Wednesday, January 5, 2011

Okay, YOU Balance The Budget!

Taking it easy over the last two weeks, I seem to have missed a lot. Our Trophy President seemed to be accomplishing everything over the lame duck session except making it stop snowing over the East Coast, and it seemed like I could pay attention to other things for awhile.

Not so, for now our newly elected Republicans, all but wearing red capes and spandex, are out to put a lid on government spending -- by refusing to raise the debt ceiling. And if the debt ceiling doesn't get raised? The government shuts down. Medicare and Medicaid? On hold. Retired and expecting a Social Security check? You're screwed! Interest owed to foreign nations who were so nice to lend to us? Fuck 'em! Strategic purchases of oil from Saudi Arabia? Nah, fuck the Saudis, too! In fact, fuck everybody unless we slash spending.

What heroism! What high moral standards! What tactical insanity! What utter disregard for the integrity of the dollar!

Look, it might sound like a great idea to say that the government needs to curtail spending, but when it comes to specifics, nobody in the GOP is saying WHAT, exactly, is going to get cut! And herein lies the sub-moronic-level stupidity of the posturing. A SPECIFIC budgetary plan must be offered BEFORE lines in the sand like this can be drawn. But for whatever reason, this young and naive electorate has adopted a "ready, fire, aim" approach to budget balancing.

That's a good way to shoot yourself in the foot.

So, to illustrate how silly this whole thing is, I'm challenging my readers (all four of them) to do what the GOP says it will do, but refuses to get specific about: balance the Budget! Do you support the Republicans? Great! Try to balance the budget yourself. I've got some numbers to give you.

Now, I haven't ordinarily been too pleased or proud to be an accountant by trade. It's boring work, and the term "bean-counter" is well-earned. But it does enable me to look over financial documents and more or less make sense of them. So I can break things down for you, the reader, to understand easily. Here, based on the official Summary Tables of the U.S. Federal Budget for 2011 are the revenues Uncle Sam will be making, and the items he'll be spending on. YOU decide how to cut spending, or increase revenues!

Projected federal receipts: $2.567 trillion.
Projected federal outlays: $3.834 trillion.
Projected 2011 deficit: $1.267 trillion.

So, to balance the budget, you'll need to slash about $1.267 trillion, or about 49% of our nation's tax revenue! If we hit the debt ceiling, and are unable to raise it, that's exactly what will need to be done. Actually, it's probably more like $1.29 trillion, because the official budgetary summary tables project that the Obama-era health care reform act will save $23 billion. (That's right, the non-partisan projections project savings, not increased spending!) So, in fairness, since Republicans want that repealed, we'd better add that $23 billion back into our projected deficit. Hence, the $1.29 trillion total. We'll round it up to $1.3 trillion.

Now, if you'd let the Bush-era tax cuts for the upper 2% of income earners expire, you'd have brought in an additional $700 billion (according to CBS news.com, Dec. 2, 2010), and you'd only be facing a deficit problem of $0.6 trillion, or $600 billion. Oh, well! Missed that opportunity, didn't ya? Too bad. Well, back to the problem at hand...

Here are the non-discretionary items (that is, stuff you CAN'T cut, either because it's an entitlement, or else cutting the spending would actually cost more due to fiscal or non-fiscal backlash). In other words, mandatory items:

Social Security $730 billion
Medicaire $492 billion
Medicaid $271 billion
Other Mandatory Programs: $596 billion
TARP: $11 billion
Interest on the debt: $250 billion
Disaster relief fund: $3 billion

These projections already include the new mandatory retirement age of 65, so we've cut about all we can from Social Security. Health care reform will mean less reliance upon Medicare and Medicaid, so these projected numbers are lower than they would be if health care reform were repealed, but we'll leave them at their current levels for now, just to make it easier.

Here are the discretionary (cuttable) items:
Security: $846 billion
Non-Security: $530 billion

Security is, of course, the military. It's so huge because we're fighting two wars (er, conflicts) in Iraq and Afghanistan. Non-discretionary is everything else. That means all federal employees, all research programs, all commissions to find ways of keeping Asian Carp out of Lake Michigan, all NASA programs, aid for public schools, etc.

Now, these numbers are rounded, so they don't add up to $3.834 (they add up to $3.728), but they give us a good percentage approximation to work with.

So what would YOU cut?












If we cut ALL discretionary spending, and that means recalling all troops from Iraq and Afghanistan, that would save 1.37 trillion. Of course, it would cost money to recall our troops, put them on fuel-powered ships and planes to bring them home, and then cover their G.I. bills and medical costs, so it's impossible to cut all military troop spending. It would cost money to decommission and mothball all our navy ships and fighter planes. It would cost even more money to close and either lock-down or sell off all our military bases. Hell, shutting down our military might cost more than the military presently!

In the words of the banner that once hung behind Dubya, "Mission Accomplished?"

Well, no, obviously not. Even if we wanted to slash the military budget, nobody wants to leave Iraq and Afghanistan stranded. We could save a significant amount of money by scaling way back in both these countries, which we can do, but nobody wants to dismantle our entire military. We'll need to cut somewhere else.

How about other discretionary programs? John Boehner, the new Speaker of the House, insists that the new Republican Congress will only make cuts here. He says there will be no military cuts. Ah, but even if he cut everything from NASA to the U.S. Highway fund, he would only bring the deficit down by 530 billion. That's not even half of what we need to do to keep from getting a concussion when we hit the debt ceiling! We'd be $770 billion short. And with $846 billion locked up in military spending, we'll never reach that goal just by recalling all troops.

