Ask the Readers: How Would You Balance America's Budget?

Photo: Ian Sane

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The New York Times recently released an interactive game that puts you in charge of balancing our nation's budget. While not everyone will agree with all the assumptions made by the Times, this game is an interesting starting point for discussion.

How would you balance America's budget? What items would you cut? Would you raise taxes? Lower foreign aid? Rollback healthcare? You can list just one change you'd make, or give us your entire plan. Please keep the discussion civil!

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Guest's picture
Mary Ann Baclawski

I would cut the budget by eliminating almost all military expenses. I would kill the Bush tax cuts for the wealthy. I would make all earnings subject to Social Security and Medicare taxes. I would increase the budgets for the foreign service, or better yet, a department of Peace. I would increase research and development spending,

Guest's picture

First, limit the number of days each year that Congress is allowed to be in session (like many state legislatures and even the U.S. Congress in it's early days). One sixty day session followed later in the year by a 30 day session would allow them to do the work that needs to be done without meddling in all the stuff they do now or spending trillions of dollars we don't have. In an emergency (i.e., war), they could be recalled by agreement between the president and the majority and minority leaders of both houses. If they spend less time in Washington, they'll spend less money.

Second, every program has an expiration date (or sunset clause). No program is funded in perpetuity. Every program has to be explained and defended before it is funded in future renewals.

Third, zero-based budgeting replaces baseline budgeting. Currently Congress figures next year's budget based on this year's budget ("Well, we spent a million dollars on that this year, next year it will be 1.2 million.") Instead, every budget starts with "we anticipate X number of dollars in tax revenue, what will we spend it on."

Fourth, a balanced budget law or amendment that works. This might not be necessary if we do items 1-3.

Fifth, fix the tax code. I mean *really* fix the tax code. Scrap the current system and replace it with a fair tax or flat tax.

Sixth, fix the entitlement problem. It probably means raising the Social Security retirement age for anyone under 50, most likely to a new retirement age of 70.

Seventh, and finally, and most likely, if the current congress and president refuse to do what is needed to fix the mess, vote a bunch more of them out in two years and try again.

Would these things work? I think so. Will they be tried? Probably only after things get a lot worse (Greece-kind of worse) and we do number 7.

Guest's picture

I would definitely lower foreign aid. I would also slash the salaries of those in office! I think that would put quite a bit of money back into the country's budget!

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i would aim to cut farm subsidies (not totally eliminate)

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bev b.

fiscal disciplines and personal responsibility rather than a culture of entitlement

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I would reform our welfare programs - too many problems with people abusing the system. Yes, you'll have abuse in just about anything the government creates, but our programs could use some help.

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Get rid of Obama, extend the tacx cuts, and end the fiscal ABUSE in DC one and for all.

Of course I know its impossible, but that's what I would try to do...

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Cut the Department of Education and return control of education to the local level. Cut farm subsidies. Cut the TSA.

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The majority of education is controlled at the local level. Curriculum, funding, hiring, labor negotiations, etc... are all local. The items you mention are a mere fraction of the problem.

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- Shut down unnecessary overseas military operations and stop policing the world. I think no explanation is needed here.

- Opt out of SS, Medicare. Other countries have done it just fine. There's no reason for the Fed to coddle you from cradle to grave.

- End all subsidies. I'd rather we pay $10+ a gallon for gas, maybe then things would really start hopping in the alt energy sector. Those clamoring we're a "free market", capitalistic economy neglect the fact that subsidies alter true market driven pricing.

- End Prohibition II. "If it grows, it goes." The Fed should not be in the business of regulating plants. If you want to go to your windowsill and pluck off a coca leaf to throw in your Earle Grey tea on a Saturday morning and read the paper, so be it. You're in your home, not violating anyone else's rights, I see no problems. Any substance requiring alterations (meth, cocaine) will be available via prescription only, similar to vic's, and oxy's. This reduces immigration issues, smuggling, deaths, gangs, etc.

