A simple proposal for the US budget

Progressives don’t like the Bush tax cuts. Conservatives don’t like the high spending.

So how about we go way, way back in the time machine to the last time we had a balanced budget … the year 2000. I propose we reinstate taxes at the rates they were then, but also cut back spending to where it was then (adjusted for inflation, of course). You can change where the money is spent, but the total amount is the same as 2000.

I suspect I will have few takers for that offer. Tell me why.

I’m tentatively okay with that…why wouldn’t I be? Especially since you let me move money around, and I get to gut military spending :).

Something would have to give. We have two wars and the major economic downturn to deal with.

One issue is that 2000 was still a boom economy. Boom economies are great for taxes - lots of revenue coming in, and often the government need to spend is reduced. In a boom economy, you aren’t going to have a lot of money going towards extending unemployment benefits. Medicaid payments go down because more people are working. There are few stimulus packages spent. At the same time, everyone (well, lots of people) are making money and that money is taxed. So revenues go up.

A bust economy is a difficult tax and spend situation. The need to spend goes up - both to inject dollars in (stimulus) as well as just pay out benefits to those temporarily in tight circumstances. But revenues have gone down - fewer people making money and less money being made means at the same tax rates, you have less revenue.

This is why its actually responsible for the government to continue to tax at its normal rates during a boom - even if they end up with a surplus - as long as they don’t SPEND it. Having reserves through a good economy keeps us from having issues in a bad one. Unfortunately, we are driven to lower taxes - and why should the government hold a surplus - its MY MONEY? - and spend - if we have a surplus, we can afford to do all these cool things with it.

Probably because discretionary spending is roughly the same, but Social Security and Medicare are way up because the number of old people has gone up.

Besides the other good comments, this proposal goes back to a tax rate versus a spending limit. At the least, the proposal should be to limit spending to the amount of revenue generated by the new rate, not the amount 10 years ago.

And this makes a difference to our creditors how exactly? I mean, if I get behind on my credit card and they want to jack my rate up, I can try telling them about my sick mom, but the odds are they aren’t going to care.

Yes, we have a bunch more old people we made promises to. Keeping those promises means getting the money from somewhere else.

Fine: we go back to pre-Bush rates, and peg spending to that amount. Deal?

My proposal would be that no governments - federal, state or local - should be allowed to pass tax cuts while public debt is greater than say, 10% of total revenue.

Because until that debt is paid off, its not our money anymore - it is our childrens and grandchildrens (and at the rate we piled it up the last thirty years, their grandchildren as well.)

If you are in a financial crisis, you don’t tell the bank that you are going to lower your interest payments so you can buy a new car or take a vacation to Maui. Sure the bank will agree, they don’t care if ever pay the principal, as long as you pay the interest, any interest, but eventually the house of cards will fall down.

I am going to have a big problem with any large direct tax hikes. (can’t do much about sneaky stuff)

Time and time again, we have been promised smarter, wiser, saner spending, if only purty please, just give us this one last tax increase, and time and time again, spending goes up FASTER than the revenue increase.

I’m thinking we need to draw the line, civil disobedience, tax strike, whatever.

Did they ever release figures for ‘on time’ quarterly tax payments last year compared to the year before? I bet it was WAY down, and a precursor to something bigger and more organized this year . . .

Patently false. The last time taxes were raised (1993!) spending did not go up as fast as revenue. You might recall that we had a balanced budget for a while.

Sure, so long as you guarantee that the number of people paying into the system ( 1 - the real unemployment rate) is the same as then.

You’ve been reading too many SDMB time machine threads.

So what do we do with Medicare beneficiaries? The cost of Medicare has increased by about $250 billion in the last ten years.

Is your proposal to cut out other functions of the government in order to fund Medicare? Or just to boot people out of Medicare?

If we wanted to “pay” for the Medicare increases, we would have to eliminate the Department of Transportation ($100 billion) and all its functions, eliminate all investment in sciences from National Labs to NASA ($33 billion), stop all environmental activities, from running National Parks to enforcing pollution laws ($47 billion), and cut half of all our educational activities ($70 billion).

