What would you do to balance the American budget?

Just what actions do you think should be taken to bring the US budget back into order?

 

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reduce the defense budget by about 20%, raise income taxes and reduce deductions focused on the upper brackets, create higher tax brackets for the uber rich, reduce benefits from social programs for the uber rich, end all those corporate income tax loopholes, shift tax brackets to reflect the actually distribution of money

 

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Massively overhaul entitlement spending to reduce it, cut defense spending in the arena of Homeland Security and end farm subsidies.

 

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As George Carlin put it, " Just Balance the stoopid fuckin budget".

The short answer is...painfully (from the government perspective - massive layoffs).

The long answer is ...painfully. By dismantling the industrial military complex.

 

Start by raising taxes on rich people and their corporations.

It's a necessary first step, without which adequate spending cuts will be impossible to obtain from a system in which the rich so greatly benefit, net, from government spending.

If you can't do it, you can't balance the American budget.

 

No matter what any of us says should be done, they will NOT do what they should and just keep digging our graves deeper and deeper. Eventually there will be a depression and they will just move to another country and live off the money they have hidden in secret Swiss bank accounts. We are doomed no matter what is done now for it will be to late to salvage anything that they screwed up and will continue screwing up until its gone.

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This is weird. I actually agree with all five posts

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What needs to be done will be done out of dire necessity but not until the system has collapsed upon itself which is where we seem to be heading. I was going to say that there was no need to bail out corporate america and that the stimulus package was funneled into the wrong areas but all of that has already been done.

The problem with system collapse is that you won't be able to tax the rich heavily because many of them will be gone. You also won't benefit from government social programs because there won't be any (completely unaffordable).

Did anyone mention completely getting rid of the federal reserve? What would happen if they did? Or perhaps simply forcing transparency? Which in itself would mean the end of the Fed Reserve

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Raises taxes so high that everybody leaves.

 

Would converting completely to electronic money allow the government to monitor all transactions and automatically apply/collect sales tax, income tax, etc -- and also expose/eliminate working under the table, deadbeat parents, drug trafficking, prostitution, organized crime, etc ... and virtually eliminate bankruptcy?

 

Leaving isn't as easy as it used to be. I recently discovered that there were a lot of American expats who were giving up their US citizenship (which is irreversible):

WASHINGTON — Amid mounting frustration over taxation and banking problems, small but growing numbers of overseas Americans are taking the weighty step of renouncing their citizenship.

The Federal Register, the government publication that records such decisions, shows that 502 expatriates gave up their U.S. citizenship or permanent residency status in the last quarter of 2009. That is a tiny portion of the 5.2 million Americans estimated by the State Department to be living abroad.

Still, 502 was the largest quarterly figure in years, more than twice the total for all of 2008, and it looms larger, given how agonizing the decision can be. There were 235 renunciations in 2008 and 743 last year. Waiting periods to meet with consular officers to formalize renunciations have grown.

...frustrations over tax and banking questions, not political considerations, appear to be the main drivers of the surge.

American expats have long complained that the United States is the only industrialized country to tax citizens on income earned abroad, even when they are taxed in their country of residence, though they are allowed to exclude their first $91,400 in foreign-earned income.

http://www.nytimes.com/2010/04/26/us/26expat.html

But now it seems that in 2008 the government responded to the fact that there would be Americans moving assets outside of the States when renouncing citizenship by pulling this move:

You'll Pay If You Give Up U.S. Citizenship

A lot of people probably can't understand why someone would voluntarily give up American citizenship -- but if someone wanted to do that, they'd now incur financial penalties for it.

Congress just passed a new law that will stop your capital -- or at least a good portion of it -- at the border, should you decide not to be a U.S. citizen anymore. Is it, perhaps, in preparation for the possibility that Americans might rebel at the debt and taxes incurred by their government by leaving for lower-tax locales?

You probably didn't notice this little provision inserted into the Heroes Act of 2008, passed by Congress on June 17. The headlines in the press release about the law were about the increased benefits for veterans and families of deceased military.

But Richard Kohan of Price WaterhouseCoopers drew my attention to one section of the act, which states that anyone voluntarily giving up his or her citizenship will be taxed on all of his assets as if he or she had sold them -- paying capital gains on assets that have increased in value, even though they have not been sold.

That's right. While everyone in the media is focused on keeping aliens out of America, Congress has voted to lock its citizens - or at least a good portion of their assets -- into America! Maybe they're thinking that patriotism won't be enough to keep the smart money from recognizing the coming increases in the tax burden.

http://www.thestreet.com/story/10423687/youll-pay-if-you-give-up-us-citizenship.html

 

That is not true in a technical sense. It's possible to balance the budget using spending cuts alone under current proposals, so long as you cut deep.

http://sciforums.com/showthread.php?t=104987

It may not be the preferred route to a balanced budget, but that's a different matter.

