Happy Tax Day!
You might feel that you’re paying a lot, but the nytimes says that you’re not paying enough: “Federal Budget Deficit Projected to Soar to Over $1 Trillion in 2020”.
It seems that we can’t simply vote ourselves to be richer and more efficient so that we can afford the government of our dreams.
Let’s assume that the onion of the U.S. economy is already being squeezed for as much tax revenue as can be obtained (of course rates can be cranked up higher, but then you have companies fleeing offshore physically (the pharmas) or virtually (Apple), so the net revenue may not be higher; higher tax rates for individuals may similar discourage work and/or encourage tax-avoidance investments such as captive insurance).
Let’s have a fun Tax Day exercise.
Readers: What do you think should be cut? And, for each proposed cut, how much would it save per year? (we need to get to $1 trillion total!)
I’ll go first… the government should stop purchasing opioids for non-hospitalized patients. So Medicare and Medicaid would not pay for OxyContin. Patients would have to purchase opioids with their own funds and/or obtain them from charities (who wants to start Oxy for Everyone, a 501c3?). See Who funded America’s opiate epidemic? You did. for what we’re doing now. I’ll estimate that this cuts opioid abuse in half, which boosts the economy by about $250 billion (source), of which the federal government gets $50 billion.
I’d cut the TARP slush that was dumped in a few years back. TARP was passed in 2009, but then it was added to the “baseline” for spending and has been getting spent ever since. That was almost 1 trillion added in (986 billion) and since we got along without it very recently, I think we can give it up. That’s pretty close to 1 trillion in savings.
If we brought our health care spending in line with European nations like France that get better outcomes at half the cost, the deficit would evaporate overnight. You can’t get there by cutting line items, only by breaking up the AMA cartel by taking away its credentialing power, by curbing hospital mismanagement and curbing Big Pharma, e.g. restoring negotiating for volume discounts to Medicare and Medicaid.
*** SNAP [1].
A good majority of the SNAP recipient spend the money on none essential personal pleasure stuff.
*** Public employee pension plans in the United States [2]
Why our government treats its employee with such sweet deals is beyond me. Oh, I know, they make their own laws!
*** Incarceration in the United States [3]
Cut all items that are none essential. No cable TV, games, or even warm shower or hot meals.
*** I can go on and on …
[1] https://en.wikipedia.org/wiki/Supplemental_Nutrition_Assistance_Program
[2] https://en.wikipedia.org/wiki/Public_employee_pension_plans_in_the_United_States
[3] https://en.wikipedia.org/wiki/Incarceration_in_the_United_States
Though choice, what should be cut. Here in NYC vagrants are housed in $250 a night hotels so they can spend their days panhandling and in the evening enjoying the fruits of their labor in the local Holiday Inn. I know this is a radical idea but it seems to me that housing vagrants in $250 per night hotel rooms is not an ideal use of tax revenues.
1. Subsidies for Gas and Oil companies
2. Cut the waste with Medicare and Medicaid (negotiate drug prices with Drug companies, cut the abuses in the system)
3. Cut the waste at the Department of Defense (remember all those billions of dollars that were unaccounted for?)
It’s your armed forces, but I betcha you could spend half the money you are now on it, and not see any differences in outcomes.
https://www.marketwatch.com/story/this-is-how-much-it-will-cost-to-replace-the-tomahawks-used-in-syria-2017-04-07
Stop bombing Syria?
I’m not sure that “cut waste” is a realistic suggestion. We have the government that we have and they will probably get more wasteful over time, as with other bureaucracies, not less. Also, it is not as though the government is currently TRYING to waste money. So Federico’s suggestion to cut military spending in half seems workable, but Dan’s “cut the waste at the Defense Department” does not.
>Also, it is not as though the government is currently TRYING to waste money.
Of course it’s trying to waste money – of some government department doesn’t spend all it gets this year,they will get less next year, so they always overspend a bit. You can see it in corporations too, for example, campus I’m working at every year gets senseless renovation projects renovating over same things.
Do it yourself: http://archive.nytimes.com/www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html
What others chose: https://www.nytimes.com/2010/11/21/weekinreview/21leonhardt.html
I’d suggest at least a 75% cut in military spending, along with a requirement that all members of Congress who allow the President to start a new war should be deployed with the infantry, on the front-lines.
The only exception would be a physically defensive war, waged on US soil.
And there is a lot that could be done in healthcare, as well. See “Money-Driven Medicine” by Maggie Mahar.
Everything except the military and a handful of three letter agencies and cheaper programs. Replace all entitlements, welfare & corporate welfare with a universal minimum income.
Since 2000, debt has increased over four-fold (source: http://usgovernmentspending.com/recent_debt), while GDP has increased two-fold (source: https://www.wolframalpha.com/input/?i=us+gdp). Clearly not a sustainable trajectory.
Two-step plan to fiscal sanity:
1. default on debt so no one will ever lend us money again
2. this will force us to spend only what is brought in (no deficit spending), saving us $0.5-1T PER YEAR (source: https://www.usgovernmentspending.com/federal_deficit_chart)
No other plan saves so much money AND restricts new spending.
Otherwise, the boomers will continue to vote themselves overly-generous benefits, as they have for decades, and it will end badly.
“I’ll estimate that this cuts opioid abuse in half, which boosts the economy by about $250 billion (source), of which the federal government gets $50 billion.”
The idea that the government “should stop purchasing opioids for non-hospitalized patients” is worth considering. However, this estimate of the effectiveness of one small intervention strikes me as laughably optimistic; do you have any evidence or analysis to back it up? The projected savings also ignores the fact some fraction of outpatient prescriptions are for medically necessary medication. In those cases, physicians would be forced to keep the patient hospitalized rather than sending them home. The government’s (50%) share of an additional three days in the hospital for 10% of existing retail opioid prescriptions would be $75 billion. It might be possible to treat those patients in less expensive specialized facilities, but those don’t currently exist. This is an interesting idea, but it unclear at best that the projected savings are bankable.
There are no doubt many parts of the government which could and should be cut. However, the idea that we can somehow make fiscally significant cuts to the government is a fantasy. The best one can hope for is keeping spending levels more or less constant adjusting for inflation and then grow the economy around the government. Even this scenario really rests on the assumption that it is possible to increase the government’s efficiency over time and I’m not aware of proven scalable methods for doing this. Many proposals trade corruption for efficiency which is even worse than the status quo.
Cut “defense” spending to the same as Russia’s. That will save you something like $700 billion a year. Stop invading, bombing, leaning on, and generally despising other countries. You will save an unbelievable amount of money, you may have the unexpected pleasure of finding armaments manufacturers begging in the gutter, and you will be surprised how popular you will become abroad.
Get rid of all the “intelligence agency” alphabet soup; they all disagree, their political chiefs always ignore what the staff (and the computers) say in favour of what’s “on message”; and the Chief never asks them questions anyway.
Then you need to find a way to cut back the insurance thorns that are choking your medical sector to death – that should save about half of all spending on “health” (although actually, of course, it’s sickness).
To get really extreme, find a plan to feed people real healthy food instead of manufactured foo-dlike substances. That way you may eventually cut your “health” expenditure down by 80% and stop wasting hundreds of billions of pharmaceuticals that mostly just make matters worse.