Can we balance the budget???
According to the Congressional Budget Office, the federal government
this year is spending almost $3.5 trillion. Tax receipts are estimated
to be less than $2.2 trillion, which means a projected deficit of about
$1.35 trillion.
So can we balance the budget when there is that much red ink? And is
it possible to eliminate deficits while also extending the 2001 and 2003
tax cuts?
The answer is yes. One approach would be to get rid of
counterproductive forms of spending such as the Department of
Agriculture, energy-subsidy programs, Department of Housing and Urban
Development, Small Business Administration, Department of Education,
National Endowment for the Arts, and Department of Transportation. In
other words, embrace the tea-party agenda and get rid of programs,
agencies, and departments that don't mesh with the Founding Fathers'
vision of a limited federal government.
Balancing the budget is not difficult. Getting rid of red ink is easily achievable with fiscal restraint.
For much of America's history, when such restraints were honored,
federal spending was on average only 3 percent of economic output. If we
did the same thing today, federal spending would be about $450 billion.
We'd not only have a balanced budget; we'd have a giant surplus and
could easily afford to abolish the income tax.
But while radical downsizing of the federal government would be
desirable, the budget could be balanced with much more modest forms of
fiscal restraint. Indeed, there's no need to cut spending. Politicians
simply need to reduce the rate at which spending is growing.
It's a simple matter of mathematics. The Congressional Budget Office
estimates that tax revenue will grow by an average of 7.3 percent
annually over the next 10 years. Reducing the budget deficit is easy —
so long as politicians increase overall spending by less than that
amount. And with inflation projected to be about 2 percent over the same
period, this is an ideal environment for some long-overdue fiscal
discipline.
If spending is simply capped at the current level with a hard freeze,
the budget is balanced by 2016. If we limit spending growth to 1
percent each year, the budget is balanced in 2017. And if we allow 2
percent annual spending growth — letting the budget keep pace with
inflation, the budget balances in 2020.
"The Congressional Budget Office estimates that tax revenue will grow by an average of 7.3 percent annually over the next 10 years"
ReplyDeleteNot impressed with previous CBO predictions... and certainly not impressed with the idea that we can grow revenues at an average of 7.3 a year.... not without serious tax increases. Growth predictions from everywhere else in the universe are not nearly so generous..... but then again, everything they calculate is from some overly optimistic 'baseline'
I love that. Revenues when we really mean taxes. Wish the politico's would call it what it is tax dollars.
DeleteCBO has a track record of being not only wrong but way wrong on their estimates on everything. Obama care is a prime example, 900 billion over 10 years and now 2.8 trillion. Not even close to being done with that estimate.
I like the notion of simple goals and measured course change. Quite arbitrarily, a 2% or 3% year over year reduction in the federal budget for the next 10 years, or until we reach a deficit of zero, is not untenable or unreasonable. Until, of course, the 535 have to articulate it. And then there's that NIMBY thing. Along with that, the tendency to blab about inflation-adjusted dollars, as well as the almost guaranteed scoffing sound at the mere mention of foregoing 'automatic' increases in the gazillion budget sub-categories. Sorry, I think it's doable.
ReplyDeleteA possible POSITIVE unintended consequence (imagine that!) would be a boost to markets, and a little bit of respect from the remaining 6.7 billion-peopled countries (ok, some of the countries) for starting to, dare I say it, behaving fiscally responsibly. Wow, that was hard to type. Seemed like it was grammatically incorrect.
What does being fiscally responsible mean to a government that can create money? That it does not spend it faster than it can digitally create money? What is this national debt but a privately held asset? Where does a government defict go if not to the private sector? Where would a government surplus come from but from the private sector? Why does a government that can create infinte amounts of money need to tax you to get money that it can already create in infinte amounts? For a government that can create money, when would it really want to have a balanced budget?
ReplyDeleteYou've repeated it hundreds of times, but I still don't know how the ferderal government creates money...or, rather, how they have the ability "to create infinite amounts of money".
DeleteThat aside, even if they have the ability to create infinite amount of money, they do not have the ability to create infinte amounts of value.
Your print til the ink runs dry solution has been historically demonstratively disproven to work.
"Why does a government that can create infinte amounts of money need to tax you to get money that it can already create in infinte amounts?"
ReplyDeleteBecause if it went that route and stopped taxing its people, then it would show itself to the rest of the world as a worthless tin-man government with whom they would immediately stop doing business.... unless we threatened to shoot um if they did.