A 5% Solution For America's Deficit Woes

IBD Editorials ^ | September 3, 2009 | J. T YOUNG

[Kaslin]

Recession-fueled federal spending and deficit growth caught the public unaware, but awareness is growing, welling up like a primal scream. Inarticulate now, the public is searching for its voice.

Fiscal conservatives must be that voice, but this opportunity has taken them by surprise too. It's an opportunity for leadership, not partisanship, and it's not simply enough to oppose. At some point, public demand switches from style to substance, and a solution must be offered.

Fortunately, an answer can be found in a few basic steps — for those knowing where to look.

It's easy to see how America has been fiscally surprised. In 2008, federal spending was 21% of GDP and the deficit was 3.2%. Now, a year later, federal spending is projected to be 26.1% of GDP and the deficit 11.2%. Neither percentage has been so high since during World War II.

But before conservatives can address the deficit problem, they must understand it. Put simply, the deficit is the creation of federal spending. As the nearby table shows, federal revenues have fallen 21% as a percentage of GDP from 2007 to 2009, but much less than the 31% that federal spending has risen. And if the present is not persuasive enough, then try the future.

[Kaslin]

[PugetSoundSoldier]

Here's my solution. It's politically viable, will absolutely work, and is proven for any period in the past. Just takes the political willpower to implement.

[Lucas McCain]

I have long believed that there should be some version of a budget freeze. It is a simple concept that the masses can understand and get behind. It would eventually balance the budget and put a dent in the debt. The Republicans would do well to run on it.

[Clintonfatigued]

What conservatives also need is credibility. Before Obama, it was Republicans who ran up record Federal deficits. Hopefully, we can regain what we’ve lost.

[stylin19a]

I think everybody should have a dog in the fight.

53,176 million returns filed in the U.S., 65,361,000 paid no tax or had a negative tax rate (checks are actually mailed out to them under the earned income tax credit). This means that 42.67 or 43 percent of all taxpayers in the U.S. don't pay any taxes or get tax refunds exceeding their tax liability.

It also shows that 23,658 million Americans, all those earning over $100,000 per year, or 15.4 percent of all taxpayers, pay 83.3 percent of all taxes; and that the 5.138 million top taxpayers earning over $200,000 per year pay 58.1 percent of all income taxes.

I hate taxes, but until we get to a fair tax or flat tax, it's time for EVERYBODY to pay something. Once you do have a dog in the fight, you will all of a sudden become aware of how your tax money is being wasted.

[AFPhys]

This is worth a try, I think. All we need after that is to pass a balanced budget amendment and an amendment capping fed taxes and spending based on GDP, and we might get this stupid Fed gov’t under control. I’m not expecting this to happen any time soon, but it is something that must happen.

[kabar]

How do we control federal spending without reining in the entitlement programs? Demographics alone will account for at least 40% of the increased costs. By 2030, one in five Americans will be 65 or older, or twice what it is today.

In 1950 there were 16 workers for every retiree, today there are 3.3, and by 2030 there will be two. Where is the revenue going to come from to support these programs, which are already either broke or going broke within a decade?

A SUMMARY OF THE 2009 ANNUAL REPORTS Social Security and Medicare Boards of Trustees

[kabar]

60 million people are on Medicaid. 37% of all births in the US are funded by Medicaid.

Medicare, of course, was never expected to be fully funded with dedicated taxes and premiums. Federal taxpayers have always subsidized coverage for physician services, and Congress extended this subsidy, much to the chagrin of many fiscal conservatives, to prescription drug coverage in 2003. Enrollees are required to pay their own premiums if they elect to enroll in these parts of Medicare, but the premiums now cover only about 25 percent of costs, with the balance financed automatically from the U.S. Treasury. This annual subsidy is set to rise dramatically in coming years, from 1.5 percent of GDP in 2007 to 4.7 percent of GDP in 2050. (The entire budget for the Department of Defense now stands at about 4 percent of GDP.)

[SaraJohnson]

Your plan would work if...

Democrats and Republicans - from election to election and no matter what “National emergencies” arise, would stick to the plan given the public has an attention span of one day and socialists make up a quarter of the population and almost all the news media.

Do you think that is possible?