One of the hot topics of today is the federal budget and deficit control.
No political speech or press event can finish without at least one question linking whatever the topic may be back to the budget and its impact on the national debt. From the campaign to the inauguration to the State of the Union address, the underlying theme was balancing the budget and eliminating or getting our national debt under control. There is a serious question as to whether this can even be done considering the size and scope of federal spending. However, it is possible, and if we look at the size and scope of the government, military spending, entitlements, and tax reform, there are ten ways to eliminate our deficit by 2030.
1. Cut Foreign Aid in Half - $17 billion
As a country, we are facing huge deficits and cannot continue to provide aid at our current clip. If we cannot help ourselves, how can we help others? My solution is not to eliminate foreign aid, just cut what we give in half.
2. Eliminate Earmarks - $14 billion
Earmarks have been a great talking point for both parties during campaign season, but no one ever does anything about it, because these pet projects for home districts are a good way to keep securing votes. Let’s finally put an end to the practice.
3. Cut 250,000 Government Contractors - $17 billion
Contractors typically are cheaper than actual employees, but when the number of contractors greatly outnumbers employees something needs to be done. Either see if current employees can do the job or outsource it to the private market.
4. Reduce the Size Of World-Wide Troop Presence - $49 billion
We can produce savings by reducing the size of the military to the pre-Iraq War size and reduce our presence in Europe and Asia by 26%, which would also be less (33%) than future projected levels. Acting as the police of the world only stretch our defenses out, and as history has proven all great empires fall when they stretch their defenses too far.
5. Reduce Troops in Iraq and Afghanistan to 30,000 - $169 billion
These numbers are based on troop levels from 2010, but the idea of bringing these troops home remains the same. In the State of the Union, the president announced another round of troop withdrawals from Afghanistan. Once that is complete there will still be more than 30,000 troops there, so we still need more withdrawals to get the levels in both places to a total of 30,000.
6. Cap Medicare Growth - $562 billion
If we cap Medicare growth at G.D.P. plus one percentage point we can start saving significantly. One piece of reform this could spark is looking at the hospitals and doctors with the highest costs and look for ways to reduce them.
7. Reduce Benefits For Those With High Incomes - $54 billion
Social Security will continue to be a hot topic. One way to produce savings that is not talked about widely is reducing the benefits of high earners. This is not eliminating their benefits, or giving their benefits they paid for to someone else. What it does do, is grow their benefits at a slower clip.
8. Return Estate and Investment Taxes back to Clinton-Era Levels - $150 billion
The Clinton-era is the last time we had a balanced budget and a surplus. Since that time both presidents have run deficits and run our debt to all-time highs. It makes sense to return tax rates to the Clinton levels since that was the last time the government was prosperous.
9. Payroll Tax: Subject Incomes Over $106,000 to the tax - $100 billion
This is the tax that pays for Social Security and Medicate, but we cap how much income can be taxed. If we remove or increase this cap, we can generate a lot more money for these programs that can increase their longevity.
10. Eliminate Loopholes, Credits, and Lower Rates - $229 billion
The deficit commission came up with a plan to lower rates, while also eliminating some tax breaks or the Bowles-Simpson Plan. The plan cut all breaks except for the child and earned income credits and those for mortgages, health and retirement benefits while cutting the corporate tax rate and individual rates for all brackets. I take this one step further by adding the mortgage deduction as well. Currently, high earners benefit the most from the credit and not the middle to lower income homeowners. If we are lowering rates across the board we can eliminate this credit, or at a minimum think of ways to reform it.
Trying to find a balanced approach was not easy and my final numbers came from 60% spending cuts and 40% tax increases. Our leaders in Washington are more focused on their respective party lines than doing what is right for the country. As a result, we have people resigned to the fact that we may never have a balanced budget or eliminate our debt.
The fact of the matter is that if our political leaders can stop looking for the easy way out and instead focus on the size and scope of the government, military spending, entitlements and tax reform we can eliminate our federal debt by 2030.