Thursday, November 18, 2010

Budget Puzzle: You Fix the Budget

Think you can solve the budget problem better than the pinheads in Congress?

Here's your chance to take a crack at it.

Budget Puzzle: You Fix the Budget

Today, you’re in charge of the nation’s finances. Some of your options have more short-term savings and some have more long-term savings. When you have closed the budget gaps for both 2015 and 2030, you are done.

Budget Puzzle: You Fix the Budget - Interactive Feature -

Here's my run at it.  My solution resulted in 70% of savings from spending cuts and 30% from tax increases.

Budget Puzzle:  My Proposed Budget Fix

I checked every box. Cut, cut, cut, cut, cut spending.

In the MILITARY section I checked just one box: Reduce Navy and Air force Fleets. The description says it would reduce the fleet from 286 ships to 230. Obviously the oldest and most obsolete would be mothballed so I see that not unlike pruning a tree getting ready for new future growth. Every good garden needs a little culling now and then. Lopping $20 Billion off a nearly $800 Billion Military Budget should hardly be noticed.

The HEALTH CARE section got 3 check marks. Enact medical malpractice reform. The system is crazy as it is. I know personally that doctors order all kinds of tests, many of which are probably unnecessary, for fear of getting sued. A little sanity needs to prevail.  

In my mind increasing Medicare eligibility age is tied to increasing Social Security retirement age. Both should be 70. See my comment in the Social Security section below.

The third check mark in Health Care is to cap Medicare growth starting in 2013. Medicare growth is out of control. This is what happens when you put billions of dollars into a centrally controlled government system. There's no accountability, very little oversight and almost no incentive to keep costs down. Government needs to get out of management of the healthcare system and let the private sector do its job. If capping Medicare growth is a step towards that end then I'm all for it.

SOCIAL SECURITY is referred to as 'the third rail' in politics because touching it can kill you, politically speaking, not unlike touching the high voltage center rail in an electric subway system. So there's little chance anything will be done any time soon in Congress. But this is a hypothetical wish list so we can dream.

While I know it's unpopular with my 50-something friends, I would opt for upping the Social Security retirement age to 70 for full benefits, with reduced benefits starting at age 62. Any changes would not affect my 50-something friends, despite the orgasmic clamoring that will arise claiming otherwise. The deal is set for those who are retired or are approaching retirement. Remarkably it's the older generation who are the most vocal against changing the system. They're convinced, mostly because their Democrat representatives tell them so, that the Republicans want to snatch their benefits away by 'privatizing Social Security' (another third rail phrase). But nothing is going to change for them. They will live out their lives on the plan they came in on. Any changes will only affect younger workers. I don't understand why I can't get that through my Dad's head (and millions like him).

Social Security was never intended to be a retirement package. It was meant to be an old age safety net. People are living longer, working longer and are healthier. 65 isn't even considered old age any more. There are thousands and thousands of 'retirement communities' full of people who play golf, swim, play tennis, go on cruises and party like kids. If 65 is old age, I want to be one. If you want to retire at 55 or 60 you should have saved and invested outside the SS system. (Many people have, and they also have pensions from their employers.) You can't expect to live large on the government's pathetic 3% investment return on your FICA contribution. If you had saved and invested the same 12% of your pay (6% from you, 6% from your employer) throughout your working life you could retire at 60 as a millionaire on your own money. Shoulda, coulda, woulda. It's too late for you. But it's not too late for the younger generation. The Social Security system needs to be changed for them.

I would also reduce benefits for high income earners. It drives me nuts that people like John Kerry and dozens of the other millionaire members of Congress, and all the other millionaires in the country get the same Social Security benefits, largely paid out at the highest amount since they paid in up to the cap every year.  They paid in a smaller percentage of their income by far than most people yet they get the largest Social Security check. A check that still would't be enough to pay the guy Kerry hired to polish the brass on his yacht.

Social Security was intended to be an old age safety net to keep people off the poor farm and in their homes to let them live out their lives with dignity. There should be an income qualification to eliminate pay outs to those who have substantial alternate means. Social Security should be looked at for what it is, an insurance program. Not unlike a term life insurance package. A guy buys term life to protect his family. If he dies the policy pays. If he doesn't die it's just money spent. Or car insurance. If you wreck, insurance pays. If not, it's just money spent. Social Security should be treated the same way. You "buy" (that is, with no choice not to) the SS policy as a backup plan in case you need it in your old age (If you're one of the lucky ones who live that long). If you need it, claim it. If you don't need it, it's just money spent.

I checked the box to tighten eligibility for disability. Anyone who knows me knows I'm on disability so it looks hypocritical to want to make it harder for people to qualify. But I've seen many people get a doctor to declare them disabled for things I don't think should qualify. (Not unlike the ubiquitous blue hangers on car mirrors. Everybody and their uncle has one.)  It's not my place to judge them, but the system should have a threshold that filters out those who try to get on disability who are not truly disabled. The proposal would look at the states that are most lax in setting a threshold. 

(For the record I was on disability for 3 years during which I was retrained for a less strenuous job. I got off disability and worked 13 more years fulltime before I had to finally quit work and go back on disability. While I'm in blab mode I'd like to further say that I bought and paid for a long term disability (LTD) insurance benefit as part of my employer's benefit package. The plan paid 60% of my salary should I become disabled. I paid into that plan  for 13 years. When I had to leave work I was surprised to learn that in order to claim disability benefits through my plan I first had to file and be approved for disability benefits through the government. The policy only pays the difference between what SSDI pays and the 60% figure. A much smaller amount. So after paying for LTD benefits I was still forced into the Federal system to collect. Precisely what I thought I was avoiding by going back to work. That bites.).

In EXISTING TAXES I checked only one box. Raise the Payroll tax cap on some incomes over $106,000. This is the FICA tax cap that people making huge incomes blow right past. Most of the rest of us never reach the cap. 

NEW TAXES AND TAX REFORM I checked 3 boxes in this section. 

A 5% additional tax on incomes over $1 million. This should have a sunset expiration tied to the deficit. The tax expires when the deficit is eliminated.

Eliminate loopholes, reduce rates. This would spread the tax load across more people but at a lower rate.

Reduce mortgage deduction for high income households. Again, this should have an expiration tied to the deficit.

Overall I'd rather see the entire income tax system tossed out and replaced with the Fair Tax. The phrase "23% National Sales tax" scares the living daylights out of people so bad they run into the other room when you bring up the subject. But if you look at it, it makes sense. Taxing on the consumption end instead of the income end would eliminate the IRS, filing tax forms, tax cheats and more. Your paycheck would be bigger because all corporate and payroll taxes would also be eliminated. The Sales Tax would only be collected on purchases of new items. And everyone would get a break on the necessities so the poor would not even pay anything. Take the Fairtax Calculator quiz and see how your family would do under the Fair Tax plan. I know I'd do anything to never have to track income and file tax forms again!

I do not support a National Sales tax that does not eliminate the income tax and other income-based taxes  and the IRS, as is being proposed as one solution for reducing the debt. Congress doesn't get to have it both ways. 

And I certainly no not support the VAT tax that was proposed by Pelosi. She should have her mouth washed out with soap for just saying it. I'm going to go wash my hands for just typing it.

I do not support taxing air. Carbon Dioxide (CO2) is air. The man-made global warming thing has been pretty much debunked as a fraud. We need to continue to pound on Congress until they stop talking about controlling the climate through legislation. It's our own fault really. We let them control our clocks twice a year so now they think they control the sun. It has only emboldened them to think they can control Earth's climate.

Well that was fun. I single-handedly soled the national deficit problem. Now I can go to lunch.

© Larry Wright

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