- Return the business of incarcerating citizens to the gov. It's their job to protect us from threats, not a bottom-line driven corporation lobbying for more illegal this and more illegal that to make us nothing more than profit statistics on their balance sheet.

- Eliminate 75% of the Departments of ___________. They are a joke and completely unnecessary.

- Substantially increase grants for education. An ignorant society is easier to control with fear and keep in line (Patriot Act anyone?)

Numerous others, but I think you get the idea.

Guest's picture

Kudos! Well said.
When are you running for office? You'll have my vote.
Until the USA starts taking care of their own FIRST, we'll never make definitive progress.

Guest's picture

this is pretty easy. legalize marijuana and then tax it! it will make a lot of cash for the government, new jobs, and some very happy people. plus, there will be fewer people being supported by the government in prisons.

Guest's picture

This not a complete plan but it would probably be the centerpeice of one. Since I do not have real numbers, I'm not sure exactly how much closer it would bring the budget into balance. I've read that the bulk of the deficit problem is Social Security and Medicare. I would propose a progressive tax hike by age on each of those programs. If you are in your 20s or 30s and working, then you pay the current percentage. However, after 40 you would pay an extra half a percent or a full one percent and have it increase essentially by a half a percent every 5 years or every decade until you're actually able to collect SS or use medicare. I'm aware that there are some people who use the programs long before they retire, but they are a miniscule part of the program. The particular numbers would of course be open to debate, but the main idea is that it would be a much easier sell to the right (or both parties for that matter). Tax hikes for these programs are usually seen as socialist. In this case, it's tax the young and/or working to give to the elderly, retired, and/or sick. In this scenario, people who are going to use the program in the very near future (those in their 50s and 60s) are paying the most in. It's less like a social program and more like a traditional 401K and health insurance plan. You could also give a smaller tax hike to those in their 20s and 30s (say a miniscule half a percent between each program). This would hopefully be an easier sell to that generation because at least they would see that it's a fairer deal for them and they're not just being taxed for a program they'll never get to use. In other words, this large change (along with incrementally increasing the retirement age) could actually keep the two programs afloat for the forseable future.
One further stipulation that I would be fairly flexible on is that if you're past the retirement age and still working but making an income two times higher than the poverty line, then you cannot collect social security. However, you would also be exempt from paying the social security tax (which under my plan would be fairly significant at this time). I think this would be a gigantically hard sell to the elderly and the right and it would be somewhat of a disincentive to keep working. However, I think it's more fair considering the program's questionable viability and the fact that there are so many young people out of work.

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Alicia C.

Tough question... there are so many ways to go about this. I guess the first thing I'd do is cut all of the large agri-businesses from getting tax cuts. Keep that farm bill for the small farmers. Give even better incentives to these small farmers for going organic. Charge higher taxes when food is imported or transported from far away. I could go on and on.


Guest's picture

1. Cut defense spending in half and reallocate half of the cuts to education (net reduction of 25% of current defense spending)
2. Eliminate government pensions for all federal employees, offer a 3% defined contribution plan; raise the military pensions to the same age as social security
3. Cut social security benefits in half for anyone under 50
4. Cut foreign aid by at least 50%
5. Cut medicare by at least 15% (not sure how)
6. Keep taxes where they are

Not sure if this would balance it, but it would be more of a start than what the federal politicians are doing today.

Guest's picture

I would approach this the same way and individual needs to approach cutting debt. Raise revenue and cut expenses. Just like diet and exercise is the best way to loose weight, we can't expect to get any where by just depending on one strategy.

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0% savings from tax increases, 100% savings from spending cuts. I felt it was important to make these necessary but painful cuts now rather than later. Someone has to make the sacrifice!

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Raise taxes, lower spending. Next time give me a tough one.

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I would extend tax cuts, cut welfare and medicare spending drastically (I live in a poverty stricken city and abuse of these programs is rampant. People just let their families jump on board and falsify documents.) Oh, and could we get rid of USPS on the government tab? Their CEO is bright enough to turn the company around and big government won't let him.

