How would you fix the deficit?

[OldWiseGuy]

Annual budget deficits are added to the national debt. Balancing the budget is the first step toward not adding to the national debt. This alone would have a huge impact on business and consumer confidence.

 

[AceHero]

Washington State recently legalized pot, and it'll be taxed three times:

• 25%, grower to processor

• 25%, processor to retailer

• 25%, retailer to user

It's estimated that the new law will bring in $500 million annually for the state. Could you imagine if this was national policy?

Is that $500 million in revenue from pot tax alone, or is it combined with the savings from the criminal justice system of not having to arrest, prosecute and jail offenders?

Well, apparently the $500 million is a high-ball figure. Whatever that figure is, it's just taxable revenue:

Disbursements from the Dedicated Marijuana Fund are made quarterly by LCB to state agencies to expend for specific programs and services. Disbursements are also made to specific accounts. Expenditures are dependent on the amount of revenue generated under the initiative. Because revenues could be as low as zero, estimated expenditures could be as low as zero. However, assuming the revenue generated from a fully functioning market, estimated state expenditures from the Dedicated Marijuana Fund could be as high as $1,590,668,000 over five fiscal years. Because the range of impact is wide, the estimated impact on state and local government
expenditures is indeterminate, but non-zero. See Table 3 for details on state distributions from the Dedicated Marijuana Fund assuming a fully functioning marijuana market.

...

The state, counties and cities are anticipated to experience decreased costs from fewer marijuana possession and use arrests, prosecutions and incarcerations. Data are not available to accurately predict the amount of savings that will accrue to the state and local governments.​

Some anti folks believe that the public health and public safety costs of it being legal will dwarf the costs of the tax revenue and the savings in criminal justice. I find that more than a bit hard to believe, but I have no illusions that OWI will be more of a problem with it being legal.

Who knows though... after you folks give it a shot for a few years, we may well find a national pot tax might end up making a real dent in the national debt.

There certainly is a risk of increased traffic infractions:

The initiative adds presumptive levels of intoxication for tetrahydrocannabinol (THC) concentration when a driver is arrested for suspicion of driving under the influence (0.0 for drivers under the age of 21; 5.00 nanograms per milliliter of blood for drivers age 21 or older). The initiative adds the requirement that the Department of Licensing (“DOL”) administratively suspend or revoke the driver’s license of a person who tests above the presumptive level of THC. Assuming an estimated increase of 4 percent in the DOL workload for administrative suspension/revocation hearings, increased fee revenue to the state is estimated at $4,295,000 over five fiscal years.​

It'll be interesting to see how it works out, both economically and socially.

 

[doubtingmerle]

Annual budget deficits are added to the national debt. Balancing the budget is the first step toward not adding to the national debt.

Obviously, yes.

But the question is how we balance the budget. You need to axe out 13 "slices" of 100 Billion each to balance the budget. Where would you get those 13 slices?

 

[doubtingmerle]

Okays, time for my turn.

I vote for you!

Here we actually have a plan. Military cuts and tax revenue increases are a big part of your plan. You also address the tough issues such as social security and medicare, and recognize that a balanced budget would require such tough calls. Thanks for your input.

 

[doubtingmerle]

There was an interactive website out there a while ago that let you manipulate budget items to see if you could balance the budget. A useful exercise.

Here it is. Give it a try.

Budget Puzzle: You Fix the Budget - Interactive Feature - NYTimes.com

Thanks for the link. That is a great site.

 

[doubtingmerle]

You may have noticed that ALL tax increases and NO spending cuts doesn't get you to a balanced budget by 2030.

I don't believe that anybody is suggesting that. Raising taxes is part of the solution, not all of it.

I would like to see somebody find a satisfactory budget with no military cuts and no tax increases. That is the challenge.

 

[doubtingmerle]

We can never solve the budget problem by increasing taxes and cutting spending. We need to get labor force participation back up to the levels Reagan achieved and were held almost constant until 2009 began. Get Americans back to work, and a lot of our problems simply disappear. That is the secret to Clinton's budget surplus years. Yeah, the declined started with Bush Jr.

Last year the government spent 54% more than what it took in. If you are going to fix the budget by freezing both spending and tax policy, and then improving the economy until we balance the budget, you will need to increase the GDP by about 54%.

Pray tell me, how do you plan to increase the GDP by 54%? How long will it take you to do that?

We could also fix the budget by having Santa Claus give us $1.3 trillion each year.

But neither the Santa Clause proposal or the rapid growth proposal seem realistic to me.

 

[doubtingmerle]

Washington State recently legalized pot, and it'll be taxed three times...It's estimated that the new law will bring in $500 million annually for the state. Could you imagine if this was national policy?

It might not balance the budget, but pot could perhaps help us stop worrying about it.

 

[doubtingmerle]

OK, let's say you find a way to eliminate the deficit (balanced the yearly budget.)

