Banner Logo
Home
The Real Kato
About Me
Twitter
Facebook
Frozen Lunches
Links
Kottke
Daring Fireball
Amalah
Secret Agent Josephine
Dooce
Contact



Archives
Most Recent

2024 March
2004 September
2004 August
2004 July
2004 June
2004 May
2004 April
2004 March
2004 February
2004 January
2003 December
2003 November
2003 October


Categories
All Categories 

bloggers 
books 
commentary 
dating 
food 
funnyhaha 
interesting 
life 
movies 
music 
politics 
reviews 
science 
site-business 
sports 
style 
techwatch 
television 
theater 
travel 


Recent Comments
On College Football 2022: Week 6 Recap and Week 7 Pre...
Ken said:
Yeah, we've both had our share of hope and disappointment in this game. Let's just hope for a good b...
On College Football 2022: Week 6 Recap and Week 7 Pre...
Dan* said:
I'm not sure how I feel about this game. On one hand, I feel pretty optimistic that we have the tale...
On College Football 2022: Week 1 Preview
Dan* said:
Glad to see you'll be back writing football again, Ken! Congrats on the easy win today. You didn't ...
On College Football 2021: Week 10 Recap and Week 11 P...
Ken said:
Yeah, sorry one of our teams had to lose. I've come to appreciate Penn State as a classy and sympath...
On College Football 2021: Week 10 Recap and Week 11 P...
Dan* said:
Hey Ken, congratulations on the win yesterday! Some really odd choices by our coaching staff in that...


<< Previous: Television: Lost | Next: Town of Cary (Update... >>

The Federal Budget Game, Part II
Wednesday, 2004 September 22 - 11:11 pm
Give up yet? Here are some hints.

Before we get back to the game, I just want to note that while Bush is yammering about Kerry's supposed $2 trillion in proposed new spending, Bush himself has proposed $3 trillion in new government programs. Come on, does he really think we're so stupid that we won't see that? (Well, apparently, some of us are just that stupid.)

Anyway: I expect no one figured out how to balance the federal budget and still retain all their popularity points. So we'll have to make some tough and unpopular decisions. But first, let's play a few tricks to give us a head start.

First of all, we'll need to increase income. This is accomplished either by raising taxes, which provides an immediate boost to income, or by lowering taxes, which (via trickle-down economics) grows the economy and eventually provides more tax revenue. Of course, when the economy grows, so does the Federal budget; and in the short term, the federal debt increases, and interest on the debt grows proportionally. So really, lowering taxes is a losing proposition all around, from the perspective of federal fiscal responsibility. In reality, we still have a long way up the Laffer curve to go. Raising taxes will increase revenue, period. The thing is, who should pay more taxes? That's arguable. But suppose we roll back the Bush tax cuts for the wealthiest segments of the population (as Kerry proposed, but perhaps even going a bit further and raising their taxes above pre-Bush levels). That will provide perhaps about another $50 billion each year. We can consider a closing a few corporate tax loopholes, for another $15 billion or so. And we can raise the minimum wage, which not only helps our poorest hard-working citizens, it also increases our overall tax base. Let's say we can raise income through these packages by $70 billion. That makes our budget-cutting goal now $407 billion.

Next, let's lower interest rates. Not only does that reduce our interest payments on the federal debt, it will also stimulate economic growth. The downside for most folks is that it will increase the risk of inflation, and that hurts if wages do not keep pace. Here's the thing: inflationary pressures are very low right now, and even if inflation occurs, most people won't even know it's happening. So let's do it, and count another free $20 billion in revenue as a result. Our goal is now $387 billion.

So now let's get to program cuts. Defense spending is enormous, and cutting it gives us a lot of bang for our buck. Let's pressure our anti-war allies to pick up more of the tab in Iraq and other peace-keeping efforts around the world, thereby allowing us to cut the size of the military by 20%. Offset the bad press by raising salaries for enlisted personnel, and by increasing spending on the Justice department. Net gain: about $40 billion. Get rid of looney cold-war relics like "Star Wars" and ABM programs, and concentrate spending on aircraft and technology aids for troops. Net gain: an additional $20 billion. We lose 30 popularity points for our $60 billion in cuts, but gain 10 points back because of our highly visible efforts to "modernize our military, support our troops, and protect the homeland"; we now have $327 billion to go, with 80 points left.

Medicare and Medicaid are hard to cut. Our health care system strains to provide adequate care for people as it is. We don't want to cut the quality or availability of care, so that leaves us with a few unpopular options to increase revenue: we can increase premiums, increase deductibles, and/or increase co-payments. (We could also try to privatize the system, but any private company that would take this on would surely hike premiums so they don't bleed money.) Let's give ourselves $50 billion as a result of this, but lose the full 50 points for it. We now have $277 billion to go, and 30 points left. Uh-oh.

It's not really worth it to lose the remaining 30 points, especially if we're gunning for re-election. But we have cut the deficit by $200 billion, without seriously jeopardizing the economy. So it's a start. Perhaps we go ahead and spend a little money on technology research and worker education, to stimulate new job opportunities and economic growth. Perhaps we cut taxes on the middle class to stimulate consumer spending. Maybe in a few years, we'll have enough growth to catch up.

It seems impossible, doesn't it?. Perhaps you'll see what the federal government has to deal with, and you'll think twice before complaining how taxes have prevented you from buying that third car or that big-screen TV. We as Americans are not taxed to death, despite what Republicans will tell you. Your tax money helps other Americans, and other Americans' tax money helps you. We are supposed to be in this together. If you want to go it alone, you can move somewhere, hire your own army, and build your own hospitals, and see just how well you can save enough money to retire.

If you want to keep playing this game, you can try the National Budget Simulation. They use slightly different numbers, it seems, but the concept is pretty much the same. Have fun!
Permalink   Bookmark and Share
Posted by Ken in: politics

Comments

There are no comments on this article.

Comments are closed for this post.
Login


Search This Site
Powered by FreeFind