Tackling the Debt

I tried this new budget debt tool - it gives you options for cutting the federal deficit over a ten year period. It is pretty user-friendly, though there are a few options that I don't fully understand (even with the explanations).

First time through I ended up with a big surplus (almost $2 trillion). My choices were pretty liberal - almost $2.5 in revenue increases for every $1 in expense cuts. I think I let the Bush tax cuts expire and then added more tax brackets at the high end. Speaking of the Bush tax cuts, this debt tool makes it clear how expensive those (unfunded) tax cuts really are. Which again reminds me of the amazing hypocrisy of the GOP's focus on the deficits and debt since they passed the tax cuts.

I didn’t raise the Medicare or SS age. And I wasn't harsh on military spending at all. It almost felt too easy. Then again, the tax increases would never fly. Unfortunately.

When I ran through it a second time, the big decisions became clearer. One of course is the taxes. The Bush tax cuts cost $4.5 trillion. Preserving just the middle income costs $3.7 trillion. And the tax reform I selected generates $1.3 trillion.

The other is the overall government spending levels. If you let government grow with the economy as I prefer, which is a growth of 5.1%, it costs you an extra $2.4 trillion. If you let it expand with inflation, which is just under 2%, it only costs $0.8 trillion. 

The bottom line is that balancing the budget over the next 10 years mostly involves just a few big decisions - how much do we want to raise in taxes, and how much do we want to spend on discretionary programs.

In 2008, candidate Barack Obama said that he would take a scalpel to the budget, not a sledge hammer. It was a great talking point, except that it was vapid and ridiculous. Obama was trying to say he could balance the budget with a lot of small cuts in programs that aren't working. Knowledge of the budget and this tool show that isn't possible.

In the end, you kind of need both the scalpel and the sledge hammer. Or rather, you need a blue print and set guidelines. Then you can use whatever metaphorical tool you want. Obama's talking point was a cute way of avoiding discussing his guidelines.

At risk of overwhelming this post, I do want so say that I think the discussions of budgets are more detailed this year than in 2008. Sure Romney and Ryan are light on details, and Obama is forced into more clarity due to his position as the incumbent president, but there is more substance overall. With Romney's plan, you can see what would have to happen to achieve his goals. Compare that to Obama's scalpel and McCain's call to balance the budget by eliminating Congressional discretionary spending (ie pork) which isn't even a drop in the bucket.