How I Solved the Federal Deficit Crisis in Less Than Five Minutes

Apparently, I need to be in Congress. Using a handy tool developed in 2010 by economists working with the New York Times, I clicked and calculated my way to a sane, reasonable budget that shows the current "crisis mode" budget talks are a political stunt, an obnoxious sham, and an absolute waste of time. In true bipartisan fashion, and recognizing that neither "all cuts" or "all tax increases" will get us back to an affordable amount of debt, I chose items that will please both parties, and other items that will irritate both parties. The overall plan is split 60/40 for tax increases, cutting back from a 50/50 split only because I did not go hard after social security or medicare cuts. Translation? This is a win for everyone, because neither side will be incredibly pleased, and we will have a surplus (even before accounting for economic growth) that will pay down the debt. Keep in mind, this took all of five minutes to do. There is no reason why our Congress, Republicans and Democrats, cannot come together to make this happen. Want to try your own hand at solving the budget crisis? Click on the NYT Budget Widget here. Here is my plan. Why the Republicans Will Be Grumbly I did not cut medicare or social security for anyone who relies on it. I slimmed back the military spending. I raised taxes, but only on the wealthy, and not as high as could be. Why the Democrats Will Be Grumbly I raised the retirement age for Social Security and the minimum age for Medicare, both to 68. They won't like that. I also reduced the cost of living adjustment for Social Security and cut benefits for wealthy Americans, so Social Security only goes to those who truly need it. Total Savings: $744 Billion for 2015 and $1.35 Trillion for 2030. Eat your heart out, Boehner and Obama. Here is the entire plan, with explanations from the actual program for descriptions: Eliminate earmarks Earmarks are lawmaker-directed spending items, often to finance local projects favored by a member of Congress.
2015 Savings: $14 billion
2030 Savings: $14 billion Eliminate farm subsidies Many economists argue that farm subsidies distort the workings of the market and largely flow to big agricultural businesses.
2015 Savings: $14 billion
2030 Savings: $14 billion Reduce nuclear arsenal and space spending Would reduce number of nuclear warheads to 1,050, from 1,968. Would also reduce the number of Minuteman missiles and funding for nuclear research and development, missile development and space-based missile defense.
2015 Savings: $19 billion
2030 Savings: $38 billion Reduce military to pre-Iraq War size and further reduce troops in Asia and Europe “This option,” according to the bipartisan Sustainable Defense Task Force, “would cap routine U.S. military presence in Europe and Asia at 100,000 personnel, which is 26 percent below the current level and 33 percent below the level planned for the future. All told, 50,000 personnel would be withdrawn.” The option would also reduce the standing size of the military as the wars in Iraq and Afghanistan wind down.
2015 Savings: $25 billion
2030 Savings: $49 billion Reduce Navy and Air Force fleets Under this option, the Navy would build 48 fewer ships and retire 37 more ships than now scheduled. Overall, the battle fleet would shrink to 230 ships, from 286. In addition, the Air Force would retire two tactical fighter wings and reduce the number of fighter jets it planned to purchase.
2015 Savings: $19 billion
2030 Savings: $24 billion Reduce the number of troops in Iraq and Afghanistan to 30,000 by 2013 Reducing troops by to 30,000 from 60,000 could save an additional $20 billion by 2030.
2015 Savings: $86 billion
2030 Savings: $169 billion Enact medical malpractice reform Many doctors believe so-called defensive medicine – ordering tests and procedures to avoid lawsuits – is a major reason health costs are so high. This option would begin to reduce the chances of large malpractice verdicts, and supporters believe, also reduce rising medical costs.
2015 Savings: $8 billion
2030 Savings: $13 billion Increase the Medicare eligibility age to 68 Those who favor raising the eligibility age for Medicare often say that Americans are living longer and should work longer. And, some say, the new health-care bill will allow people in their late 60s without employer-provided insurance to buy a policy through an exchange.
