Sunday, May 23, 2010

How Would You Stabilize The National Debt?

The Committee for a Responsible Federal Budget has put together a fairly realistic and comprehensive budget simulator with the goal of stabilizing the debt at 60 percent of GDP by 2018. My own budgetary decisions are reflected below:
I started with a budget path of reducing our troop levels in Iraq and Afghanistan as quickly as possible, letting the 2001 and 2003 Bush tax cuts on upper-level earners expire and reducing lower-rate cuts by half while tying regular discretionary spending growth directly to inflation. From there I cut all unnecessary defense and foreign aid spending while maintaining veterans benefits and increasing spending on homeland security. The only domestic cuts I made were to reduce food stamp benefits to 2008 levels and I did pay to institute a new jobs bill.

For social security I raised the normal retirement age and required all new state and local workers to pay in while protecting all low and medium earner benefits. For health care I expanded coverage to 5 million additional people, reduced spending, enacted medical malpractice reform and replaced traditional Medicare with insurance vouchers. I cut all other spending except for NASA's Moon and Mars landing projects (I should probably have cut those too but they're relatively cheap and personally dear to me).

For taxes I enacted Cap and Trade, increased the gas tax by 10 cents a gallon, reformed the tax code and instituted a two percent surtax on earnings above the Social Security payroll tax cap. Then I converted the mortgage interest deduction to a 20% credit, limited itemized deductions for high earners and biofuel subsidies, made R&D tax credits for private businesses permanent, extended college tax credits and began the excise tax on high cost employer sponsored health insurance plans in 2013 instead of 2018 as it now stands.

I have to admit that this was a lot harder than I thought it would be. It's easy for people in both political parties to condemn Washington for profligate spending but making the tough choices to rein in our debt really makes you agonize over your priorities (I went back through my budget three times to be able to keep those NASA programs without unfairly overtaxing high earners or cutting benefits for children, the poor, the unemployed and education and even then I still had to reduce food stamp spending). I encourage everyone to try it out here: the simulator keeps track of your budget in real time as you check boxes in eight categories to increase or decrease spending. You might be surprised to learn how you would go about doing things if you were actually the President of the United States. This simulation made me glad that I'm not.



Anonymous said...

This is a pretty interesting one... I do not share your lunar obsession though.

JBW said...

My obsession is much more Marscentric, one L. I just see a lunar colony as an inevitability for our species and a relatively close dry run (no pun intended) for an eventual Mars mission.