Tuesday, November 30, 2010

I Fixed the Budget

I like the puzzles in the New York Times, including a new one offered two weeks ago: "Get a Pencil. You're Tackling the Deficit." (NY Times Week in Review, Nov. 14, 2010, p. 4). Unlike some of the
crosswords and acrostics, this puzzle was easy, since the columnists David Leonhardt and Bill Marsh provided multiple choices.

Here's what I did to reach $1.345 trillion, the amount called for in the puzzle by 2030:

Eliminated earmarks ($15b) and cut pay of federal workers 5% (15b).                         subtotal $ 30b
Left intact farm subsidies, foreign aid, federal work force, government contractors,
national parks budgets, and aid to states.                                                                              

Left intact current level of military spending.

Enacted medical malpractice reform ($15b, although  don't understand why medical malpractice is a federal budget item).
Capped Medicare growth at G.D.P. growth plus 1 percentage point starting in 2013 ($560b).
                                                                                     health care subtotal                               $575b

Left Social Security intact. Did not tighten eligibility, did not reduce benefits even for top 40 percent of lifetime earners, did not slow cost-of-living increases, did not raise retirement age. (Would favor lowering it, in fact.)

On estate and investment taxes, returned to Clinton era:
Exempted first $1 million of estate ($105b)
Raised capital-gains taxes on all households and taxed dividends as ordinary income ($45b)
Allowed expiration of all Bush tax cuts, above $250,000 ($115b)
and below $250,000 ($250b).
                                                                                  Clinton era subtotal                                $515b
I mandated the Social Security payroll tax apply to some income above the current
ceiling of $106,800 (a ceiling about which my blood has been
boiling since Reagan days).   ($100b)      

I reduced mortgage deduction and other tax breaks for high-income households ($55b)
and placed a gradually rising tax on carbon emissions ($70b).
                                                                            Tax reform subtotal                                    $225b

I did not reduce tax breaks for employer-provided health insurance; nor did I place a
5.4 surtax on income above $1 million.              
Banks did not receive a new tax from me, and I strongly vetoed a 5 percent national sales tax.

                                                                                                                                 Total $1.345 trillion

I even think these reforms would be passable. Republicans and Democrats both are always crying for an end to earmarks, so do it.

With the military budgets intact, who can object to a 5% pay decrease in civilian federal workers (except maybe their unions)? If they do object, just cut 250,000 government contractors instead for the same $15b. They aren't our valiant troops in uniform.

Republicans should love both the cap in Medicare growth and the malpractice reform.
As for Social Security, that "third rail of American politics," even the richest will keep their Social Security benefits and be able to retire at current ages.

And who can seriously object to returning to the Clinton era tax rates? We had a better job rate back then, didn't we?

Mortgage deductions aren't clear in the puzzle; but I would negotiate their removal from second and third homes.

The ceiling on the payroll tax has never ever been fair, and the tax on carbon emissions, which starts at $23 per ton of carbon dioxide, is but the merest baby step compared to the effort we will need to exert. With banks left alone and employers keeping their health care deductions, businesses should find themselves agreeable to clean-energy policies.

Congress: pass this good balance of health care, military spending, social security, with a return to healthier tax policies of the Clinton era, adding progressive incentivizing taxes. Then we can face the future with confidence.



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