The Most Obvious Solution to the U.S. Budget Crisis
There is good news for people upset with austerity measures in the U.S. According to House Minority Leader Nancy Pelosi, there are no more budget cuts to be made as the "cupboard is bare." People in the real world will have realized that Pelosi really meant, "We can't cut without upsetting the lobbyists paying for our campaigns."
Because even though sequester, a meager 4% decrease in spending has kicked in and Congress was still able to enact 17,679 budgetary measures since March 1. The U.S. can't function without making rules over the Bend, Ore. airport? Without spending time on a Washington State inventory of native human remains? Without paying attention to an Arizona museum trying to repatriate native objects to the appropriate tribes?
If she were true to her oath to defend the Constitution, Pelosi would actually think that expenditures should be taken care of with a thermonuclear bomb, not a scalpel. Indeed, if D.C. had stayed true to the Constitution, there would be no departments but the state, treasury, justice, and defense as these represent essential functions of the federal government the founding fathers envisioned.
Cutting everything else from education to agriculture to the EPA would save (according to the departments' most recent budget requests, and excluding loans they guarantee) nearly $1.7 trillion or 45% of the deficit. Cutting every federal agency not enumerated in the Constitution (FBI, DEA, FCC) would also save several billion, which would eventually turn into surpluses by abolishing programs like Social Security, Medicare, Medicaid, and by having tariffs that only exist to bring revenues rather than stop trade.
While this would help the U.S. in the long run as regulations could have shrunk the economy by as much as four-fold, there would be an unavoidable and very painful recession in the short run. It would be unavoidable because not only so many people working for the government would be fired, but also because so many people and businesses have arranged their lives around the signals sent by government. There would be too little savings and too much debt because of artificially low interest rates, risky loans forced by Washington, a "too big to fail" mentality that encourages unsustainable practices and so on.
So the solution would be to gradually phase out all regulations and departments not vital to the survival of the country. That way, we prove Nancy Pelosi wrong by making deep cuts in the budget while easing the pain to all of those losing their jobs as a result of those cuts. It will be painful, but countries can get through it, as Canada and Estonia have shown.