CDZ Serious Proposal for Budgetary Reform

[jwoodie]

I think most people agree that the federal government cannot continue spending substantially more than it takes in year after year without serious economic repercussions. If nothing else, the inevitable return to normal interest rates will become a deficit monster even if the rest of the budget was balanced. (5% of $20 trillion is $1 trillion per year.)

The only ways to reverse this course are to limit spending and increase revenues. The former poses questions of fairness and priorities, but the latter should only be a question of how to maximize long term net revenues (adding other considerations only serves to defeat this purpose).

Spending is determined by two factors: Per capita increases in spending levels (e.g., COLAs) and the numbers of people/programs receiving the outlays. The fairest way to limit spending is to limit (or temporarily eliminate) per capita increases in outlays, because it spreads the burden over the largest number of people and programs. Once this is accomplished, additional priority adjustments could be made on a zero sum basis.

Maximizing long term net revenues is also determined by two factors: Tax structure and regulatory policies. On the income side of the equation, the federal tax structure should only be concerned with determining optimum sustained revenue streams using legitimate economic principles (e.g., Laffer Curve). On the expense side, regulatory policies should place their highest priority on expanding and maintaining private sector employment, since this is the most efficient way of turning tax eaters into tax payers.

It seems to me that these approaches would lessen the current political Balkinization that has prevented any serious budgetary reform. If voters' attention was refocused on a common goal of avoiding impending economic disaster (rather than their immediate special interests), we might be able to restore prosperity to our country.

Thoughts/comments?

 

[Fishlore]

I think most people agree that the federal government cannot continue spending substantially more than it takes in year after year without serious economic repercussions. If nothing else, the inevitable return to normal interest rates will become a deficit monster even if the rest of the budget was balanced. (5% of $20 trillion is $1 trillion per year.)

The only ways to reverse this course are to limit spending and increase revenues. The former poses questions of fairness and priorities, but the latter should only be a question of how to maximize long term net revenues (adding other considerations only serves to defeat this purpose).

Spending is determined by two factors: Per capita increases in spending levels (e.g., COLAs) and the numbers of people/programs receiving the outlays. The fairest way to limit spending is to limit (or temporarily eliminate) per capita increases in outlays, because it spreads the burden over the largest number of people and programs. Once this is accomplished, additional priority adjustments could be made on a zero sum basis.

Maximizing long term net revenues is also determined by two factors: Tax structure and regulatory policies. On the income side of the equation, the federal tax structure should only be concerned with determining optimum sustained revenue streams using legitimate economic principles (e.g., Laffer Curve). On the expense side, regulatory policies should place their highest priority on expanding and maintaining private sector employment, since this is the most efficient way of turning tax eaters into tax payers.

It seems to me that these approaches would lessen the current political Balkinization that has prevented any serious budgetary reform. If voters' attention was refocused on a common goal of avoiding impending economic disaster (rather than their immediate special interests), we might be able to restore prosperity to our country.

Thoughts/comments?

I think you raise an important issue in a clear and thoughtful way. Most people agree that spending and taxation ought to be balanced. The big exception is the political class which finds spending rewarding and taxing risky and unpopular. Tax and spend has been replaced by borrow and spend.

By ducking the hard part, our leaders avoid having to take a position on the key questions: "what kind of society do we want to have?" and "who is going to pay for it?" These questions are never easy. In a democracy they provoke class warfare between the majority of the people and the ruling class, which has the most money. As the income disparity grows, so does the tension. Our income gap is the greatest it has been in several lifetimes and the resulting tension has corrupted our political process and caused deep division and alienation in our society. The current situation is unstable and unsustainable. I fear that a hard rain is gonna fall.

 

[leftwinger]

Understanding the Debt Ceiling and the Lies and Myths We're Told About It

(similar thread)?

 

[MarathonMike]

I look at the Federal Government as a hugely inefficient company. This company has two problems that must be fixed before continuing to increase spending and taxes. Number one is there are many more employees than needed to keep the government running smoothly. In fact over-employment itself causes inefficiency. Every other company has to downsize to stay competitive, why is the Federal government exempted? Number two is the enormous amount of fraud that takes 10s of billions of dollars out of the Treasury and very little is done about it. Before raising taxes and raising borrowing limits, downsize the government and go after the defrauders aggressively.

 

[jwoodie]

Understanding the Debt Ceiling and the Lies and Myths We're Told About It

(similar thread)?

