One Way To Solve Budget Deficit

[Tex]

Paul Abrams
Paul Abrams

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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.
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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.

 

[TSR]

Seems like some good ideas from Mr. Abrahms. This post should be forwarded to every Congressman.

 

[lonewolvie]

Congress does not need anymore money, the more we give them the more they blow and the debt continues to increase.

Cut spending is the only thing that will work.

 

[ANGUS327]

Financial Activities Tax of only .05 % what a joke how long before thats up to 5%. Sounds like something the U.N. came up with.

 

[Tex]

Financial Activities Tax of only .05 % what a joke how long before thats up to 5%. Sounds like something the U.N. came up with.

Well, Wall Street blew up the economy and if it took 10 percent tax to pay off the damage they caused, it should be 10 percent plus a 5 percent penalty.

Personally I think we shouldn't have bankrolled any of these companies in the name of too big to fail or too big to go bankrupt. We should have allowed them to go bankrupt. I thought that is what they were doing only in a slow way but the facts don't seem to show that. We bailed out Wall Street's gambling because the Glass Steagal Act allowed investment bankers to gamble with the banking industry in the U.S.

I am with you, Angus, that there shouldn't really be a tax on them, that we should have let them go bankrupt.

We had years of big banks consolidating and then playing financial games while local banks doing real lending to businesses in the community had to compete with them. We should have allowed all the big banks to fail and the owners lose their money and the investors theirs instead of what we did.

A .05 percent tax just doesn't seem enough for the hedge funds and foreign banks that were bailed out. Some of those guys need to be in prison for leveraging up with other people's money in their gambles. Going broke would be like a prison for a lot of them. Some payoffs to politicians and whoof, no accountability AGAIN.

Tex

 

[Steve]

Republicans de-fund the IRS so the money cannot be collected.

talk about spin,,, or should I just say.. lie.

in DC it seems to work this way... side a asks for a few billion more..

then side b cuts it back by almost a billion and the media cries that side b defunded the needed program by millions..

The IRS budget request released this week gave the first glimpse of the amount of money the agency thinks it needs to enforce the employer and individual mandates, as well as other provisions. The tax agency asked for $118.8 million in fiscal 2012 to implement the entire reform law.

The IRS is asking for $62.5 million and 65 employees to develop the information technology infrastructure it says is necessary to enforce the individual mandate and the requirement that businesses employing at least 50 workers provide coverage or pay a fine.

"Both provisions involve new information reporting that will streamline IRS verification and compliance efforts," the agency wrote in its budget justification. "The IRS must implement appropriate business rules for document matching, conduct penalty calculations and send notices to individuals and employers, and integrate [reform law] requirements into current collection, case management and fraud detection systems."

The IRS is also seeking $24 million and 234 employees to build systems to implement a new reform law premium assistance tax credit that takes effect in 2014. The inspector general's office wants $5.6 million and 29 employees to oversee new changes required by the healthcare overhaul.

Rolling out the reform law will be a massive undertaking for the IRS, representing the "largest set" of tax law changes in more than two decades, the agency said. And though most of the major changes don't go into effect until 2014, some major provisions are already taking hold.

so in reality, the IRS didn't get defunded, but the increases expected due to the obama heath care law were not approved.

this increased cost of enforcement is easily solved by FIXing the existing heath care law recently enacted so it will not cost taxpayers more.

ironically.. the IRS has recently been the perpetrator of a fraud costing the Taxpayers billions..

Boustany and Ways and Means Chairman Dave Camp, R-Mich., sent IRS Commissioner Douglas H. Shulman a letter Feb. 15 demanding answers about the agency's administration of the refundable earned income tax credit. The letter follows a report by the Treasury inspector general for tax administration saying the IRS has been allowing billions in improper EITC payments.

Billions...

www.congress.org

 

[ANGUS327]

Financial Activities Tax of only .05 % what a joke how long before thats up to 5%. Sounds like something the U.N. came up with.

Well, Wall Street blew up the economy and if it took 10 percent tax to pay off the damage they caused, it should be 10 percent plus a 5 percent penalty.

Personally I think we shouldn't have bankrolled any of these companies in the name of too big to fail or too big to go bankrupt. We should have allowed them to go bankrupt. I thought that is what they were doing only in a slow way but the facts don't seem to show that. We bailed out Wall Street's gambling because the Glass Steagal Act allowed investment bankers to gamble with the banking industry in the U.S.

I am with you, Angus, that there shouldn't really be a tax on them, that we should have let them go bankrupt.

We had years of big banks consolidating and then playing financial games while local banks doing real lending to businesses in the community had to compete with them. We should have allowed all the big banks to fail and the owners lose their money and the investors theirs instead of what we did.

