2009) Dollars
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Tuesday, May 22, 2012

The National Debt and Generational Responsibility

I've been thinking about the national debt.  It occurs to me that each time we increase the limit, we are borrowing that money from some future generation, saddling them with our problems.  I came up with a rough solution to this travesty.

We could implement a constitutional amendment does the following:
Any increase in the national debt limit is hereby tied to a flat increase in all brackets of the income tax. 
  1. This increase in taxes is the rate at which the increase in the national debt will be paid off in 4 years.
  2. This new tax revenue cannot be used for any other spending or appropriation - the funds may not be raided by any agency, and must be used to pay down the debt.
An amendment such as this would ensure that any new debt added must accompanied by a tax that is paid towards the debt every year.  This ensures each generation pays for its own borrowing rather than kicking the can to their children or grand children.

Not that I like taxes, but at least if they were constituionally tethered there would be a "built in plan" to prevent the national debt from getting out of control.  I am not silly enough to think this payment guaranty would work - I am sure that politicians will screw it up - however this would ensure every American would feel the bite of borrowing, and my guess is that they would be up in arms about it. Maybe, just maybe, this would keep down the excessive borrowing and spending.

Again, this is very rough, but I am happy to hear your thoughts.

It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world.
- Thomas Jefferson