How would you fix the deficit?

[abdAlSalam]

Your own "post" says nothing on whether the U.S. debt is currently a problem.

Here's a hint: it isn't. Will it become a problem in the future? Quite possibly, if we decide to ignore the other half of Keynesian economics. Is it a problem right now? Lol, no.

 

[usexpat97]

Cutting the U.S. national offense would sure be nice, but also absolish the Fed, and instead of stimulating the economy by lowering interest rates and lining the bankers' pockets, instead keep rates flat/higher, print money in commensurate amounts, and use that to pay for Federal programs instead of debt. The whole debt problem would not be 1/10th of what it is were it not for the Fed.

 

[Vylo]

I would add to revenue, cut defense spending and cut welfare, primarily food stamps. Welfare programs should have people work and be training them for the future. Education is part of the root of our problems.

 

[Jeffwhosoever]

The only defense spending I would cut would be associated with withdrawal of troops from the Middle East. I look at defense spending from the point of view of a father, so I want our troops to have the world's best weapons by a large margin for my son, should he decide to serve one day.

 

[abdAlSalam]

Cut Defense to the point where the only thing we're paying for is veteran's health benefits/pensions for those who served. All RnD spending goes to NASA. BOOM the end. Doesn't solve out deficit, but it certainly makes us a better country. Also, end all private contracts. Can't make it in the free market without govt subsidies? Tough.

 

[Vylo]

Cut Defense to the point where the only thing we're paying for is veteran's health benefits/pensions for those who served. All RnD spending goes to NASA. BOOM the end. Doesn't solve out deficit, but it certainly makes us a better country. Also, end all private contracts. Can't make it in the free market without govt subsidies? Tough.

So....what do we do when attacked?

To say this is risky would be a dramatic understatement.

 

[abdAlSalam]

So....what do we do when attacked?

To say this is risky would be a dramatic understatement.

Emergency spending. It depends upon how we are attacked. Ostensibly the 'well-regulated' militias will kick in and we will be able to defend ourselves in that way. But the fact is that a large scale invasion of the U.S. would be doomed before it even began. You think Afghanistan was bad? Try America.

 

[Vylo]

We would be a tough nut to crack due to gun proliferation, but a full scale conventional attack would devastate us if we didn't have the weaponry and army to hold off a serious enemy. We can certainly spend less on the military, but gutting everything, especially R&D is complete folly.

 

[OldWiseGuy]

EDIT: Current average of yield on treasury bonds:2.560 *meanwhile inflation from 2010 to 2012 was 6.1%.

If you're going to add several years of inflation together shouldn't you add the same years of Treasury's yield together as well? Treasury bills and notes usually reflect the rate of inflation while (long) bonds are a 'WAG' (wild-ass guess).

 

[AlexBP]

So....what do we do when attacked?

Don't get attacked and then it won't be a problem.

Costa Rica has no military for 50 years. It hasn't been attacked in all that time. It's done a much better job of defending its people from domestic and foreign threats than other countries in the region.

(Personally, I don't know if I'd go so far as to eliminate the entire military. If I were in charge, I might cut it by about 95%. Then we'd still have enough strength to fend off foreign threats if they came into existence, but we wouldn't be tempted to go haring off on wild adventures in places like Vietnam and Afghanistan.)

 

[keith99]

Emergency spending. It depends upon how we are attacked. Ostensibly the 'well-regulated' militias will kick in and we will be able to defend ourselves in that way. But the fact is that a large scale invasion of the U.S. would be doomed before it even began. You think Afghanistan was bad? Try America.

A well regulate militia worked decently when it took 3 months to get here. It provided for the ability to turn civilians into soldiers faster in WW II.

BUT as a first line of defense it is useless in a modern world.

Spending for defense after the attack is like bolting the door after the cows are gone.

 

[doubtingmerle]

The only defense spending I would cut would be associated with withdrawal of troops from the Middle East. I look at defense spending from the point of view of a father, so I want our troops to have the world's best weapons by a large margin for my son, should he decide to serve one day.

I also look at defense spending from the view of a father.

I don't want my sons policing a Middle Eastern country that doesn't want us there.

 

[doubtingmerle]

I see that cutting defense and raising revenue are the most popular options, so folks agree with me there.

But I am a little confused that 27% would like to cut the interest payments on the national debt by 44%! I would like to know how you plan to do that! Basically they are asking us to default on our loans. Not a good idea.

I'm also am very disappointed that some want to cut veterans benefits by 78%! Hopefully that is a case of not understanding the question. I can't imagine people think that is a good idea.

