The USA has a fiscal crisis, in part, because total taxes collected has collapsed with the economy (with the loss of jobs) but also because the government spending has rapidly accelerated under the Bush and Obama administrations.
Therefore to solve the fiscal crisis, the government must promote growth and employment and restrain spending. If the economy begins to grow at an average rate, then total taxes collected will increase and solve about 40% of deficit (approx). It's spending that s truly out of control--this everyone knows. Sharp spending cuts in most categories of government expenditures including military spending must be "on the table."
Here is my list of spending and tax reforms that would reduce the near and medium term Federal deficits:
- Pro-growth policies will help in the medium term. Such policies would include less regulation not more, more energy not less, more conventional energy not pie-in-the-sky alternatives, more power generation not less, less threats of rule changes not more, competent regulation not incompetent, lower employer costs not more, less fear of fiscal calamity not more!
- Medicare and Social Security need to be means tested now. If you're very well-off, you don't need the benefits.
- Reduce or eliminate all tax deductions. Why subsidize well-off people with their mortgage payments?
- Corporate tax reform to lower top brackets but less deductions to collect more revenue. Corporations should pay more tax but the top rate should come down.
- The defense budget, and the entire budget, need 10% across-the-board cuts. This includes Social Security and Medicare if item #2 doesn't cut enough. Alternatively, roll back spending in each category back to 2007 category levels.
- We don't need troops in 140 countries! What part of the phrase fiscal crisis do we not understand??
- Federal employees salaries need a 10% cut and reduce benefits which have ballooned beyond all reason, (see next item below).
- Federal workers make far more than private sector workers now--when you include benefits. From USA Today: Overall, federal workers earned an average salary of $67,691 in 2008 for occupations that exist both in government and the private sector, according to Bureau of Labor Statistics data. The average pay for the same mix of jobs in the private sector was $60,046 in 2008, the most recent data available.
These salary figures do not include the value of health, pension and other benefits, which averaged $40,785 per federal employee in 2008 vs. $9,882 per private worker, according to the Bureau of Economic Analysis. Can you say CUT THE FAT??? State and Federal employees costs have risen well beyond those in the private sector.
- The Federal Government must schedule an end (soon) to the unlimited support ($100's of billions) of Fannie Mae and Freddie Mac. Sell off both. Yes, mortgage rates would rise to cover the cost of foreclosures but it would finally force housing prices to bottom. The market would normalize sooner than later.
- The Federal Government doesn't need to be in the student loan "business" either. Student loans are now so huge and burdensome to students, that they will be next debt bubble to burst and become a drain on taypayers. What are banks for if not for making loans to families?
- The Federal Government needs to be gutted by eliminating entire departments. Many departments of the government are completely incompetent and ineffective. I propose eliminating the Dept of Education, Dept of Homeland Security, TSA, Dept of Agriculture, NLRB (National Labor Relations Board), Dept of Energy, HUD and other housing programs.
- To cut public employee costs, kill defined benefit plans for public workers and scrap Davis-Bacon and all prevailing wage laws for public workers. Markets work! Public projects cost much more than they should and the related gov't bureaucracy is even more costly. One dollar more spent on project labor compared to a market rate is ripping-off taxpayers!
- A total housecleaning and downsizing of the SEC since it is completely useless organization. They can't do anything or get anything right! When has the CIA gotten anything right? Was it in your lifetime?
- Eliminate agricultural subsidies. Agricultural subsidies are huge--up to $30 billion per year primarily to large corporate farms--for what reason? Subsidies were originally intended for small farms. Horrible!,
- Eliminate AMTRAK subsidies and cancel most foreign subsidies starting with eliminating subsidies to Pakistan!
- We must bring our foreign wars to an end. Sorry folks, we don't have the money! And we shouldn't burden our children! A balanced budget amendment to the US Constitution should dictate that taxes must be raised to fund wars. Once passed then, if we stay in Afghanistan, then a special tax must be raised to cover the cost!
- A balanced budget amendment to the Constitution or a Federal law to that effect. Pay for wars.
- Cancel Obamacare since it's going to cost infinitely more than what was promised. Instead, Congress should take the many steps known to reduce costs and reform insurance. Steps include expanding health care savings plans so people need only to purchase high deductible/high out-of-pocket policies, limit medical care malpractice suits, etc. Sorry ladies and gentlemen, but the government can't spend more money on health care (or force states to spend more on Medicaid) in the middle of a fiscal crisis! We don't have the money! Get real people!
- Privatize, privatize, privatize! Privatize the Federal highways and Post Office?