2015 Savings: $8 billion
2030 Savings: $56 billion Reduce the tax break for employer-provided health insurance This option would reduce the tax break for employer-provided health insurance, by slowly adjusting the cap, so that it increases at the rate of economic growth, rather than the growth in health costs – which tends to be significantly faster. Over time, more employer spending on health insurance would be taxed. 2015 Savings: $41 billion 2030 Savings: $157 billion Raise the Social Security retirement age to 68 The increase in longevity has caused some to favor higher eligibility ages for Social Security. This option would gradually raise the age from the currently planned 67 to 68. Supporters say that the change would go a long way toward fixing Social Security's shortfall, by reducing benefits and by encouraging people to work (and thus pay payroll taxes) for longer.
2015 Savings: $13 billion
2030 Savings: $71 billion Reduce Social Security benefits for those with high incomes “Currently, initial Social Security benefits are determined in a way that allows them to grow with economy-wide wage growth,” says the Committee for a Responsible Federal Budget, a private group in Washington. Under this option, workers below the 60th percentile of the lifetime earnings distribution would continue to have their retirement benefits grow over time with average wage increases. But the benefits of top earners would grow more slowly – with inflation – while benefits for workers just above the 60th percentile would grow at a rate between inflation and wage growth.
2015 Savings: $6 billion
2030 Savings: $54 billion Use an alternate measure for inflation Some economists believe that the Consumer Price Index overstates inflation, giving Social Security recipients larger cost-of-living increases than necessary. This option would use a different, lower inflation measure both for Social Security and in the tax code. Supporters say the lower measure is more accurate.
2015 Savings: $21 billion
2030 Savings: $82 billion Return the estate tax to Clinton-era levels Under President Bill Clinton, the estate tax exempted $1 million from any taxable estate. This level would not grow with inflation over time, subjecting more estates to the tax. The rate would start at 18 percent and climb to 55 percent, as it did in the 1990s. The 55 percent rate would begin at $3 million.
2015 Savings: $50 billion
2030 Savings: $104 billion Return rates to Clinton-era levels This option would return rates to their level under President Bill Clinton: 10 percent on capital gains for low-income households and 20 percent for everyone else, while dividends would again be taxed at the same rate as ordinary income.
2015 Savings: $32 billion
2030 Savings: $46 billion Allow expiration for income above $250,000 a year This option would allow the expiration of the Bush tax cuts for the top 2 percent or so of households on the income distribution – those making $250,000 or more. On average, the change would equal about 2 percent of a given household's pretax income.
2015 Savings: $54 billion
2030 Savings: $115 billion Payroll tax: Subject some incomes above $106,000 to tax When the payroll tax – which finances Social Security and Medicare – was created, it covered 90 percent of all income. Today, with a ceiling at $106,800, it covers closer to 80 percent. This option would gradually raise the ceiling, until 90 percent of income was again subject to the tax.
2015 Savings: $50 billion
2030 Savings: $100 billion Millionaire's tax on income above $1 million Currently, the top tax brackets starts at about $375,000. In past decades, it started at much higher income level, after inflation is taken into account. This option – which the House passed last year but the Senate did not – would create a new 5.4 percent surtax on income above $1 million.
2015 Savings: $50 billion
2030 Savings: $95 billion Eliminate loopholes, but keep taxes slightly higher This option is the same as the previous one – except that tax rates would be cut less, raising more revenue to reduce the deficit.
2015 Savings: $136 billion
2030 Savings: $315 billion Reduce mortgage deduction and others for high-income households The benefits of the mortgage-interest deduction (and several other tax breaks) flow mostly to high-income households – because they tend to have larger mortgages and have marginal income-tax rates. This option would reduce the value of some of those breaks to high-income households.
2015 Savings: $25 billion
2030 Savings: $54 billion Bank Tax This option would tax banks based on the size of their holdings and the perceived riskiness of those holdings. Larger, riskier banks would pay more tax, both to discourage them from taking big risks and to help cover the costs of future financial crises.
2015 Savings: $73 billion
2030 Savings: $103 billion