Let’s assume for the purposes of this thread that politicians get on board with a plan to balance the budget in the year 2013. Let’s also assume that the public might piss and moan about the cuts, but won’t do anything to disrupt the process while it happens.
The proposal is like this: We use as a baseline the government receipts this year. I don’t have the numbers, and it doesn’t matter, but let’s assume $2 trillion.
EVERY piece of spending next year will allocate a percentage to that department that was used this year (except for interest on the debt which can’t be changed). If social security got X% of the federal outlays this year, then next year it gets X% of the federal receipts. If defense got Y%, next year it gets Y% of the receipts. (X and Y being adjusted for the interest that can’t be reduced). No favorites, no special exemptions. Nothing. The same percentage as last year for every single department.
What are the horrific consequences and who suffers the most?
Along with that, what positives would happen? Would the economy rebound in a hurry because investors see that we are serious about fiscal responsibility?
Note: I’m not advocating this plan. I would just like to see what posters think would happen in such a scenario.