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I've read through a lot of the suggestions and, while some of them make great sense, some of them also do not. The US economy is a very complicated thing. Many things depend on many other things. Some of that is good, some of that is bad and due to political corruption, lobby groups, etc. It's easy to say "cut subsidies, I'll pay $10/gallon of gas and $5 for a potato" if you have a reasonable job and can make that work in your budget. But for someone working at a lower paying job, that's would be unimaginable.

I'm an engineer, not an economist, so I don't have a lot of ideas of how to make things work to reduce the national debt. But I do think that fixing the tax code would be a start. It would still need to be income based and provide incentives for charitable giving. But there's gotta be a way to make it simplier and cheaper than it is.

Guest's picture

I also think some people buy into the hype that the majority of our economy is heavily subsidized. It's not. In fact removing all subsidies wouldn't even move the needle on most items other than clean power, the most heavily subsidize item on a per unit basis.

Take petroleum subsidies. Remove them, and the US would pay a few pennies per gallon more. Same thing goes with food. Take corn for example, the total subsidies in the US are about a half a penny per pound, less than 1% of the cost when it gets to your table.

When taken in total, numbers like $4 billion seem huge (2010 corn subsidies), when put on a per unit basis, they all of a sudden seem miniscule ($0.005/lb) they all of a sudden seem miniscule.

So while I agree that in general, we could survive the elimination of subsidies, the impact they will have on people in general will be small. Although, we have subsidies, if you look at deficit reduction potential, they also do not move the needle when talking about $1.4 trillion/year.

Guest's picture

one of the first things I would do is put a term limit on all federally elected officials (state too, but this is about the federal budget) and therefore do away with their pensions. If they are only in office for 2 terms (or whatever the limit is for their position), then a 401K type program will suffice.

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Slash the salaries of those in office first and foremost. Cutting military spending is the other change I would make nearly immediately.

Also, without going into not-keeping-it-civil territory, I don't see any reason why the tax cuts for the wealthy should be *extended*. You have all manner of rich people making hundreds of thousands of dollars per year or more and keeping it and spending it on themselves, not using it to create new jobs or help the people trying to get by on $15k per year. Get rid of the dang tax cuts for the wealthy already.

Guest's picture

Yes. Because those luxury houses, cars, restaurant meals, cleaning services, etc... that the rich spend their money on never create jobs here in America. I'm not saying I disagree with getting rid of the tax cuts. I just think they should all be eliminated. Not just those for people making $250K a year or more.

Like it or not, wealthy people create and have created the majority of jobs in this country (or any country for that matter.) Usually, that's how they got to be wealthy. They created jobs and then took their cut of each employee's production.

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I am for the flat tax to help balance the budget

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Patti B.

I would cut the expense account and salaries of congressional. Why should they get cost of living adjustment expenses when the citizens in the real world don't get one.

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Reduce politicians salaries, and then make it so that the public's vote determines raises for politicians, not votes by the politicians themselves (like they are going to vote "NO" to paying themselves more!).

Phase out Social Security for all but the lowest income brackets.

Simplify the tax code, keeping percent brackets in place but eliminating all deductions that create incentive to take on debt (people buy stuff just so they can deduct interest!). Really we should remove everything except standard deduction and exemptions. So many people complain about taxes, then turn around and complain about inadequete services that are funded through taxes. You can't have it both ways folks.

Impose stricter guidelines for welfare (drugs tests would be a good start) and then use savings there to increase programs to provide people with training so that they can support themselves.

Create laws/tariffs that reduce outsourcing of labor by large corporations overseas. More people making decent wages means that smaller income taxes can be spread over a larger populace (also helps with the whole wellfare issue).

Require personal finances courses to be taught in all high schools (financially literate citizens = financially stable country).

Guest's picture

This is a thought provoking question.

