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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  1. Got an even better idea: eliminate all but three departments (Defense, State, and a catch all third department to be created). That saves over a trillion dollars!

  2. Thanks for the reply TP. I believe most of our departments could be cut, as you are suggesting, however I suspect any savings seen would quickly be lost by a new "catch-all" department. Politicians would be great at throwing softballs into such a thing.

    It's hard to believe there is nearly $3 trillion more in spending than what I have already listed! About a quarter of that appears to be pension payments. We should do away with pensions for new hires, (might save as much as $70B/year if IBM's example carries), and negotiate reduced payments to existing pensioners before the program flat out fails, after all it is just another impossible pipe dream. If we could save 20% on negotiations that would be another $185 billion.

    That brings us up to between $1045 and $1161 billions in savings. :)