OK, I have a debt reduction plan. (revised)

[Missourian]

Updated from this plan that was general panned by both sides of the political spectrum, http://www.usmessageboard.com/politics/139425-ok-i-have-a-plan-to-reduce-the-deficit.html from October, 2010.

I'm reintroducing it , as we now face a new reality.



OK...I have a plan to reduce the deficit and debt.

It will require a Constitutional Amendment that:

1) Requires a National Balanced Budget

2) Would allow deficit spending ONLY in the event of a crisis and would require a 3/4 majority vote in Congress AND Presidential authorization.

3) Would institute a Value Added Tax, the revenues from which would apply 100% to reducing the national debt.

4) The Value Added Tax would sunset after the national debt was paid off. It could be re-instituted to pay off any new deficit spending that resulted from crisis deficit spending.

5) Would outlaw Value Added Taxes for any other purpose than paying off the debt.
​

Yes, I know it is difficult to pass a Constitutional amendment, but I see no alternative.

This could also free up the 8% of the federal budget that is used to pay the interest on the national debt, which, in conjunction with spending cuts and entitlement and defense spending reform, may allow for a balance budget.

Critique?

 

[Greenbeard]

Critique?

Aside from the VAT, it's a bit of an Underpants Gnomes plan.

1. Set goal/requirement of balanced budget.
2. ???
3. Budget balanced!

But then again, quite a few deficit reduction plans these days tend to have that structure.

 

[Animus]

Not all debt is bad, but when the majority of the debt is on entitlement/social programs it is bad debt. I'd like to see all those programs restructured and/or some totally eliminated or privatized. If our 15T debt was being used for job creation then I'd really wouldn't have a problem with it because the tax revenue created would pay off the debt in no time.

 

[NYcarbineer]

Politically impossible. The Republicans couldn't vote for the VAT tax because of their vow to Grover Norquist.

 

[Missourian]

Critique?

Aside from the VAT, it's a bit of an Underpants Gnomes plan.

1. Set goal/requirement of balanced budget.
2. ???
3. Budget balanced!

But then again, quite a few deficit reduction plans these days tend to have that structure.

I had to look up "Underpants Gnomes".

Let me clarify, this is actually a debt reduction plan.

It helps reduce the deficit by freeing up all or part of (or none) of the revenue that now goes to paying the debt...Around $164 billion in 2010.

That would go along way toward balancing the budget.

 

[Missourian]

Politically impossible. The Republicans couldn't vote for the VAT tax because of their vow to Grover Norquist.

They could and they would vote for this one.

It does three things fiscal conservatives want...a balanced budget amendment, a constitutional outlaw of VAT taxes for every other purpose and stabilizes the national debt.

 

[Foxfyre]

The only way a balanced budget amendment will be feasible is by limiting Congress's ability to use the tax payer's money to increase its own power, prestige, authority, and personal fortune. You have to limit the size of the budget they will balance to get the federal government off the backs of productive Americans.

 

[dilloduck]

You are under the illusion that politicians care about the debt.

 

[Zander]

There is an easier way. Just "Freeze" spending.

When these morons in DC talk about spending "cuts" they are talking about cuts in the rate of growth of spending- not actual cuts. Only in DC is a spending increase a "cut" in spending!

If we freeze spending and tax rates at today's levels, we have a balanced budget in 5-6 years assuming normal growth.

 

[Toro]

A balanced budget amendment is a bad idea. It is pro-cyclical. Policies should be counter-cyclical. Run deficits when the economy is contracting and surpluses when the economy is expanding.

Also, there is no reason to pay off all the debt. Some debt is good.

I do like the idea of a VAT tax to go directly towards paying down the debt, however.

I'd also say no tax cuts during wars.

The best framework in which to conduct monetary policy is for the people to be diligent about the deficit. You run surpluses when the economy is expanding and deficits when it is contracting. The people should get pissed off when it is run otherwise. But for that to happen, the American people need a big dose of cold water reality first. They haven't had that yet.

 

[Foxfyre]

There is an easier way. Just "Freeze" spending.

When these morons in DC talk about spending "cuts" they are talking about cuts in the rate of growth of spending- not actual cuts. Only in DC is a spending increase a "cut" in spending!

If we freeze spending and tax rates at today's levels, we have a balanced budget in 5-6 years assuming normal growth.

