I know most of you are thinking that's easy, so I have an assignment for an industrous worker bee. What percentage would we have to cut the federal budget to balance it in thirty years. To me that would be a decent goal. If we cut 10% off the budget could we get there? I'm sure it's much more draconian than that.

Admitting "industrous worker bee" are smarter then you? BTW industrious has 2 i in it. Teach.

(01-27-2010 12:55 PM)Machiavelli Wrote:  I know most of you are thinking that's easy, so I have an assignment for an industrous worker bee. What percentage would we have to cut the federal budget to balance it in thirty years. To me that would be a decent goal. If we cut 10% off the budget could we get there? I'm sure it's much more draconian than that.

It would have to be a helluva lot more than 10%. Don't want it to be that draconian? Then repeal the 16th amendment and implement the Fair Tax. Also, cut spending back to what was originally intended, national defense and the regulation of interstate commerce. Leave everything else up to the states.

(01-27-2010 12:59 PM)SumOfAllFears Wrote:  Admitting industrous worker bee are smarter then you? BTW industrious has 2 i in it.

Actually, I applaud Mach. He always bitched about the debt under Bush, and he seems to be consistent with Obama and the debt. Most of these Dems don't seem to have a problem with it anymore now that "their" guy is in office.

(01-27-2010 01:11 PM)Rebel Wrote:  

(01-27-2010 12:55 PM)Machiavelli Wrote:  I know most of you are thinking that's easy, so I have an assignment for an industrous worker bee. What percentage would we have to cut the federal budget to balance it in thirty years. To me that would be a decent goal. If we cut 10% off the budget could we get there? I'm sure it's much more draconian than that.

It would have to be a helluva lot more than 10%. Don't want it to be that draconian? Then repeal the 16th amendment and implement the Fair Tax. Also, cut spending back to what was originally intended, national defense and the regulation of interstate commerce. Leave everything else up to the states.

The regulation of interstate commerce would have to be narrowly defined. That interpretation of the commerce clause and "promote the general welfare" clause is what has made gov't explode in the first place.

The 2009 numbers are all squirreled up because of the "stimulus." They show us with receipts of $2.1 trillion and expenditures of $3.9 trilion. So it would take about a 45% decrease across the board. Of that $3.9, about $1.5 trillion is non-discretionary, so we'd be looking at cutting about 75% of discretionary to get there.

If we go back and look at 2008, the numbers are about $2.5 trillion receipts and $2.9 trillion expenditures. We would have to cut back about 15% across the board, or with the same $1.5 trillion nondiscretionary, we would have to cut back $400 billion out of $1,400 trillion, or about 29% of discretionary spending.

At the end of the day, any effective action in this area probably needs to be focused rather than across-the-board.

My 15-15-15 tax approach would generate about $2.7 trillion, plus another $200 billion in excise taxes and other revenues, which would then fund the $2.9 trillion pre-2009 number. Of course, that $2.7 trillion is net of about $400 billion in Boortz-Linder prefunds (using a 30% prefund rate, 15+15). A substantial portion of that money would eliminate the need for amounts currently paid out in welfare, on the order of $150 billion. Cato, among others, have identified about $300-400 billion of wasteful spending that could also be eliminated; a lot of that is corporate welfare that would presumably no longer be needed if the max tax rate was 15%. My health care proposal would cost about $900 billion, but would eliminate the need for Medicaid (saving $350 billion) and also subsidize Medicare to the extent of about $170 billion initially (and Medicare would eventually be phased out, although current beneficiaries would lose nothing and prospective beneficiaries would have a choice to take more now in exchange for less later). So I've funded health care with savings elsewhere.

At the bottom end, the combination of prefund and health care benefits means that nobody with a minimum wage job, and no families with at least one minimum wage earner, would be below the poverty line. (Edited to add, for Robert) That's a much better deal than the poor get with welfare now. Even better, they aren't penalized with an effective 100% tax because of lost benefits if they do get a job.

At the top end, private businesses would now be looking at a max 15% tax rate plus either being able to eliminate employer funded health care altogether or provide supplemental health care at heavily subsidized rates. I think this makes them ultra-competitive on world markets, and growth would take off as a result of the resulting increase in our worldwide market share.

We'd have a balanced budget at that point, and making US businesses more competitive would be a good start toward eliminating the trade deficit. Focus our energy plan on getting us off foreign oil and we could eliminate the trade deficit plus make huge progress in reducing greenhouse gases. Get rid of those two trillion-dollar drags on the dollar, and we'd be in pretty good shape.

