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Budget numbers fly around Congress and the DC-media so fast they hardly alight to make sense of them. Meanwhile, the middle class shudders to think what further assaults against it may be in the offing under the guise of shrinking runaway deficits.
When Republicans are on the wrong side of an issue, their technique is to throw up smokescreens so what can be done straightforwardly seems overly vague and complex. Democrats often oblige by offering point-by-point rejoinders, and the public has difficulty making sense out of anything.
So, to provide harmony and clarity, I offer this simple "sane and easy" $4T deficit reduction program.
If deficit cuts must be massive to impress markets, here is what a sane government in our current position would choose among the options to do initially, without triggering honest policy disagreements. [Note the adjective "honest" modifying "policy disagreements"].
The IRS reports that there is ~$300B in uncollected taxes annually. Republicans de-fund the IRS so the money cannot be collected. This is an unvoted upon tax-cut of massive size that goes mostly to the wealthy. If we provide proper funding, let us assume that only 2/3 could actually efficiently found and recovered. That amounts to $2 trillion over a decade.
That's halfway to the goal without any spending cuts or tax rate increases.
A financial activities ("FAT") tax of only 0.5% would collect $100B annually, or $1 trillion in a decade.
We have now reached $3 Trillion in reductions. The financial industry cannot afford an infinitesimal 0.5%? GMAFB.
Reducing defense expenditures by 10%, that should not be difficult by bringing troops home from Iraq and winding down Afghanistan as is scheduled, would generate another $60B annually, or $600B in a decade.
That is $3.6 Trillion of deficit reductions.
Allowing the Bush tax cuts to go back to their levels under Bill Clinton for the top bracket would raise another $70B annually, or $700B in 10 years. If one cares to argue that we do not need the entire $700B, then raise the top bracket cutoff higher than $250,000, and impose a higher tax rate on it than 39.6%, so that we get $50B annually, or $500B in 10 years.
We have now hit $4.1-4.3 Trillion. No poor person has been denied benefits, no sick child has gone without healthcare, no teachers have been laid off, no firefighters denied their pensions, no medicare beneficiaries denied their benefits, no Head Start program has been downsized.
Taxes have been raised only infinitesimally on financial institutions and minimally on individuals who can well afford it.
Now, these changes are not sufficient to bring our budgets into balance, or retire our national debt as we could have done without the tax cuts and wars the disastrous Bush Administration pursued and the Great Recession its policies brought about.
But, we are where we are.
Think of this $4.1-3 trillion as a no hardship-related downpayment on our future. This will provide time to consider how to retain Medicare as a guaranteed benefit but reform its payment system and re-organize the care system for the most costly patients, improving outcomes, reducing costs, and not throwing seniors into the private insurance system. It will also provide time to determine if there are more fundamental cuts that can be made to military spending, based upon a modernized set of defense goals. It will enable us to reduce agricultural subsidies to big agribusinesses.
That's the sort of stuff that is harder, more complex, with downstream effects that need to be weighed. Right now, we can reduce the projected deficits by $4.3T over the next decade, painlessly.
A sane society would do it.
And, get on with the business of righting our economic ship by investing in our children's future.
Clarification: I would like to be clear that my proposal on funding the IRS properly is NOT to target middle class people at all. As stated in the first paragraph, the middle class is already under attack by the wealthy. The 2/3 of taxes due that are unpaid by mostly wealthy individuals is what was proposed. If that does not return the full $2T, then there are other ways of picking up the slack that are similarly not impactful on the middle class.