A .05 percent tax just doesn't seem enough for the hedge funds and foreign banks that were bailed out. Some of those guys need to be in prison for leveraging up with other people's money in their gambles. Going broke would be like a prison for a lot of them. Some payoffs to politicians and whoof, no accountability AGAIN.

Tex

I think that tax would apply to everyone that uses a debit card, credit card tranfers money from one account to another or any time money has changed hands.

 

[hypocritexposer]

How a bout just being business friendly and taxing more dollars generated?

 

[Tex]

Financial Activities Tax of only .05 % what a joke how long before thats up to 5%. Sounds like something the U.N. came up with.

Well, Wall Street blew up the economy and if it took 10 percent tax to pay off the damage they caused, it should be 10 percent plus a 5 percent penalty.

Personally I think we shouldn't have bankrolled any of these companies in the name of too big to fail or too big to go bankrupt. We should have allowed them to go bankrupt. I thought that is what they were doing only in a slow way but the facts don't seem to show that. We bailed out Wall Street's gambling because the Glass Steagal Act allowed investment bankers to gamble with the banking industry in the U.S.

I am with you, Angus, that there shouldn't really be a tax on them, that we should have let them go bankrupt.

We had years of big banks consolidating and then playing financial games while local banks doing real lending to businesses in the community had to compete with them. We should have allowed all the big banks to fail and the owners lose their money and the investors theirs instead of what we did.

A .05 percent tax just doesn't seem enough for the hedge funds and foreign banks that were bailed out. Some of those guys need to be in prison for leveraging up with other people's money in their gambles. Going broke would be like a prison for a lot of them. Some payoffs to politicians and whoof, no accountability AGAIN.

Tex

I think that tax would apply to everyone that uses a debit card, credit card tranfers money from one account to another or any time money has changed hands.

That sounds like a tax on the financial service industry's clients, not the financial services industry. I think any tax needs to be targeted to the unit who is able to take profits home and leave the risk in the table as well as closing the loopholes for counting earned dollars as investment dollars by those in the industry.

Just any ole tax on the industry because the idea sounds good isn't prudent or smart--- something I am beginning to believe is inescapably absent with our politicians running the government--thew being prudent or smart part. Political donations seems to be what motivates these politicians, not running the country where it actually works.

The first thing they need to do is to put back in place the Glass Steagal protections that separated commercial and investment banking. That one provisions allows investment bankers to take their cut without risk by using the money in the banking system.



Tex

 

[Steve]

Just any ole tax on the industry because the idea sounds good isn't prudent or smart--- something I am beginning to believe is inescapably absent with our politicians running the government-

well you just made another point I can fully agree with you on...

that is why i try to keep the message i send to them so easy a DC simpleton can understand it...

STOP SPENDING

when you add in the part where we would accept a small targeted tax to bring down the deficit, ..., all they hear is 68% of Americans favor raising taxes..

 

[Tex]

Just any ole tax on the industry because the idea sounds good isn't prudent or smart--- something I am beginning to believe is inescapably absent with our politicians running the government-

well you just made another point I can fully agree with you on...

that is why i try to keep the message i send to them so easy a DC simpleton can understand it...

STOP SPENDING

when you add in the part where we would accept a small targeted tax to bring down the deficit, ..., all they hear is 68% of Americans favor raising taxes..

The part that got our country into this mess was the part where they stopped regulating.

Ask any Bernie Madoff client.

Tex

 

[Mike]

The part that got our country into this mess was the part where they stopped regulating.

The "Fed" is the prime regulator for banks.

Problem is, no one has authority over those private banks that make up the Federal Reserve.

Bernie Maddoff was one small criminal that didn't amount to a hill of beans in the overall picture.

The US taxpayer has been ripped for Trillions by the Fed and NO ONE is mad.

Has anyone read "The Creature From Jekyll Island"?

 

[Tex]

The part that got our country into this mess was the part where they stopped regulating.

The "Fed" is the prime regulator for banks.

Problem is, no one has authority over those private banks that make up the Federal Reserve.

Bernie Maddoff was one small criminal that didn't amount to a hill of beans in the overall picture.

The US taxpayer has been ripped for Trillions by the Fed and NO ONE is mad.

Has anyone read "The Creature From Jekyll Island"?

Mike I agree with you. Bernie was small potatoes compared to what the fed did and is doing. No one is really being held accountable. They are keeping the system pretty close to what it was before with no accountability.

We are seeing the destruction of democracy because those with money are buying their way out out of the fix they created with taxpayer dollars via our political leaders---and yes, the fed has been right there in the middle finding ways to keep the wealth in the hands of the wealthy who destroyed our economy.

I am afraid our country is being sold to the highest bidder with the best spin.

Trillions, yes, but even worse, there is no accountability. We just bailed them out and put them back in the saddle. We didn't break up the big banks, we allowed them to consolidate.

Tex