My post is not about the debt ceiling; rather, it is suggesting a different (and rational) approach to dealing with our seemingly permanent deficits. Instead of pitting one group against another or demagoguing "income disparity," why don't we identify this budgetary problem as a threat to everyone and approach it in an objective manner?

Economic growth and/or inflation are the only external factors we have to work with. The former reduces the number of people receiving government expenditures while increasing the tax base. The trick is to determine what tax structure maximizes these benefits.

At the same time, inflation can be used to slow increases in real spending by limiting cost-of-living adjustments to federal programs. This is the fairest way to distribute its effects, since it spreads them over the widest number of people.

Hopefully, this approach would provide our citizens with a common goal: The sooner we get our economic house in order, the sooner we can restore the American dream for all.

 

[leftwinger]

Understanding the Debt Ceiling and the Lies and Myths We're Told About It

(similar thread)?

My post is not about the debt ceiling; rather, it is suggesting a different (and rational) approach to dealing with our seemingly permanent deficits. Instead of pitting one group against another or demagoguing "income disparity."

OK.

Eliminate/Combine similar DEPTs. (this could be huge)
Layoff non-essential employees. ($18T debt yet FED has non-essential?)
Pay-cut 10-25% for remaining. (Not military or Safety).
Spending/Travel to necc. only by approval of MGT only.
No parties/seminars/conference.
No GOVT pensions. Go on SSI.
No special Healthcare. Use ObamaCare.
Senate and House no pay, become volunteers.
Sell Assets. use to pay existing debt.
and more.........

They take in $3T.........they could easily cut $0.5T from $3.6T spending.

 

[jwoodie]

While I would support a freeze on hiring nonessential government employees, massive layoffs and pay cuts would be very harmful to the economy. Better to eliminate COLAs. I would also support strict limits on discretionary spending, but no pay for legislators would make them even more dependent on donors/special interests. Better to have term limits?

What assets do you want to sell? What happens after they are sold?

 

[eagle1462010]

Why can't the federal government sell unneeded real property more quickly?

The feds cleared out of the Dyer building after the new $163 million Wilkie D. Ferguson Building opened next door in 2007. Over the following six years, Miami-Dade College repeatedly attempted to buy or lease the property. The Dyer building was never brought to market and the extended vacancy has caused damage that the GSA estimates would cost $60 million to correct. Tired of the delay, Rep. John Mica, R-Fla, introduced legislation two years ago to give the property to the college. The bill died in committee. Though the ornate courthouse remains empty today, taxpayers spend $1.2 million annually to maintain it.

These aren't just anecdotes. The federal government’s property management problem is both longstanding and significant. Getting rid of unused and underutilized property is a particularly big problem, as was underscored at a Senate hearing this past week. The Government Accountability Office has had the GSA portfolio on its “high risk” list since 2003, a designation indicating vulnerability to “fraud, waste, abuse and mismanagement.”

According to the GAO, the federal government owns or leases 900,000 buildings and structures. GSA data from Fiscal Year 2014 report 735,000 buildings and structures. ACongressional Research Service report from 2010 estimates around 77,000 of them are vacant or underutilized. We can't be sure if these numbers are right, the GAO told the Senate Homeland Security and Governmental Affairs Committee, as the GSA’s Federal Real Property Profile is not entirely reliable. The GSA’s property database is not readily accessible to either Congress or the public, although the GSA does post FRPP reports and some summary data.

 

[eagle1462010]

50 Examples of Government Waste

• The federal government made at least $72 billion in improper payments in 2008.[1]

• Washington spends $92 billion on corporate welfare (excluding TARP) versus $71 billion on homeland security.[2]

• Washington spends $25 billion annually maintaining unused or vacant federal properties.[3]

• Government auditors spent the past five years examining all federal programs and found that 22 percent of them -- costing taxpayers a total of $123 billion annually -- fail to show any positive impact on the populations they serve.[4]

• The Congressional Budget Office published a "Budget Options" series identifying more than $100 billion in potential spending cuts.[5]

• Examples from multiple Government Accountability Office (GAO) reports of wasteful duplication include 342 economic development programs; 130 programs serving the disabled; 130 programs serving at-risk youth; 90 early childhood development programs; 75 programs funding international education, cultural, and training exchange activities; and 72 safe water programs.[6]

• Washington will spend $2.6 million training Chinese prostitutes to drink more responsibly on the job.[7]

• A GAO audit classified nearly half of all purchases on government credit cards as improper, fraudulent, or embezzled. Examples of taxpayer-funded purchases include gambling, mortgage payments, liquor, lingerie, iPods, Xboxes, jewelry, Internet dating services, and Hawaiian vacations. In one extraordinary example, the Postal Service spent $13,500 on one dinner at a Ruth's Chris Steakhouse, including "over 200 appetizers and over $3,000 of alcohol, including more than 40 bottles of wine costing more than $50 each and brand-name liquor such as Courvoisier, Belvedere and Johnny Walker Gold." The 81 guests consumed an average of $167 worth of food and drink apiece.[8]

• Federal agencies are delinquent on nearly 20 percent of employee travel charge cards, costing taxpayers hundreds of millions of dollars annually.[9]

• The Securities and Exchange Commission spent $3.9 million rearranging desks and offices at its Washington, D.C., headquarters.[10]

• The Pentagon recently spent $998,798 shipping two 19-cent washers from South Carolina to Texas and $293,451 sending an 89-cent washer from South Carolina to Florida.[11]

• Over half of all farm subsidies go to commercial farms, which report average household incomes of $200,000.[12]

• Health care fraud is estimated to cost taxpayers more than $60 billion annually.[13]

• A GAO audit found that 95 Pentagon weapons systems suffered from a combined $295 billion in cost overruns.[14]

• The refusal of many federal employees to fly coach costs taxpayers $146 million annually in flight upgrades.[15]

• Washington will spend $126 million in 2009 to enhance the Kennedy family legacy in Massachusetts. Additionally, Senator John Kerry (D-MA) diverted $20 million from the 2010 defense budget to subsidize a new Edward M. Kennedy Institute.[16]

• Federal investigators have launched more than 20 criminal fraud investigations related to the TARP financial bailout.[17]

• Despite trillion-dollar deficits, last year's 10,160 earmarks included $200,000 for a tattoo removal program in Mission Hills, California; $190,000 for the Buffalo Bill Historical Center in Cody, Wyoming; and $75,000 for the Totally Teen Zone in Albany, Georgia.[18]

• The federal government owns more than 50,000 vacant homes.[19]

• The Federal Communications Commission spent $350,000 to sponsor NASCAR driver David Gilliland.[20]

• Members of Congress have spent hundreds of thousands of taxpayer dollars supplying their offices with popcorn machines, plasma televisions, DVD equipment, ionic air fresheners, camcorders, and signature machines -- plus $24,730 leasing a Lexus, $1,434 on a digital camera, and $84,000 on personalized calendars.[21]

• More than $13 billion in Iraq aid has been classified as wasted or stolen. Another $7.8 billion cannot be accounted for.[22]

• Fraud related to Hurricane Katrina spending is estimated to top $2 billion. In addition, debit cards provided to hurricane victims were used to pay for Caribbean vacations, NFL tickets, Dom Perignon champagne, "Girls Gone Wild" videos, and at least one sex change operation.[23]

• Auditors discovered that 900,000 of the 2.5 million recipients of emergency Katrina assistance provided false names, addresses, or Social Security numbers or submitted multiple applications.[24]

• Congress recently gave Alaska Airlines $500,000 to paint a Chinook salmon on a Boeing 737.[25]

• http://showmethespending.com/wp-content/uploads/2014/10/wastebook2014.pdf

 

[leftwinger]

While I would support a freeze on hiring nonessential government employees, massive layoffs and pay cuts would be very harmful to the economy. Better to eliminate COLAs. I would also support strict limits on discretionary spending, but no pay for legislators would make them even more dependent on donors/special interests. Better to have term limits?

What assets do you want to sell? What happens after they are sold?

I don't disagree about Term limits, that could help as they may not make it to pension status? But "they" costly with large paid staffs and perks. They are treated like kings and queens while we pay.

I am certainly no expert but I am sure they have many assets to sell (buildings, land). I had always thought about the land in SOCAL near Dana Point (military base, name?). Proceeds go direct to debt, reduce future interest payments.

sigh......National Parks? VA hospitals (why is FED in medical game? privatize?)

 

[eagle1462010]

From the Waste book...............Called the Tower of Pork..............

NASA’s $349 million monument to its drift

GULFPORT, Miss. — In June, NASA finished work on a huge construction project here in Mississippi: a $349 million laboratory tower, designed to test a new rocket engine in a chamber that mimicked the vacuum of space.

Then, NASA did something odd.

As soon as the work was done, it shut the tower down. The project was officially “mothballed” — closed up and left empty — without ever being used.

The result was that NASA spent four more years building something it didn’t need. Now, the agency will spend about $700,000 a year to maintain it in disuse.

