Balance the U.S. budget? I did it in under a minute

June 2, 2011

James
Pethokoukis

Politics and policy from inside Washington

 

So I took a crack at the budget
simulator
cooked up over at the NYTimes Web site. It starts out with a
projected 2015 deficit of $418 billion and a projected 2030 deficit of $1.355
trillion. My goal was to do it through 100 percent spending cuts.

nytimes

Here is what I did:

1.  Eliminated earmarks  ($14 billion)

2. Cut the pay of civilian workers by 5 percent ($17 billion)

3. Reduced the federal workforce by 10 percent ($15 billion)

4. Reduced nuclear arsenal and space spending  ($38 billion)

5. Reduce military to pre-Iraq War size and further reduce troops in Asia and
Europe ($49 billion)

6. Reduce Navy and Air Force fleets ($24 billion)

7.  Cancel or delay some weapons programs ($18 billion)

8. Reduce the number of troops in Iraq and Afghanistan to 60,000 by 2015
($149 billion)

9. Enact medical malpractice reform ($13 billion)

10. Increase the Medicare eligibility age to 68  ($56 billion)

11. Reduce the tax break for employer-provided health insurance ($157
billion)

12. Cap Medicare growth starting in 2013 ($562 billion)

13. Raise the Social Security retirement age to 70 ($247 billion)

14. Reduce Social Security benefits for those with high incomes ($54
billion)

15. Tighten eligibility for disability ($17 billion)

16. Use an alternate measure for inflation ($82 billion)

In the end, my budget would have a minuscule 2015 deficit of $80 billion and
a 2030 surplus of $187 billion. Now I would have preferred an option for deeper
domestic spending cuts. The Heritage
Foundation has ideas
for over $300 billion worth. And I think eliminating
hundreds of billions of tax breaks and lowering tax rates across the board would
boost growth and revenue. The simulator only lets me use the Bowles-Simpson plan
which would lower rates by cutting tax expenditures —  but uses some of the
dough for deficit reduction. Plus, the simulator assumes no impact on growth
from higher taxes or lower taxes. Also, there is no doubt the Medicare cuts
would be rightly labeled as “rationing.”  But Americans really have only two
choices, I think: severe government healthcare rationing (since right now
healthcare costs are rising much faster than GDP growth) or voucherization.

The simulator also shows how tough it is to balance the budget through tax
increases alone. If you went for every tax increased offered, you would still
have a slight deficit in 2030. And again, that assumes zero impact on economic
growth from a) letting all the Bush tax cuts expire; b) eliminating tax breaks;
c) adding a national sales tax, carbon tax and bank tax. That is a fantasy.
Letting all the Bush tax cuts expire, for instance, would probably knock 2-3
percentage points from GDP next year.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: