Wednesday, August 31, 2011

To Balance the Budget, Do Nothing

UPDATE II: "[T]here’s an uncomplicated way to fix America’s medium-term debt woes. All Congress has to do is … nothing. At the end of 2012, the Bush tax cuts would automatically lapse. As inflation rose, the alternative minimum tax would hit more and more Americans. A whole slew of business tax breaks would expire. And the Sustainable Growth Rate formula in Medicare would trigger large automatic cuts to payments to doctors." Read the Washington Post, Doing nothing is still an option, which includes this graph:

UPDATE: Another way to balance the budget, end tax expenditures, better known as tax deductions. Tax expenditures amounted to about $1 trillion in 2009. Read Random Observations for Students of Economics, Spending Hidden in the Tax Code.

One difference, "non-defense discretionary spending tends to be skewed quite progressively while tax expenditures are often quite regressive." In other words, the tax deductions like that for corporate jets disproportionally benefit the rich.

As I've said before, the NoBullU solution for the federal deficit and debt is: restructure the federal government (to end Congressional free lunchism), reform the federal tax code (so that revenues pay for ALL government spending), and amend the Constitution to require a balanced federal budget (because Congress can't control its spending).

"The single most important fact about our projected deficits is that if Congress does nothing, they go away. You might not like how they go away — it’s mostly higher taxes and sharp cuts to Medicare — but they go away." Read the Washington Post, We have a Congress problem, not a deficit problem, in one graph: