How Would You Solve the Debt Crisis?
I found an article by David Paul Kuhn today to be both enlightening, in that it is the fault of our politicians not the public for why the deficit problem is not solved, but also a pox in the conservative movement (likely because we, as a whole, reject the projected increased revenue from tax increases). We know there is a point of diminishing returns, when you increase taxes, and loopholes, to such a degree that you incentivize the transfer of income to vehicles that will lower taxes. See G.E.'s 2010 taxes. However, this is still an interesting exercise, try this application, and see how much you would reduce the 2015 budget deficit.
When given the choice between 31 major areas of the budget (notably not medicare, social security, and medicaid) I reduced the projected deficit from $625B to $85B.
When it came to income taxes, I attempted to create a flax tax rate of 15%, but this application did not permit that. However, I did reduce the deficit from $85B to -$121.7B. That is $206B in taxes! My strategy: increase the tax rate for everyone as close as I can to 15%, and not increase any that is already over 15% (no option to lower taxes)
Corporate taxes, no change. 14.7% is closer to 15% than 15.4%, and in a global economy it would be dangerous to give countries like China an edge over us
"Financial Crisis and Responsibility Fee," yes, I would impose this on those banks who accepted bailout money from the government. That's another $9B, down to $130.7B.
Carbon tax? No way! This shows just how this application does lean left, they have no similar "fair tax" option.
Sin tax on alcohol, well from the options, I would choose the 25 cents per ounce. I am hesitant to do this because I do not like to single out a particular industry, but I do not see this tax as being a significant burden, and if it does decrease alcohol sales and subsequent alcohol related accidents and crimes, maybe that is for the best. This raises another $6B, bringing the total to -$136.7B
Sugary drinks? Mrs. Obama may be behind this one, but surprisingly, I would support a 1/2 cent tax per ounce on soda pop. I worry that this is just because I do not drink soda, and I am simply trying to impose my preference for a healthy lifestyle on others; but as a person very involved in the fitness lifestyle, and because it is mostly children drinking soda, I believe it is worthy goal to steer children towards a healthier lifestyle. Also, this says I raise another $9B, giving me a -$145.7B deficit.
A VAT. This is another non-starter for me, I do not trust the federal government to have more taxing powers than they already have.
Estate tax? As Benjamin Franklin said: "In this world nothing can be said to be certain, except death and taxes." There is no option to eliminate this tax, so I would choose to give a continuation of the new tax rate at incomes over $5 million; however this would add $9B to the debt. Going from $145.7B to $136.7B.
Social Security
I found I would cover 112.5% of the social security shortfall. I would reduce starting level benefits .5% each year until they were reduced 25%, requiring people to slowly depend on themselves more rather than on government. Also I would adjust the Annual Cost of Living Increase (COLA) to be pegged to what people buy, rather than just a fixed set of goods. Finally, I would increase the age to 70, by 2048 (in reality I would like that to happen by 2020).
Total 2015 Budget Deficit: -$136,7B
Percentage of Long-Term Social Security Deficit Solved: 112.5%
You're Welcome.
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Comments :
Dec '10
Re: How Would You Solve the Debt Crisis?
This thing assumes GDP and tax compliance will stay the same regardless of tax rate and in addition to the lack of flat tax I didn't see an option to create private accounts for social security recipients under 55 or Ryan's Medicare solution.
I didn't really see the program offering any conservative options at all, which is a bummer because it looks like it could otherwise be a very interesting thought exercise.
Apr '11
Re: How Would You Solve the Debt Crisis?
-148 Billion and 0% soc sec because it didn't contain my solution which would be to return the system to social insurance _only_ (i.e. no longer a retirement account, but a way to pay for people who can not work due to disability) Combine that with an elimination of malpractice suits against doctors and a fully free market medical care system and you can shelve medicare/medicade and get the gov out of the healthcare business.
I could cut the gov down further with a better application. Maybe the Cato Institute will come up with one.
Nov '10
Re: How Would You Solve the Debt Crisis?