The first thing that I think would happen is that US-based companies would have a huge incentive to repatriate foreign earnings currently sitting offshore, since at a 15% marginal rate those would all come home essentially tax-free. I've seen estimates that this amount is between $4 trillion and $10 trillion (yeah, that's a big range, but solid data are pretty hard to come by). Either way, that much money flowing into the US would have a huge impact on the banking system and investments generally.

What I am afraid of. Even if we cut it by 50% I don't think we could pay it off in 50 years. We are screwed.

Owl, does that 2008 number include the 2 wars we are fighting. Or emergency relief money. And the reduction of revenue due to the recession, bank failure and the gov't nationalizing and becoming the owner of industries.

Need to clarify difference between "deficit" and "debt." The deficit is the current year impact, like the income statement in a set of financials. The debt is the cumulative impact, like the balance sheet. Obviously, the balance sheet is the cumulative product of all your income statements since inception, and the debt is the cumulative product of all the deficits and surpluses since 1776 or thereabouts.

The deficit calculation includes debt service on the debt. So, if we get the deficit down to zero, the debt will go away over time, depending on the amortization. If we show a surplus on the current account, that surplus could be used to pay down the debt.

Of course, the elephant in the room on this is the unrecorded and unfunded future liabilities, that range anywhere from $50 trillion to $75 trillion, depending on who is doing the counting. They aren't reflected in any of this.

(01-27-2010 01:27 PM)Owl 69/70/75 Wrote:  Need to clarify difference between "deficit" and "debt." The deficit is the current year impact, like the income statement in a set of financials. The debt is the cumulative impact, like the balance sheet. Obviously, the balance sheet is the cumulative product of all your income statements since inception, and the debt is the cumulative product of all the deficits and surpluses since 1776 or thereabouts.

The deficit calculation includes debt service on the debt. So, if we get the deficit down to zero, the debt will go away over time, depending on the amortization. If we show a surplus on the current account, that surplus could be used to pay down the debt.

Of course, the elephant in the room on this is the unrecorded and unfunded future liabilities, that range anywhere from $50 trillion to $75 trillion, depending on who is doing the counting. They aren't reflected in any of this.

unfunded future liabilities is closer to $107 trillion

http://www.usdebtclock.org/

(01-27-2010 01:27 PM)SumOfAllFears Wrote:  Owl, does that 2008 number include the 2 wars we are fighting. Or emergency relief money. And the reduction of revenue due to the recession, bank failure and the gov't becoming the owner of industries.

2008 includes the wars and the effect of the recession (or at least it purports to). The emergency relief isn't in either 2008 or 2009, but Haiti isn't material to the numbers. Despite what you may have been told, the numbers are so big that the wars aren't material either.

The differences between 2008 and 2009 are the effect of the recession on revenues (larger than I had anticipated, actually) and the effects of TARP and "stimulus" and other rescue programs on expenditures.

If we Grow the Economy, it goes along way to balancing it. Part of the gap now is due to Recession.

It was close to being balanced, relatively speaking in 2005-2007 range I think, when Tax Receipts were 'unexpectedy" soaring.

Anyway, "Cutting" and "balancing" based on the current recession and Obama's Massive SPending Increases would certainly take a long time. If Obama wants to keep spending like a drunk, he needs to Free the Marketplace and let Economic Growth ensue.

note: this doesn't mean more "Fannie/Freddie" housing schemes by the Govt., quite the opposite.

(01-27-2010 01:30 PM)SumOfAllFears Wrote:  unfunded future liabilities is closer to $107 trillion

http://www.usdebtclock.org/

I hadn't seen that big a number, but I certainly don't doubt it. I'm guessing it will be bigger than that before all is done. But $50-75 trillion is what I've seen.

Any of them are big numbers.

Is is so huge we will all be dead including our children and grandchildren before our great-grandchildren might see the light of day. Sickening. I hate it.

(01-27-2010 01:30 PM)SumOfAllFears Wrote:  unfunded future liabilities is closer to $107 trillion

http://www.usdebtclock.org/

Though Obama has made it alot worse, all the Debt Doomsday stuff by people with books and agendas to sell have 2 major flaw in their projection. David Walker and other fearmongers are making their case on the basis of a Stagnant Economy(again: GROW OR DIE) and Single-Entry Accounting.

If Economy Grow's at certain paces, as opposed to staying the same, then those numbers aren't nearly as bad. Secondly, Double-Entry Accounting changes the analysis quite a bit, there is a Debit and a Credit.