First, I'd get rid of the tax cuts that extend beyond $250,000. First off because median income even in the most costly of states is $80,000. Second off because the rich are already would be receiving a cut on anything UP TO the $250,000. And additionally, they rated the cuts and they were the least effective in terms of stimulating the economy and at the upper bracket actually only returned only 81 cents on the dollar.

Second, I'd remove the caps on Social Security and Medicare to stabilize those programs and I'd implement the lockbox that should have been implemented so that the surplus (as in 2 trillion dollars worth of slush)actually goes for what it was intended.

Third, I'd look at the military expenditures. I'm a veteran of 12 years and the way the military often operates is towards the end of September there is mad rush to spend every single penny whether it needs to be spent or not so your budget doesn't get slashed the following year. It's one of the areas where our government has not provided the oversight needed because it expects the military to police itself.

Fourth, I'd insist on a "war tax" perhaps if people realized they actually have to pay for wars then they might think twice and expect their leadership to actually debate the merits of force over diplomacy and consider the values of resources both in dollar and in human costs.

As for foreign aid it's only 1% of the budget but I'd be more than happy to slash some funding for arming both sides of a conflict in the interests of "foreign aid."

Since health care is such a large portion of our GDP and we know that Medicare is a proven program that actually controls costs(and that is politically popular) I'd create an exchange or option similar to Medicare that people could opt into for a percentage of their income. Let the health insurance companies compete. Isn't that what a "free market" is about?

I'd stop bailing out private entities without strings. If you need Joe Taxpayer to save you then you don't get to dictate the terms any longer. Mortgage modifications would be occurring. I'd rather bail out the guy laid off then some sleazy banker who rolled the dice and brought down the economy.

This is in the realm of pipe dream but House Representatives and Senators would earn the median incomes of their respective states. They'd be billeted in barracks in DC while serving in DC (just like the geographical bachelors in the military. No more whining about having to maintain 2 residences.) They'd be enrolled in the Federal exchange I established to make sure that everything hums along hunky dory with it. They'd lose their cushy pensions and only be able to collect if they served 20 years as a public servant(and they ought to grateful for that since the average American no longer receives a pension.) Frankly, as poorly as Congress has performed I'd be hard pressed to argue we couldn't randomly select representation like jury duty and get better results then we've gotten. At least then an average American might have a shot at having a voice in crafting government rather than the interest groups like the Oil industry(energy), the health care industry(insurance and pharma) dictating the terms we'll all be forced to adhere to.

I'm sure there's more but I think those would be decent starting points.


Guest's picture

I would bring the troops AND CONTRACTORS home from the middle east- spending part of that money on building a green structure. We need to be independent of the ME. This comes from a military family- husband son and son in law.
WE pay far more for the contractors than the troops. They all need to get out of a part of the world. It is a no win situation since no one has ever won there. Remember we trained Bin Laden in Afghanistan.

Get rid of the Department of Education. Limit farm subsidies to actual farmers.

I do not agree with keeping people employed until they are 68. Look around. Why are there not jobs for new graduates? That would be a 60 year old sitting in a chair.

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Deport ALL illegals. They pop their babies here, taxpayers are left with their hospital bills, the illegals use their anchor babies' SS numbers for welfare, we pay to house them in our jails, they bring crime and drugs, and they send billions of dollars annually out of our country. They're the downfall of America, get rid of them.

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Any representative, at any level, should be paid the median income of his constituents. If the rep thinks he needs a raise, he or she would have to raise the median income of his area.

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Jen B

I would balance the budget the same way I've had to balance our personal budget: no credit, cash only! If we don't have it in tax revenues (WITHOUT raising taxes) then it goes! The Governor of New Jersey has been a good example on a smaller scale.

Guest's picture

I actually played a similar game a few months ago

I like that one a lot better. It was really cool to see the deficit decreasing. I cut a lot of the military budget. I cut the space program and other non-essentials. I did NOT cut social security, medicare, education, or environmental programs. I reduced the debt from 70.3% in 2009 to 38.8% in 2019. I think that's pretty awesome!

