I note that as I write the U.S. has a total deficit of about $16+ trillion, an amount most agree is far too high. The U.S. budget -- discretionary and non-discretionary expenditures combined -- is now running about $3.8 trillion per year. There are three fundamental ways to reduce the deficit (or at least keep from increasing it): (1) reduce federal spending; (2) raise federal revenue through higher taxes; and (3) raise federal revenue by juicing the economy. Of course, reducing the deficit (and paying on debt obligations) is not the sole goal in federal budgetary planning. The other goals are adequately providing for (a) the welfare of citizens and residents in the U.S. and (b) for the national defense.
With this in mind, I go over my prior comments, in order, discussing their budgetary effect [NB: numbers are from the perspective of federal revenue with + meaning revenues increase (or expenses decrease) and - meaning revenues decrease (or expenses increase), and the parenthetical amounts are for (2014)(2015)(2016)].
- Increase Taxes on the Wealthy (+$200 billion)(+$300 billion)(+$300 billion) I would phase-in meaningful tax increases on the wealthy coupling them with a substantial (a) tightening on tax shelters, (b) reporting requirements for (and substantial penalties for misuse of) offshore accounts, (c) increase in the capital gains tax rate as well (and tightening the definition of "capital investment), and (d) increase in tax enforcement regarding the wealthy. There is substantial political opposition to increasing taxes on the wealthy based in part on the claim this would hurt the economy based on the Laffer curve and the wealthy would start to shelter their income from taxation. The Laffer curve is economic voodoo. The idea that the wealthy already do not generally engage in all the tax avoidance they can is, frankly, just silly.
- Reformation/Regulation of Financial Institutions (-$100 million)(+$100 million)(+$300 million) The theory is that banks and investment houses may initially retract under initial regulation; long term this will have a substantial financial benefit as it stabilizes the industry and markets and increases investment (particularly long term reliable investing). I think the 2015 and 2016 are conservative in the positive revenue flow.
- Rein-in Military Spending (+$150 billion)(+$250 billion)(+$350 billion) Cutting military spending would have to be phased-in due to not jeopardize long term defense. Even with the highest cat, based on current world wide numbers more than 35% of the total military expenditures of all nations on Earth would be by the U.S. We'd have to be at war simultaneously with almost all other nations on Earth -- given our current military development -- for that number to be too low.
- Increase the Stimulus Package (+$100 billion)(+$300 billion)(+$500 billion) People can argue about it until their blue-in-the-face but the rare occasions where an economic stimulus has been warranted and sincerely tried, it's worked, and in those rare instances in today's economic climate where it has been tried -- read Iceland -- it's worked big time. Yes, people disagree. Juicing the economy, though,is an important effective way to help our budget and help our citizens at the same time, and has a long term benefit both to our standard of living and federal revenues.
- Reform the Health Care (+$50 billion)(+$300 billion)(+$500 billion) I would reform the health care system much more extensively than Obama proposes, including (though anathema to Democrats!) reigning in further Medicaid and Medicare expenditures. We cannot afford at the moment as broad a safety net as these currently provide. Reforming the system and brining the debt under control allows these programs to be returned to what they should be in the future.
- Addressing Global Warming (-$1 billion)(-$50 billion)(-$100 billion) We must spend money to address this problem. What is not obvious is that short of such expenditures aur expenses will dwarf these in the long run. These expenses are a necessary investment. I imagine a phase in for program development.
- Environmental Regulation and Natural Resource Protection (-$1 billion)(-$1 billion)(-$1 billion) I include estimated incidental effects, although overblown, on taxes due to such regulations affecting businesses.
- Health Regulation and Inspection (-$400 million)(-$400 million)(-$400 million).The safety of our food, drugs, and material goods depends on independent oversight. Providing that oversight is an important governmental function. Citizens/consumers cannot do this themselves; it is difficult or impossible to do. Republicans oppose much of this oversight and have seen it grossly underfunded. Which is sad, because it is such a small part of the federal budget (about $2.5 billion out of more than $500 billion in non-defense federal discretionary spending (more than $1.2 trillion overall)).
- "Recreational" Drug Legislation and Taxation and Elimination of the "War on Drugs" (+$20 billion)(+$70 billion)(+$200 billion) I'd expect a phase-in and time for the new policies to have effect.
- Not Changing U.S. Abortion Law (+/-$0)(+/-$0)(+/-$0)
- Gun Control (+/-$0)(+$50 million)(+$200 million) Gun control has a long term positive effect on the economy and federal budget because it reduces medical and interdiction costs long term.
- The War in Iraq (+/-$0)(+/-$0)(+/-$0) Old news.
- Nuclear Arms Treaties (+/-$0)(+/-$0)(+/-$0)
- Funding Scientific Research (including NASA) (+$10 billion)(+$10 billion)(+$10 billion) Yes, I think the federal government should spend this much additionally from what it spends now, excluding global warming science.
- Federal Funding of Education (+$50 billion)(+$100 billion)(+$100 billion) Again, a phase-in. These numbers are relatively low. Keep in mind that educational services and spending is mostly a state not a federal function in the United States.
- Teaching Evolution not loopy other "theories" (+/-$0)(+/-$0)(+/-$0)
- Not Publicly Funding Private Parochial Schools (+/-$0)(+/-$0)(+/-$0)
- Recognizing the Separation of Church and State (+/-$0)(+/-$0)(+/-$0)
- Recognizing Gay Marriage and Gay Rights (+/-$0)(+/-$0)(+/-$0)
- Recognizing Women's Rights and Equality (+/-$0)(+/-$0)(+/-$0)
- Supporting Civil Rights (-$50 million)(-$50 million)(-$50 million) This is in addition to current expenses. A drop in the bucket given this extraordinarily important issue.
- Criminal Justice Reform (-$50 million)(+/-$0)(+$100 million) An initial investment is necessary to effectuate meaningful criminal justice reform. Long term the U.S. and its citizens will benefit tremendously.
- Reforming Immigration Policy (+$200 million)(+$200 million)(+$200 million) The benefits to our economy would be tremendous.
- Appropriately Following Federalism (+/-$0)(+/-$0)(+/-$0) Actually I think this would greatly benefit the U.S. financially, but I'll call it a wash.
- Recognizing the Importance of Government, Good Faith and Reasonable Policies, and the Goal of Serving the Polity (+/-$0)(+/-$0)(+/-$0) As above I think this would greatly benefit the U.S. financially, but again I'll call it a wash.
How is it that liberal proposals reduce our federal costs and increase federal revenues? We know for a fact that in the last 50 years the U.S. economy and budgetary situation has been better under Democrats than Republicans. Why?
The reason is, that for all their talk, the Republicans are willing to spend extraordinary amounts on things like defense and tax cuts for the wealthy. They are not interested in reducing economic disparities even though that would help the economy or investing in the poor even though that would help the economy in the long term. They are interested in cutting small value programs for the poor. That does not help the economy, help the budget, or help the nation. Ah, well.
(NB on significant digits: since I've estimated into the billions, the amounts in millions, above, are irrelevant but I've included them to show their consideration -- as well as the de minimis nature of increasing expenses in these areas.)
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