An assignment given in class today required us to visit a link entitled Budget Puzzle: You Fix the Budget from The New York Times website. In this activity, we had to decide whether we wished to cut spending for a particular government program or policy or to follow an initiative which would raise taxes in a specific area. The ultimate goal of this activity was, of course, to have "successfully" solved the deficit problem.
Below are my final results after I had managed to solve our country's deficit problem, starting with tax cuts
Tax Cuts
Regarding tax cuts, I took aim at what I saw as wasteful spending. Earmarks were the first to go. Although they only make up a small proportion of the deficit, they are synonomous with wasterful spending in Washington. Farm subsidies also went becasue it is pointless for the government to fund farms that continue to fail and not produce results. Since the federal bureaucracy is large enough, I also cut jobs in the federal workforce, as well as government contractors. In the military, nuclear warheads and some weapon programs were scrapped. I also pushed for the reduction of troops in Iraq and Afghanistan by 2015. Beside that, I made no major cuts in military spending, recognizing that the country is currently engaged in warfare and cannot afford serious slashes to the military budget. In medicare, one of the greatest cuts I made to the deficit was from capping Medicare growth in 2013. I also pushed for reform in medical malpractice and tightened eligibility requirements. If my budget balancing doesn't take off, I'll at least be remebered for advocating medical reform in America.
1) Eliminated earmarks - $14 billion
2) Eliminated farm subsidies - $14 billion
3) Reduce the federal workforce by 10% - $12 billion to $15 billion
4) Cut 250,000 government contractors - $17 billion
5) Other cuts to the federal government - $30 billion
6) Reduce nuclear arsenal and space spending - $19 billion to $38 billion
7) Cancelled or delayed some weapon programs - $18 billion to $19 billion
8) Reduce the number of troops in Iraq and Afghanistan to 60,000 by 2015 - $51 billion to $149 billion
9) Enact medical malpractice reform - $8 billion to $13 billion
10) Cap Medicare Growth starting in 2013- $29 billion to $562 billion
11) Tighten eligibility for disability - $9 billion to $17 billion
Tax Hikes
I only enacted a few taxes, half of which followed the Obama administration mode. Since I no longer wanted to make any more tax cuts, I would have to resort to some high taxes to fully defeat the deficit. The Obama intiatives were agressive enought to combat the problem(though in real life, I wouldn't be as enthusiastic). A major tax was on persons with an income over $1 million. It wouldn't be a popular move among the affluent, but it is a large souce of revenue for the federal government. I also eliminated tax loopholes for tax breaks on corporations but kept the taxes high. For similar reasons similar to taxing millionaires, as it is also a good source of income.
1) President Obama's Proposal (Modifying Estate Taxes) - $24 billion to $45 billion
2) President Obama's Proposal (Investment Taxes) - $10 billion to $24 billion
3) Millionaire's Tax on Income above $1 million - $50 billion to $95 billion
4) Eliminate Loopholes but keep taxes slightly higher - $136 billion to $315 billion
Ratio between Taxes and Cuts
Savings from Tax increases - 39%
Savings from spending cuts - 61%
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