The empty tower in Mississippi is evidence of a breakdown at NASA, which used to be a glorious symbol of what an American bureaucracy could achieve. In the Space Race days of the 1960s, the agency was given a clear, galvanizing mission: reach the moon within the decade. In less than seven, NASA got it done.

 

[eagle1462010]

Where America's Airplanes Go To Die | Zero Hedge

 

[jwoodie]

I appreciate the examples of waste, but the unfettered growth of entitlement programs is a vastly greater budgetary problem.

 

[eagle1462010]

I appreciate the examples of waste, but the unfettered growth of entitlement programs is a vastly greater budgetary problem.

Just giving examples of waste and the ability to cut 100's of billions off the budget.................
I didn't even give the cost of maintaining Federal Lands out west that could be sold as well.............

The current unfunded liabilities of SSI, Medicare, and Gov't Pensions are closing in on 100 Trillion in unfunded Liabilities........Which is completely unsustainable...............

U.S. National Debt Clock : Real Time

 

[leftwinger]

Medicare, Medicaid, SSI. (ObamaCare?) these entitlement programs? ~1/2 of budget?

I don't understand why we have Medicare/Medicade/ObamaCare? combine, streamline, reduce?

SSI: many ideas to reform. (means test? you paid in forever but you don't get?)

 

[leftwinger]

Interest on Debt and Federal Pensions also huge. Fix that first?

 

[jwoodie]

The only lasting budgetary solution is structural, i.e., implementing a self correcting mechanism for controlling revenues and expenditures. Piecemeal fixes are an illusion.

 

[eagle1462010]

Social Security Policy Options

Policy Options
In this study, CBO analyzes 30 options that are among those that have been considered by various analysts and policymakers as possible components of proposals to provide long-term financial stability for Social Security. The options follow the convention of not reducing initial benefits for people who are currently older than 55, and all would directly affect outlays for benefits or federal revenues dedicated to Social Security.

The options fall into five categories:

• Increases in the Social Security payroll tax,
• Reductions in people's initial benefits,
• Increases in benefits for law earners,
• Increases in the full retirement age, and
• Reductions in the cost-of-living adjustments that are applied to continuing benefits.

Each option is analyzed in isolation, although most proposals to make substantial changes to Social Security combine several provisions. Many options would interact with one another, so combining them might cause changes to the overall finances of the system that are larger or smaller than would be produced by a simple sum of the effects of several discrete options.

This list of options is far from exhaustive. It does not include changes that would draw on general government revenues, create individual accounts, or change the trust funds' investments. Other than an increase in the Social Security payroll tax, changes to federal tax policy are not considered. The options do not include any that apply only to people who receive DI benefits, although some of the options would affect OASI and DI beneficiaries alike.

 

[Fishlore]

I look at the Federal Government as a hugely inefficient company. This company has two problems that must be fixed before continuing to increase spending and taxes. Number one is there are many more employees than needed to keep the government running smoothly. In fact over-employment itself causes inefficiency. Every other company has to downsize to stay competitive, why is the Federal government exempted? Number two is the enormous amount of fraud that takes 10s of billions of dollars out of the Treasury and very little is done about it. Before raising taxes and raising borrowing limits, downsize the government and go after the defrauders aggressively.

I say this with all due respect and sympathetic understanding, but you are looking at the federal government the wrong way. While efficiency is indeed a valuable virtue in government as in business, the government is not a business in some very critical, basic ways. The government does not, cannot and should not try to make a profit. The mission of the government is to act in accordance with the Constitution in order to further the goals of the people stated in (but not limited to,) the Declaration of Independence:

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.--That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed,

The role of government is contractual, not transactional. The second sentence above shows another critical difference between government and a business: the government has no owners, no stock that can be bought or sold.

Ask of any business what it's goal is and the answer is uniform and simple: to turn a profit. (Granted that how to turn that profit is a much more open question.) The goal of the federal government is to protect the lives and liberties and facilitate the pursuit of happiness of its citizens. There is no way the government can make a profit performing that mission and it should not even try to make one.

 

[eagle1462010]

Updating Social Security for the 21st Century: 12 Proposals You Should... - AARP

Raise the Full Retirement Age

Begin Longevity Indexing

Recalculate the COLA

Increase the Payroll Tax Cap

Eliminate the Payroll Tax Cap

Reduce Benefits for Higher Earners

Increase the Payroll Tax Rate

Apply Payroll Tax to All Salary Reduction Plans

Cover All Newly Hired State and Local Government Workers

Increase Number of Years Used to Calculate Initial Benefits

Begin Means-Testing Social Security Benefits

From AARP as possible solutions.