Increase Font Size Option 5 Reset Font Size Option 5 Decrease Font Size Option 5
Home | Personal Finance | Investing | 7 Extreme Measures That Wouldn't Even Balance the Budget
Got Opinions? facebook_16 Facebook twitter_16 Twitter RSSRSS
7 Extreme Measures That Wouldn't Even Balance the Budget Print E-mail
(10 votes, average 4.40 out of 5)
Personal Finance - Investing
Written by livecheap staff   
Wednesday, 09 June 2010 06:31
Article Index
7 Extreme Measures That Wouldn't Even Balance the Budget
Bye Bye Home Mortgage Deduction
All Pages

Americans used to talk about the goal of balancing the Federal Budget. Just a decade ago, that debt_clockbriefly became a reality. Even after that with $150 billion dollar deficits, there were always realistic options that could have closed the gap. No longer. If you ever wanted to know what would actually have to happen to curtail our ridiculous accumulation of debt, here's 7 extreme measures that individually still wouldn't balance the budget.  That's how ridiculously in debt we really are.  Read this article to find out how you would be affected.  It's not pretty.

The FY 2011 projected federal budget deficit is $980 billion and the President's request creates a deficit of $1.27 Trillion. Believe it or not that is actually less than FY 2010.  A recent Congressional Budget Research memo looked at how we could actually balance the budget.  Here's some of the ugly options.

1. No Military:

If the entire military and all national security were eliminated and not a dime was spent on either of these in FY 2011, we would still run a budget deficit of about $100 billion. This is of course not counting the increased unemployment that would have to be paid to all the fired employees and the fact that we would have zero defenses.  Realistically, the military is going to either need to be smaller or fewer weapons will need to be produced.  If you work in the Defense industry or you are in the military, eventually, you will be affected.

2. Eliminate Every Other Discretionary:

If every program and agency outside of the Military, Social Security, Medicaid, and various other non-discretionary programs were eliminated, we'd still run a deficit of about $500 billion dollars. Think about it. Every National Park, government funded hospital, every health program, our entire space program, all subsidized housing, and any work done on any federal highway would be eliminated and we'd still have a deficit greater than any deficit prior to 2008.

3. Across the Board

Even if you took the simplistic approach and said, just cut everything evenly, you'd have to hack every budget by 35% just to get to breakeven. What would that mean? If you received a $1,600 Social Security check, the government would have to cut that to $1,040. If you were a soldier making $50,000 a year, you'd be cut down to $35,000. Medicare payments would need to be slashed proportionately which would make doctors even less interested in working with Medicare patients.

4. Raising Taxes

Why not just tax the rich or for that matter everybody? You'd have to raise the tax burden about 80% to balance the budget and assume that this would have no impact on the economy. For instance, if you were used to paying a 25% federal marginal income tax rate, you'd need to fork over 45% for the government to balance the budget and in the proposed Presidential budget, you'd need to shell out about 55%. The reality of course is that most households are strapped at current relatively low tax levels and an increase in taxes would correspond to a decrease in consumption.

Add New RSS
Write comment
Please input the anti-spam code that you can read in the image.
Ken Mitchell  - Roll back the clock ,,, to 2004! |2010-06-11 19:15:42
It would be easy to balance the budget; roll back spending to 2004 levels, especially on the government giveaways. Government income increases every year - but government spending is going up much faster!
haverwench  - Want to be a Budget Hero? |2010-06-09 13:05:49
If you would like to take a crack at balancing the budget your way, you can play this game on the American Public Media website: Of course, the figures they use are sort of speculative, but it's fun to try.
Omiewon  - Cool Link |2010-06-09 14:28:10
I played around with the tool. Don't necessarily agree with the impact of each change, but I like the fact that you can see the relative scale of each change.

Thanks for the link Haverwench.
Joomla Templates by Joomlashack