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1 response so far ↓
1 Edmund Bujalski // Sep 1, 2009 at 7:14 pm
How to cut the deficit and improve the U.S. Balance Sheet:
1) Freeze for ten years, in nominal 2009 dollars, the total payroll/expense of everyone employed by or contracted with the U.S. government. This includes military personnel and all government contractors. Virtually every business in the U.S. is downsizing and reducing staff. It is time the the Federal government did so as well. Over ten years, this could be a huge savings, and would force Congress to decide what services are truly necessary out of the Federal purse. Entire agencies (many of which did not exist 30 or 40 years ago, or were skeletons of the bloated carcasses that some have become) may be eliminated to maintain truly essential services. Even at 3% inflation, if these Federal expenditures are held at 2009 dollar levels, this would reduce outlays for Federal employees and government contractors by about 40%. This would not be “bending the curve,” it would be flatlining it for ten years.
2) This is in the proposed health care reform legislation, but in too lenient a form, and moreover, unlikely to make it into any final bill. The government should put a federal tax on all foodstuffs containing sugar and other fattening ingredients (corn starch, corn syrup, fructose, etc.) that do not offer much nutritional value. The public will scream, but there should be a 10 cent tax on every 12 oz. soft drink, 50 cents on every package of cookies, 50 cents on a half-gallon of (non sugar-free) ice cream, 5 cents on every candy bar, etc. These “fat taxes” should also apply to things like potato chips, milk shakes, cakes, etc. Not only would this produce huge federal tax receipts, but over time, this would effect eating behaviors and lead to a reduction in obesity (approximately 30% of Americans are considered obese by the CDC – that’s a “Body-Mass Index” or BMI of 30 or higher). I expect that such a “fattening foods tax” could generate $50 – $100 billion a year in increased federal taxes. More importantly, if it lead to a reduction in obesity, over time this would dramatically reduce health care costs in the U.S., reducing Medicare and Medicaid costs. Approximately 30% of obese people suffer from diabetes, a major driver of healthcare costs in the U.S., and 70% of morbidly obese people (BMI’s over 40) have diabetes or another co-morbid condition (sleep apnea, hypertension, asthma, high cholesterol etc.). We tax cigarettes because they cause ill health. We need to tax foods that cause ill health, and fattening foods clearly fall in that category.
3) Slap an additional $1.00 federal tax on every gallon of gasoline purchased for use in an automobile. This will raise a huge amount of tax revenue, and enourage much needed conservation. It will lead auto makers to respond to a market demand for increasingly fuel efficient cars. Europe has heavily taxed gasoline for decades, and everyone there seems to be surviving. The Energy Information Administration reports that 137.8 billion gallons of gasoline were consumed in the U.S. in 2008. This $1.00 tax, while painful and regressive, would generate over $100 billion in additional revenue, cut fuel consumption, lead to wiser choices in auto purchases.
4) Stop subsidizing the auto industries. Let things die if they need to die. “Creative destruction” (Schumpeter) is a tenet of the process of capitalism.
5) Eliminate all farm subsidies, and insitute a 10% tax credit for purchases of organically grown food. This will most likely be a net savings to the government, and will encourage people to buy healthier food. In fact, if the “fattening food tax” above is initiated, people receiving food stamps should get some sort of credit for buying organically grown foods (maybe getting $1.5o to the dollar if food stamps are used for organically grown food). The thinking here is to break the influence of the large food conglomerates, and let the market find its equilibirium. The disequilibrium of the support for buying organics comes back to healthier eating and lower long term health care cost (remember that Medicare is a much bigger driver of future deficits than Social Security payments).
6) Reduce our military bases abroad by at least 50%. We have something like 300 foreign bases. this is ridiculous. We can no longer afford to police the world, nor it is our job to do so. This would tie in to #1 above, and help to hold Federal expenses to 2009 nominal dollars for ten years.
7) Eliminate the current tax code, put in a flat tax that is easily calculated and monitored. Reduce the IRS staff by over 50% and focus on collection and identifying fraud, triple the fines on anyone who fails to pay their income taxes and have mandatory jail sentences for anyone who willfully attempts to cheat the government out of $10,000 or more in a single tax year.
9) Leave the Bush tax cuts in place, but increase the ceiling for FICA withholdings to $250,000 a year in income starting in 2010, and hold it there in nominal terms for 10 years. Along with the proposal in #7 above, this will eliminate the SS Trust Fund problem. This is not a regressive tax, and will give some political counterbalance to the gasoline surcharge above.
10) Eliminated the AMT.
I beleive that most of these recommendations would never make it through Congress, and there would be a hue and cry from the public over the gasoline tax and the fattening foods tax. AARP would orgainze rallies across the land re the proposed SS changes, and certain Congressman would see their fundraising coffers a bit bare if farm subsidies and two years of “pork” are eliminated. However, these proposals should generate at least $200 billion a year in new taxes while dramatically improving the SS Trust Fund. Anything that lowers the rates of obesity in this country will dramatically lower long term heatlh care costs, the biggest driver of future federal spending. Bringing our troops home from over 100 countries is just common sense and will be a great morale booster at home. Simplifying the tax code and the wasted manpower it produces is long overdue.
Just a few thoughts for a Tuesday afternoon…
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