So, there we have it. It seems that the ONLY way to eliminate our deficit is to raise taxes. We simply have no choice. If the debt ceiling is hit, then in order to prevent the dollar from going insolvent, we may be forced, Republican and Democrat alike, to enact an emergency, retroactive tax hike. Think it won't happen? You're probably right, because threats to not vote for an increase in the debt ceiling are likely empty threats made by politicians playing a game of chicken. But if not, well, then, the shit hits the fan.

Now we know why, according to Accounting Today (Nov. 23), 45 millionaires signed a petition saying that the Bush-era tax cuts should expire for themselves. Now we know why Alan Greenspan said that the Bush tax cuts should be allowed to expire. Now we know why Steve Jobs and Bill Gates each endorsed an end to the Bush-era tax cuts for their own income brackets.

How would I balance the budget? Well, I'd try to strike a new compromise, and have Bush-era tax cuts be effective for 99% instead of 98%. (I know it's technically too late, but hope springs eternal.) That would both create jobs, and generate about $600 billion (the additional revenue doesn't decrease significantly because small businesses would not have a tax increase - see my previous posts - and most of the money comes from the uppermost portion of the upper 1% anyway). Next (I have to repeat this), I would legalize and tax cannabis. This would save 48 billion spent in a useless drug war, save additional billions in the federal prison system, and generate at least 200+ billion in new revenue. Call it a swing of $250 billion, at least. Next, I would reassess Iraq and Afghanistan. We know, from analysis, that we need at least 10,000 troops in Iraq, because the Shi'ite dominated Iraqi government, might turn to help from Iran if the U.S. has insufficient forces to protect the Iraq government from the Sunni rebels.

Oh, if only we hadn't put that ass-head Paul Bremer in charge! If only we hadn't hired Blackwater to shoot at civilians! If we hadn't needlessly pissed off the Sunnis, and made them feel like an important part of the New Iraq, or even a Federated Iraq. Then we could have saved BILLIONS! Oh, well. Missed that opportunity, didn't we?

Still, we have about 40 or 50 thousand troops in Iraq right now. We can dial that down, and still secure Iraq for the future.

How about Afghanistan? We're at about 94,000 troops there, including the additional 30,000 from Obama's troop surge. Clearly, Bin Laden isn't there. He's in northern Pakistan (if he's even alive, which I doubt). So how do we deal with this? We're starting to see the Karzai administration resulting in changes throughout Pakistan. Women are running for political office (much to the Taliban's ire), and we don't want to let that fall. So, I'd say at least 10,000 troops there as well. And a heavy reliance upon air power and technology.

Then there's Pakistan. How do we deal with Pakistan and the fact that Bin Laden might be there? Well, the Pakistanis are sovereign. We need them to cooperate with us in order for us to get Osama's ass out of there. We can achieve this by giving them more foreign aid.

Yes, spending more seems less than ideal, but we don't have to spend much more. If the Pakistani government succeeds in capturing Bin Laden and turning him over to us, there will be a tremendous backlash among the Islamic fundamentalists among their own country. The ruling powers of Pakistan will need assurances that they can remain in power in the midst of such backlash if they are to cooperate with us. We can give them that, in the form of money.

Right now, we spend about only 1 billion on Pakistan in terms of foreign aid. According to international political analyst, Bruce Bueno De Mesquita, we can assure Pakistan's cooperation if we raise that to 5 billion. Yes, there will be corruption, and there will be some wasteful spending, just as there has been wasteful spending of the $1 billion per year we've been paying them now. (For example, some of that money went to buy anti-aircraft guns. It's pretty clear that the Taliban have no aircraft! The AA weapons were meant for India!) Still, if that's what it takes to secure Pakistan's cooperation, and finally get Bin Laden, it's worth the money.

Frankly, I think Bin Laden is dead. It's entirely possible that Pakistan may pretend that he's still alive just to secure the receipt of more U.S. funds. But if they deliver Bin Laden's head, so much the better. Years later, as Pakistan stabilizes, we can always say Osama is dead, and cut funds. (Or, better, yet, threaten to cut funds if they don't deliver his head!) Besides, $5 billion is small change when compared with the cost of invading northern Pakistan. We can't win positive relations with its people by dropping food on them only during natural disasters such as flooding or earthquakes.

So here's where I'm going with this: Increasing foreign aid to Pakistan while dropping (but not eliminating) our troop strength in Iraq and Afghanistan, together with military cuts elsewhere, such as weapons development, redundant military bases, and retirement and non-retention of existing personnel, could easily drop our military budget by $450 billion at least, still leaving the Pentagon with a whopping $400 billion to play with in the future. (They really ought to be happy with that!) With the increase of $4 billion in aid to Pakistan, that's a $446 billion dollar spending cut for Uncle Sam.

Sum totals: $600 billion in tax receipts from the upper 1%, plus $250 billion in new revenues from ending prohibition on cannabis, plus $446 billion in military budget cuts, gives us 1.296 trillion income-vs.-expenditure difference in the national budget, which is now balanced.

Whew! What a job!

You know, I'm forced to retract a claim I made in earlier blog posts. Looking at our nation's books, it's clear that legalizing and taxing cannabis would generate a lot of revenue, but not enough to eliminate the deficit, begin paying the national debt, AND pay for health care. Someday, when all our troops are gone from Asia Minor, and our military budget is even lower, it will be. But not right now. Eliminating the national debt would free up another $250 million to pay for health care as well.

Oh, shit! We still have to pay down the $10.498 trillion dollar national debt, don't we? Ah, but that's a subject for a later blog post!

Eric

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