Do you really value balancing the budget more than having clean water and air, doing any S&T activities, and doing any road construction at all?

I’m cool with that, as long as we also have a freeze on any additional government spending until public debt is also below whatever level you want to set for suspending tax cuts (10% in this example).

I’d be good with that, but it would entail a lot of short term pain, as current government programs would be slashed. I seriously doubt that today’s government could make the cuts needed to get back to a fixed year 2000 federal budget, no matter how you shuffled the money. Too many people on both sides have too much vested interest in their own programs, while blithely wanting to slash the other guys budget because they don’t care about those programs (or they don’t win them any political capital). As an example:

And someone on the right might say ‘Especially since you let me move money around, and I get to gut Social Security/Medicare/some other left wing social program or sacred cow’. The reality is that unless someone makes you (or LHoD) God Emperor, you simply won’t be able to gut anything…just chip away some dollars at the edges. You won’t be able to make real, substantial cuts, and you won’t be able to get enough political consensus to make the budget at those levels. Left wingers will happily try to ‘gut’ right wing programs and right wingers will happily try and ‘gut’ left wing programs, and moderates and centrists will split one way or the other depending on individual issues, and We, The People will also split and pressure our Congresscritter of choice to save OUR programs and cut those bastards in the other states off at the knees for all the waste and abuse THEIR programs cause.

Not happening, unfortunately. It’s a good idea though and I’d go for it, even if my own ‘sacred cows’ (the space program mostly) got substantially cut in the bargin. But I’d want to make sure the pain got evenly distributed so that everyone feels the burn…and that is totally unrealistic. Instead, the only stuff that would really get cut is BS programs no one really cares enough about (or has enough support for), and…the space program. Which would be sufficient to look like the government was doing something, but wouldn’t really make all that much difference in the end.

The best bet, IMHO, is to try and get the economy booming again (gods know how) and sprint our way out of the hole we are in. To paraphrase: If you are stumbling and about to fall on broken glass, it’s better to sprint your way out of danger than try and catch yourself…


A few answers

  1. Because things cost more than they did in 2000.

  2. Even with the tax rates the same as 2000, there would be far fewer tax dollars coming in. If we could bring back the booming dot coms and have them paying those same tax rates, I would be good with it.

  3. In 2000, we weren’t on high terror alert or paying for wars in Iraq and Afghanistan.

  4. We still ran a deficit anyways. The only way that it was counted as a surplus was by using social security taxes.

UI and food stamps are largely due to the recession. SS is up too due to it. I think something like 75% of our deficit is due to the recession causing higher spending and lower taxes, if we weren’t in a recession the deficit would only be $400 billion a year or so.

But if we got out of the recession then raised income taxes it could balance things. But over the long term the real problem with the US budget is medicaid and medicare, and you can’t raise taxes enough to fund the growth in those programs.

At least one of the above, probably all. If we just keep borrowing, eventually people stop lending. Even if they don’t, you eventually reach the point where interest alone eats up your entire budget. As everyone from Barack Obama on down has said, our current path is simply unsustainable. The numbers do not add up. But almost everyone from Barack Obama on down has declined to have the guts to actually draw a line.
But that’s off-topic. My question was simply that in the OP: would you accept tax rates and spending at 2000 levels?

Gee, I’m not sure why the credit rating of the United States is a big deal if we make budget decisions that would eliminate virtually all investment in our infrastructure, environment, and science. This would create a country with no ability to move goods, make people sick because of unrestrained pollution, and a trememdously crippled economy due to a huge loss in innovation.

The obsession with our credit rating is short-sighted if you are willing to accept the wholesale trashing of the country in the process. Do you also worry about whether homeless people are wearing clean underwear? Whether rap music with naughty words is playing on a car stereo while it is being driven off a cliff?

No, it is totally on topic. I think basically everyone here has pointed out that accepting such numbers would not solve the problem. We are also suggesting that we need to fix the deficit while acknowledging that this is not the only problem that we are facing.