Guest's picture

My answer is two pronged:

Pass a balanced budget ammendment for all future obligations. Once the government spending has surpassed revenue estimates for the year, government (except for military and human safety functions) shuts down. Period. This shall be incentive to keep government spending under revenue, because no one wants a shut-down. Especially representatives hoping to be re-elected.

Reform Social Security in the following manner:

- Starting in 2040, retirement age is set to the 90th percentile of age, adjusted annually. This gives everyone who may want to retire at the customary age of 65 time to adjust their savings. Currently, this would put the retirement age around 69.
- No early retirement except in the case of disablility. You want to retire early, do so on your own nickel.
- Starting in 2035, start means testing social security. This gives everyone 25 years to get ready.

Means test will use some form of the following rule set (I'll allow for some numbers to change):
- Using the current SSI payment structure, maximum benefit allowed is 120% of the poverty level. Those failing to save during their lifetime should not be able to afford luxuries in retirement.
- The minimum SSI payment will be 0% of the current rate structure.
- Next year's payment will be determined annually on a sliding scale based on prior year's investment income (including 401K and IRA) + income from work activities.
- In years where your annual income (investments + work income) reaches 300% of the poverty level your SSI payment is 0. If the lifestyle you want requires more than that, start saving now.

Guest's picture

This one is easy: Make every state abide by GAAP, or "Generally Accepted Accounting Principles". It's insane that not every state has to do this.

Guest's picture

Accounting is about keeping track of money. Following GAAP does nothing to balance the budget. It will give you an accurate picture of what your assets and liabilities are. It will also show you how you spend and make your money. But what it will never do under any circumstance is change spending patterns.

All your suggestion will do, is make it more clear what our unfunded liabilities are. Though that is an admirable goal, I think the unfunded liability of SSI dwarfs anything else we have, and that liability is well understood, based on annual reports from the GAO. So following GAAP to shed more light on it will do absolutely nothing.

Guest's picture

One suggestion is to re-assess the prison system. It is extremely expensive to lock away drug users who are of very little risk to society. If prison is reserved for violent offenders, there would be a huge cost savings. Even if some of the funds were used to assist drug users in job training it would still save a lot of money. And, then they will be working and paying taxes which will help the deficit.

Guest's picture

I would legalize marijuana that way we can create jobs growing it and manufacture hemp products, that would cut back on some of the crime.
get a better handle on these outrageous salaries and bonuses. Tax the rich like they are supposed to be taxed. Get back the american jobs that were sent over seas to other countries. Also cut back the financial help we give other countries, we have enough people homeless & starving in america.

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Eliminate all federal/state/city funding for all the illegal aliens who are living illegally in the U.S.

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John Smith

Sadly, we are so far into this mess it's tough to imagine getting out.

Return to a Federal Government that adheres to the Constitution. Remember that? It's the document that delineates the powers of the federal government. As long as we continue to ignore it, we're (pardon my French) fucked.

Slash budgets across the board. Start with the many agencies: Department of Homeland Security, TSA, IRS, Department of Commerce, Department of Education, etc.

The main function of the federal government is to unite the states and protect the rights of citizens across the country. Defense is therefore one of the only legitimate functions of the federal government, but the budget still needs to be cut (I'm in the military.).

In a few years we won't even have the money to pay the INTEREST on the loans we have taken to live this way. Absolutely shameful.

Guest's picture

As President, I would implement a simplified 20% flat tax on all corporate and civilian income. Eliminating all past tax code, eliminating corruption, eliminating corporate welfare, requiring the Federal goverment to operate within budget or decrease services (which would cause us to weed out people who cannot get us results). Perhaps, the government would focus on defense, education and infrastructure (which keep's society's fabric together). [I would also place an income level of social security, require 2 years of civil or miltary service in order to have voting rights, eliminate all federal loans for education, enforce lifetime maximums on welfare assistance -including automatic sterlization incentitives for ignorant people and the perpetually poor. Shrink down government bureacracy and force discussions on what is actionable.