The Concord Coalition is pointing out that Paul Ryan, the new chairman of the House Budget Committee, faces a daunting task. He wants to preserve his party’s prohibition against tax hikes—while also producing a budget that reduces the budget deficit more than the Obama administration's plan.
Liberals, of course, don’t think it’s possible to be a hawk on tax cuts and a hawk on budget deficits. Ezra Klein is already forecasting that Ryan will have to either use wishful thinking or vagueness to escape the dilemma.
Fortunately for Ryan, he doesn’t need either. He just needs to look at the NetNet version of the federal budget.
Back in November, we figured out how to reduce the budget deficit all the way to zero—without raising taxes or touching Social Security. In fact, we over-achieved, resulting in a slight surplus. You can check out exactly how we did it by clicking through to the New York Times interactive feature we used as our baseline.
In many ways, this could be a huge political winner for the Republicans. Obama has shown his willingness to spend money to take sides in the Libyan civil war—something Republicans could easily run against. Our budget took an axe to military spending and space research to achieve a savings of $349 billion.
I think, actually, I’d like to slash this spending even more—but there was no option in the Times feature for a total withdrawal from Iraq and Afghanistan in 2011. Drawing our troops in both countries down to zero this year—and, obviously, ending this adventure in Libya—would save hundreds of billions more. I’d say we could add at least another $150 billion of savings for declaring victory and going home.
Foreign aid can only be cut in half—for a savings of $17 billion—according to The New York Times. We’d cut it all the way, achieving an additional $17 billion of savings.
I left Social Security largely intact, because most of the proposals to reform it are forms of redistributive taxation which I think aren’t a good idea. The only thing I cut here was $17 billion from the disability program, which is a relatively minor reduction that would only cut into states with the most generous programs for allowing disability benefits.
When we did this experiment in November, the largest savings came from Medicare, the government-provided health care for the elderly. Capping Medicare growth at GDP plus 1 percent would save $29 billion by 2015 and $562 billion by 2030. By raising the age qualification to 70, I’d take off another $104 billion over 20 years. And reducing the tax breaks for employer-provided health care—which would incentivize health-care consumers to put pricing pressure on providers—saves another $157 billion. Tack on malpractice reform and we’ve got another $13 billion in savings.
With those cuts alone, we managed to not only balance the budget—we’ve created a surplus. According to the Times, by 2030 I’d have a $30 billion surplus. The additional spending cuts—the ones The New York Times wouldn’t let us include in foreign wars and foreign aid—would bring the surplus up to around $200 billion.
I’d probably favor both raising some sort of bank tax and converting the mortgage interest deduction into a tax credit. According to the Times, this would give another $157 billion in revenue.
With an additional $357 billion in revenue, we could actually restore almost all the cuts to Medicare.
So, under this budget, we’d have no budget deficit in 2015 and none all the way out to 2030. The main thing we need to cut is wasteful government domestic spending and the unaffordable imperial military spending. Why does everyone act like this government budget stuff is so hard?
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