 

But do you believe the average US citizen who abhors tax raises, expects social security, medicare and medicaid, unemployment and a score of other economic relief programs, not to mention a penchant for security and military might will understand what it means to 'cut deep'? Cutting deep means making government smaller and increasing taxes across the board. Even if the rich and corporate were taxed heavily the debts are so huge that the middle-class would not be able to escape their share of the load. Are government officials going to slash their paychecks including that of government employees? Can Americans tolerate the coming loss in standard of living? That's the question. Then there is the tricky question of how you keep big business and the rich from simply skipping out which they can do and will. They've already moved many industries to other nations with NAFTA. What money will be used to generate industry within the US? I remember when many Dutch millionaires and those in the top 10% simply moved to Belgium because it provided them with a safe haven from the burden of heavy taxes being levied by the Dutch government. What will stop the american aristocracy from doing the same?

 

No, because they've been lied to by the parties for years and fed a steady diet of bullshit and social welfare programs that ballooned beyond their original bill. The pols are also in a heck of a political fix. That is, you can't promise people benefits for years and then tell them you're going to take them away because you completely mismanaged the government's finances.

Still, for all America's ills, we're looking better by the day. The EU, which people seriously wrote about as challenging the US financially, is crumbling before our eyes. China and India are contenders, nothing more. And nobody does business with Russia outside of its natural resource trade. So it's not like there is another game in town at the moment.

 

Good a start as any.


Drop all the stupid tax laws and put in a flat-rate tax, no exceptions on individuals or corporations.

Get our military 90% home.

Prohibit Earmarks, pork, and lobbying (make it illegal for congress people to meet with lobbyists and punishable by expulsion - no exceptions).

 

Well, there is a difference between the debt and the deficit. The deficit is just the annual addition to the national debt. Most economists will tell you that, so long as the deficit keeps the national debt growing at a rate that is less than GDP growth, in real terms, we have a smaller debt. (By way of a very rough analogy, if my salary were $100K but I have $100,000 mortgage that I am paying off over time, that is a lot of debt. If my salary increases by $200,000 in the next couple of years, however that $100K in debt is not a huge burden. As long as (national) income grows faster than (national) debt does, that (national) debt will eventually be trivial.)

So the economic problem isn't really how we pay down the whole debt, but rather how we shrink the deficit. The near term and long term deficit can be reduced to zero without any tax increases...but it would mean monkeying with entitlements, firing federal employees en masse, and slashing government expenditure across the board.

Problem: no one wants to make all those cuts, and those cuts might slam the brakes on the economy.

 

Well I never had any hope for the EU from the very beginning either as a political or economic union but China and India (in future you may even be able to throw in Brazil) are the contenders. Faith being what it is is beginning to wane in terms of the dollar only because of the fiscal irresponsibility of the government, nothing more.

 

No one wants to make these cuts I understand but its unavoidable. It might slam the brakes on the economy but only initially. Why would it slam the brakes in the long run?

Is it that you believe that the US economy is sustainable without these cuts?

 

Slamming the breaks on the economy has a lot of consequences. For one, it increases federal the federal debt in two ways. One it cuts tax revenues as fewer people are employed. And two those newly unemployed become reciepents of federal spending thereby increasing federal expenditures. Hitting the breaks on economic growth is like pulling the axel from a moving car. It is a double whammy.

If you are going to get the current US debt and deficits under control, the last thing you want is a shrinking economy. You can easily get yourself into a death spiral. Since revenues are falling, the more you need to cut. The more you cut, the worse your unemployment gets.

So unless you want to bring the US to state similar to that of Mexico or some other developing country, a shrinking economy is the last thing you want to have... unless you are willing to have homless and starving people in the streets.

 

Bottom line is the Poor and lower middle class are and will continue to be hit hardest. Many poor will starve. Many people in need will die and many people will not care. It's out of sight, out of mind.

Austerity measures are usually put into place because people are willing to cut funding to people whom are voiceless and can't speak out against it one way or another.

http://en.wikipedia.org/wiki/Austerity

But, in the eyes of some Republicans, this is a good thing since "poor people don't create jobs. They're lazy and simply consume our tax dollars without end. So, ultimately poor people are a detriment to society." - From the mouth of a Republican on CSPAN yesterday...

 

But no under Pandaemoni's proposed model those who are cut from government agencies wouldn't be entitled to federal government expenditures or hand outs because it would be cut. Obviously no one would want want a shrinking economy but how do you measure real growth? GDP? Where are the industries to replace what was lost after NAFTA? Or the vagaries of the stock market? What is real to you in terms of growth? Is the government growing the US economy when they suddenly hire many to their Census bureau on a short term basis? Creating and manning agencies that you flood with money but don't really produce anything? Obviously there is growth on wall street but where are the signs of growth on main street?

How do you do this then? How do you sustain growth and still manage debt? You are in favor of continuing growth (as if this is possible) but do you also see that the cycle includes larger and longer periods of bust? I ask this because I get the distinct impression from you that you define growth from inside financial bubbles.