Won't work as long as they can use our money to buy prestige, power, authority, and increase their personal fortunes. As it is, if next year's budget for something is set to increase say $100 billion, and they reduce that to $80 billion, they call that a 20% cut. If you froze spending they would call that a 100% cut and the headlines and lead stories on all the liberal media would be proclaiming social security, medicaid, medicare is being dismantled, school children are being starved, the elderly are being thrown out on the street, yadda yadda .

I still say the only way we will ever restore fiscal sanity is to eliminate ALL their power to use our money to benefit themselves.

 

[LordBrownTrout]

Add a penny to every transaction that occurs. Call it what it is: a debt tax that pays off our debt. Once paid, drop it.

 

[Zander]

A balanced budget amendment is a bad idea. It is pro-cyclical. Policies should be counter-cyclical. Run deficits when the economy is contracting and surpluses when the economy is expanding.

Also, there is no reason to pay off all the debt. Some debt is good.

I do like the idea of a VAT tax to go directly towards paying down the debt, however.

I'd also say no tax cuts during wars.

The best framework in which to conduct monetary policy is for the people to be diligent about the deficit. You run surpluses when the economy is expanding and deficits when it is contracting. The people should get pissed off when it is run otherwise. But for that to happen, the American people need a big dose of cold water reality first. They haven't had that yet.

I love the "theory" of cyclical deficit spending, but it will never work in actual practice. The politicians in DC lack the discipline to run surpluses in good times. When times are good they rationalize deficit spending- why not? Times are good! Let's "invest" in our children, our environment, the poor, etc... So they run deficits in good times.

Then in bad times they rationalize even greater deficit spending by saying "we need to 'save' the economy. They'll never stop until we legislate against it.

So the bottom line is once you allow a government to deficit spend- they will do it every year without exception.

 

[Foxfyre]

Add a penny to every transaction that occurs. Call it what it is: a debt tax that pays off our debt. Once paid, drop it.

We haven't had a Congress since before FDR that didn't spend every penny it took in plus a little bit more. And in 70 plus years, our fearless leaders have learned how much they can use our money to benefit themselves personally and that had emboldened them to not only not stop the snowball, but they keep pushing it faster down the hill.

We will not solve anything by giving them more money. The ONLY solution is to give them steadily less to spend.

 

[Greenbeard]

The politicians in DC lack the discipline to run surpluses in good times. When times are good they rationalize deficit spending- why not?

The argument last go around was the government has no right to run a surplus.

The growing surplus exists because taxes are too high and government is charging more than it needs. The people of America have been overcharged and on their behalf, I am here to ask for a refund.

In fairness, I imagine that some day in the future when surpluses return the same argument will be made.

 

[Zander]

The politicians in DC lack the discipline to run surpluses in good times. When times are good they rationalize deficit spending- why not?

The argument last go around was the government has no right to run a surplus.

The growing surplus exists because taxes are too high and government is charging more than it needs. The people of America have been overcharged and on their behalf, I am here to ask for a refund.

In fairness, I imagine that some day in the future when surpluses return the same argument will be made.

Yet another reason Keynes' ideas only work in theory.

 

[LordBrownTrout]

Add a penny to every transaction that occurs. Call it what it is: a debt tax that pays off our debt. Once paid, drop it.

We haven't had a Congress since before FDR that didn't spend every penny it took in plus a little bit more. And in 70 plus years, our fearless leaders have learned how much they can use our money to benefit themselves personally and that had emboldened them to not only not stop the snowball, but they keep pushing it faster down the hill.

We will not solve anything by giving them more money. The ONLY solution is to give them steadily less to spend.

All of what you said is true and I completely agree. I'm against giving them more money to spend on endless, worthless endeavors that benefit none of us. I do think the debt needs to be paid off though through responsible management of our taxes. I only threw the penny debt in there so that we could work towards paying our debt off quickly.

 

[Foxfyre]

Not only do I think we need a spending freeze AND a balanced budget, but until the national debt is paid down to say 3 or 4% of the GDP, it should be mandatory that 10% of every budget should be delegated to debt reduction. Not a theoretical cause and effect thing either, but an actual cash payment against monies owed. The debt clock should stop running entirely and then gradually start running backwards.

We would have our AAA credit rating AND full employment back in no time.

 

[Missourian]

The only way a balanced budget amendment will be feasible is by limiting Congress's ability to use the tax payer's money to increase its own power, prestige, authority, and personal fortune. You have to limit the size of the budget they will balance to get the federal government off the backs of productive Americans.

How would you accomplish this?

 

[Missourian]

You are under the illusion that politicians care about the debt.

Touche'