Cutting the deficit is a huge challenge. Its not simply a matter of cutting everything.

 

[cow451]

Gosh, I must be some kinda radical. Why not get the major players together (leaders of Congress and the President) and do something really wild like do a mixture of raising revenue and cutting expenditures. I dunno.

Oh, wait! Let's start by listing every sensible idea from the Tea Party Congress members:

1. Uh....
2. Hmmmmmmm........
3. Well there's ......
4. All of the above.

 

[doubtingmerle]

OK, if we are going to balance the budget, we are going to need to cut $1.3T somewhere, or the equivalent of thirteen (13) $100B slices. Where are we going to make those 13 cuts. 75% agree we can take at least one slice out of defense, and most agree we can make at least one $100B tax revenue increase. But where else are we going to cut?

Obviously some people are so used to saying cut everything that they just checked every box without thinking about it. Do they really want to help balance the budget by cutting interest payments in half?!?!? Can those people possibly be serious? They are asking us to default on our debts! That is absolutely insane! But this is what happens when you try to have a serious discussion on the debt. People just think it is all so easy, and all you need to do is chop everything. So they check everything.

Based on this, any category on the list with less than 25% voting yes for that item is probably nothing more than people mindlessly checking almost everything, and doesn't really represent a thought out desire to cut this item that much.

OK, once we get past defense cuts and tax increases, which are well received, where else can we get $100B (And in this case, a few measly billion here and there won't even make a dent. We need to find 13 places to cut $100B to balance the budget.) No other category beside those two is getting 50% approval.

"Everything else" is the next big item. OK, but there really is a lot in that "everything else" bucket. Cutting 15% out of it to save $100B really is not going to be easy. You might be able to get one or 2 slices out of that, but that is about it.

The only other item that shows significant desire to cut is income security. About 1/3 of the people here want to cut 22% out of the budget for welfare, food stamps, etc. It seems to me that this would be devastating to those in need. But even if we were to cut all spending on these things, we find only about 4 slices here, not the entire 13 slices we need.

So it seems to me that most people agree with me that we cannot balance the budget without huge defense cuts, and significant revenue increase. There is little support for significant cuts elsewhere.

 

[doubtingmerle]

I wouldn't cut anything, but would freeze the annual budget where it is now thus preserving all the domestic employment that is maintained by Federal spending. I would then begin to pay government contractors with newly printed money, circumventing the Federal Reserve Banking system. This would help to compensate for the $500-600Billion lost in trade to other countries (the real problem) as well as the $50Billion (cash) lost to the drug trade, and the $22Billion sent to Mexico by Latino's working here (legally and illegally) while not increasing the debt (as the money is unindebted money, not borrowed money).

Interesting idea. Since the deficit last year was $1.3 T, if we freeze everything at that level and print enough money to balance the budget, we print $1.3T a year. That is a lot of money.

And how would you answer the person who fears that would cause runaway inflation?

 

[ZaidaBoBaida]

I would raise taxes. Sorry, but I would. We are the only country in the history of the world to go to war and not raise taxes. And our silly butts did it not once but twice AND cut taxes. Gee - I wonder why we're having problems. Idiots.

I would also tax the heck out of companies that export our jobs and charge tarriffs for their imports.

I would legalize marijuana and tax the heck out of it.

I would also cut back significantly on foreign aid.

 

[doubtingmerle]

I would legalize marijuana

Heck it might not help the deficit, but it would make it seem a lot less significant.

 

[doubtingmerle]

print money in commensurate amounts, and use that to pay for Federal programs instead of debt.

Heck, government programs require money, and the government can print money, so heck the problem is solved?

So China gives us all this stuff, and we give them copies of dollar bills from our copying machines, and all is well?

Somehow I am afraid this might now work so well.

 

[doubtingmerle]

With interest rates and inflation as they are, we are basically getting money for nothing. We should use that money for upgrading our infrastructure. Energy, transportation, food stamps, unemployment payments, have all been proven to improve the economy (up to a point). Eventually we WILL have to address the deficit, because we will end up paying more and more for interest on our debt. But right now, for the time being, it ain't a problem.

Interest is not a big problem now, when we pay about 2.5%.

What if rates jumped to 20%? Jumping Jehospophat! Suddenly our interest payments rise from $200B to $2600B a year. That is a jump of 24 "slices". We can't find a way to balance the 13 "slices" that we owe each year in excess of revenue. How would we balance the budget if the debt jumped by 24 "slices" to 37 "slices".

I really don't know what we would do if interest rates shot up.