Example: 80's with Reagan, Cold War Spending and Dem Congress. However Assets outpaced Liabilities at about a 10 to 1 pace because he Liberated the Economy, the Tech Industry among others exploded. Yet you'll hear some Reagan Haters(and Fiscal Hawks) bad mouth him to no end over the subject. Even though the Nations Debt Liabilities were much Lower at the end of his term, even though budget was out of balance and debt grew.

I'm sickened by it too. No I'm pissed off by it. We need to balance our books.

(01-27-2010 12:55 PM)Machiavelli Wrote:  I know most of you are thinking that's easy, so I have an assignment for an industrous worker bee. What percentage would we have to cut the federal budget to balance it in thirty years. To me that would be a decent goal. If we cut 10% off the budget could we get there? I'm sure it's much more draconian than that.

I don't know but it probably depends on where you cut. Cutting military by 10% vs NASA by 10% is a big difference in amount being cut.

(01-27-2010 02:03 PM)RobertN Wrote:  

(01-27-2010 12:55 PM)Machiavelli Wrote:  I know most of you are thinking that's easy, so I have an assignment for an industrous worker bee. What percentage would we have to cut the federal budget to balance it in thirty years. To me that would be a decent goal. If we cut 10% off the budget could we get there? I'm sure it's much more draconian than that.

I don't know but it probably depends on where you cut. Cutting military by 10% vs NASA by 10% is a big difference in amount being cut.

Wow, you figured that out all by yourself?

(01-27-2010 01:18 PM)Owl 69/70/75 Wrote:  The 2009 numbers are all squirreled up because of the "stimulus." They show us with receipts of $2.1 trillion and expenditures of $3.9 trilion. So it would take about a 45% decrease across the board. Of that $3.9, about $1.5 trillion is non-discretionary, so we'd be looking at cutting about 75% of discretionary to get there.

If we go back and look at 2008, the numbers are about $2.5 trillion receipts and $2.9 trillion expenditures. We would have to cut back about 15% across the board, or with the same $1.5 trillion nondiscretionary, we would have to cut back $400 billion out of $1,400 trillion, or about 29% of discretionary spending.

At the end of the day, any effective action in this area probably needs to be focused rather than across-the-board.

My 15-15-15 tax approach would generate about $2.7 trillion, plus another $200 billion in excise taxes and other revenues, which would then fund the $2.9 trillion pre-2009 number. Of course, that $2.7 trillion is net of about $400 billion in Boortz-Linder prefunds (using a 30% prefund rate, 15+15). A substantial portion of that money would eliminate the need for amounts currently paid out in welfare, on the order of $150 billion. Cato, among others, have identified about $300-400 billion of wasteful spending that could also be eliminated; a lot of that is corporate welfare that would presumably no longer be needed if the max tax rate was 15%. My health care proposal would cost about $900 billion, but would eliminate the need for Medicaid (saving $350 billion) and also subsidize Medicare to the extent of about $170 billion initially (and Medicare would eventually be phased out, although current beneficiaries would lose nothing and prospective beneficiaries would have a choice to take more now in exchange for less later). So I've funded health care with savings elsewhere.

At the bottom end, the combination of prefund and health care benefits means that nobody with a minimum wage job, and no families with at least one minimum wage earner, would be below the poverty line. At the top end, private businesses would now be looking at a max 15% tax rate plus either being able to eliminate employer funded health care altogether or provide supplemental health care at heavily subsidized rates. I think this makes them ultra-competitive on world markets, and growth would take off as a result of the resulting increase in our worldwide market share.

We'd have a balanced budget at that point, and making US businesses more competitive would be a good start toward eliminating the trade deficit. Focus our energy plan on getting us off foreign oil and we could eliminate the trade deficit plus make huge progress in reducing greenhouse gases. Get rid of those two trillion-dollar drags on the dollar, and we'd be in pretty good shape.

The first thing that I think would happen is that US-based companies would have a huge incentive to repatriate foreign earnings currently sitting offshore, since at a 15% marginal rate those would all come home essentially tax-free. I've seen estimates that this amount is between $4 trillion and $10 trillion (yeah, that's a big range, but solid data are pretty hard to come by). Either way, that much money flowing into the US would have a huge impact on the banking system and investments generally.

Is that yours or is that Glenn Becks(I think he wrote that on his chalkboard). Btw, it is nice that you are so uncaring. Cut welfare= more homeless. Nice guy. "It is all about me". Greed. THe Republican disease.

(01-27-2010 02:13 PM)RobertN Wrote:   Is that yours or is that Glenn Becks(I think he wrote that on his chalkboard). Btw, it is nice that you are so uncaring. Cut welfare= more homeless. Nice guy. "It is all about me". Greed. THe Republican disease.

Providing welfare is not the responsibility of the federal government.