I got the deficit down to $71B just from cuts (though I would like something a bit more detailed). I only tried to get a 10% flat tax, though, so my surplus was only a bit more than $2B. Got 137.5% of SS deficit fixed, though.
Jul '10
Re: How Would You Solve the Debt Crisis?
The only problem is that it operates in a Static (Fixed size of the pie) mode.
It does not allow for Economic Growth caused by Lowering Tax Rates. Nor does it account for the Cost of Lower taxes factor for the Very Rich. That's right, when you lower taxes on the Very Rich it often becomes less expensive to pay taxes than to shelter money, so they pay the taxes instead and you get More (not less) revenue.
This application did none of that.
Jun '10
Re: How Would You Solve the Debt Crisis?
I am adamantly against eliminating malpractice suits. Having experienced medical care with no responsibility or accountability on the part of doctors I can tell you the quality of care can drop dramatically. Check out the problems associated with the "Feres Doctrine," the shield used by the military when it occasionally butchers it's own troops, to see what effect this has on accountability and quality of care.
Oct '10
Re: How Would You Solve the Debt Crisis?
Just on a lark, I went through this poll simply zeroing out items which are not within the enumerated powers of the federal government (including military operations without a declaration of war by Congress). I was down to balance before I got to the “REVENUES” page, where the Flash application crashed.
You need only look at the staff and board of advisors of the soi-disant “Program for Public Consultation” to see that they are enemies, and that their poll is consequently replete with static assumptions and limited choices which guide participants to their desired outcomes.
I don't know if subsequent pages allow one to address entitlements, but that's where anybody with any sense of the numbers knows you have to look first, not the discretionary dribs and drabs on the first page.
Oct '10
Re: How Would You Solve the Debt Crisis?
Congratulations. Once you allow yourself to be suckered into the assumptions of the left, you are into onanism. That is, an exercise that can produce no fruit.
Jun '10
Re: How Would You Solve the Debt Crisis?
I've never quite heard it put like that but I can certainly agree with the sentiment.
Aug '10
Re: How Would You Solve the Debt Crisis?
On the budget, I noticed that housing is twice the amount allocated for the federal justice system. Not a good sign. I slashed social and international programs and increased defence. Cut the deficit in half. Then we got to taxes. No way to reduce them below current level ... hmmmm ... I expect that John Walker has the survey's motivation nailed, And I notice that decreasing Social Security payout did not effect the bottom line. Why is that?
Apr '11
Re: How Would You Solve the Debt Crisis?
The New York Times had a similar thing based on the Deficit Commissions's recommendations back in December. Their timeline was as bit more extended than 2015, but it was quite easy with that stuff to balance the budget without taking any policies that are offensive to conservatives. I think the exercise just reinforces the point from the CR/budget battles, that the real money isn't in discretionary spending. While more or less phasing out the big government, defined benefit entitlement programs should be conservatives' goal, we also have to be realistic about the time it would take to do so responsibly.
As to the VAT: Ideally, we would completely replace all our income taxes with a VAT, in my opinion. It's so much less distortionary, and much cheaper to comply with. As an addition to the current system, I agree that it should be a complete non-starter. In conjunction with significant reforms and lower marginal income tax rates, I'd keep an open mind.
Dec '10
Re: How Would You Solve the Debt Crisis?
StevenK85:
As to the VAT: Ideally, we would completely replace all our income taxes with a VAT, in my opinion. It's so much less distortionary, and much cheaper to comply with. As an addition to the current system, I agree that it should be a complete non-starter. In conjunction with significant reforms and lower marginal income tax rates, I'd keep an open mind.
The problem with the VAT is that it is a hidden tax. The people affected by the VAT have no real way of seeing how much the VAT is actually costing them so politicians pay very little political price for raising it. Out elected officials just cant handle that type of temptation.
May '10
Re: How Would You Solve the Debt Crisis?
This does not let me do what I want to do. I mean, let's start with the elimination of the Department of Education. I mean look at this list of things we do:
http://www.usa.gov/Agencies/Federal/All_Agencies/index.shtml