Now, how are you going to eliminate the national debt? Something like $12 trillion now.

Ah, a much more difficult problem.

The total debt is about $13 trillion. If we want to pay off our debt in 26 years, we would need to pay off $500 billion a year, or 5 additional "slices". So now instead of finding 13 slices to balance the budget, we need to find 18 slices to start reducing the total debt.

 

[mnphysicist]

Lots of things are out of whack... but its hard to assign numbers.

Defense has tons of pork, and we spend far in excess of every other country, so pulling out 200B out of 1.4T does not seem unreasonable. The trick is the how and where part.

Health/Medicaid has a ton of waste too, but almost always cutting fees equates not to less waste, but to fewer services for patients. The inability of the feds to negotiate hard core is hugely problematic, and state laws often get in the way of meaningful reform. The push for greater patient responsibility sounds good... but realistically, how responsible can a senior citizen in a nursing home with few if any assets be?

Medicare is in trouble as costs have risen multifold, folks live longer, and the last medicare tax increase was in 1986. Its doesnt take an accountant to see that no matter how much is reduced on the spending side, the revenue side has to go up in a huge way... or society needs to take a step back and determine what the life of a senior is really worth and whether they are willing to spend money on them or not. Should a year of a seniors life be valued at 100K, or 50K, or perhaps only 20K? Folks dont like to think about this... but many seem quite happy toy vote for reforms which effectively assign a monetary amount to a seniors life... Perhaps $/lifeyear figures should be required for each medicare bill before congress.

Social security is underfunded too... this could be addressed by raising the retirement age to 69, upping the cap plus indexing it to a multiplyer of GDP, and means testing SS per Simpson Bowles. It would be politically very unpopular.

 

[OldWiseGuy]

Obviously, yes.

But the question is how we balance the budget. You need to axe out 13 "slices" of 100 Billion each to balance the budget. Where would you get those 13 slices?

The first thing to do is the clear the table of all existing proposals as most are idiotic BS. Then examine the problem carefully to determine exactly what the problem is. We haven't done this. For example we need to separate the 'good' and the 'bad' debt. Not all debt is bad, or needs immediate attention. SS is included in the debt but is not a part of the problem. SS not only pays retirees from it's own revenues but has enough left over to add to its Trust Fund. Future shortfalls will be adjusted for when they occur. Everyone is worried about SS, except those in charge of administering it.

Of course the biggest factor in the solution is taxes. Taxes must be raised, and the middle-class must also contribute, and right heavily because that's where the biggest source of new revenue will come from.

Exempting those making less than $250,000 is insane. Lower that to $90,000-$100,000 and we'll get somewhere.

The people that are charged with coming up with solutions aren't living in the real world.

 

[bibleblevr]

(1) Defence Budget
Many Counties around the world rely on our military power to keep them secure, countries such and S Korea and Taiwan spring to mind. Many such nations have booming economies and spend a fraction of what we pay on military spending as a percentage of GDP.

I say, If they would like our military presence, we should sell it to them at cost. Of course there would be a long phase in period as not to shock their economies.

This means Billions of dollars worth of foreign currency coming into our economy. Our defence spending would be drastically lower than current levels

(2) Welfare to Workfare
All government assistance (Within reason) requires commensurate hours of work. Failure to meet requirements results in an end to benefits.

Cost of government is reduced as some jobs can be done by welfare recipients

With a larger percentage of the population producing goods and services, the economic pie just got bigger, YUM

(3) Healthcare reform
Moving to healthcare savings accounts for all Medicare and Medicaid recipients. More power in the hands of the consumer, medical decisions will finally have price as a consideration forcing hospitals to compete to offer patients a greater value,

Allow the buying of health insurance across state lines to enable competition amongst insurance companies,

Malpractice laws are ridiculous, those must be changed, enough said

(4) Social Security and Pensions
Change to a Norwegian style system where funds for pensions and in our case, SS as well, are invested in the global marketplace.

Even throughout the recession, the Norwegian pension fund remained strong.This is a much better system than the pyramid scheme we currently use for SS.

(5) Revenue Increase
Although many taxes must be slashed to make way for economic prosperity chiefly the corporate income tax, taxes on economically unproductive activities can be increased.

Although defining "Economically unproductive" may prove difficult, some classes of activities include advertising, and the production of certain non-durable goods, could fall into this category. What ought to be taxed specifically sounds like a topic for another thread,

(6) Energy
Our largest import is oil, not only would becoming energy independent benefit our trade balance but our national security as well.

Encourage domestic drilling enthusiastically.

Nuclear, geothermal, hydroelectric, wind, solar, and tidal energy options all need to be heavily encouraged as well.



And that seems like a good start.

 

[someguy14]

Only a suggestion.
Tax $1 dollar from every paycheck.

 

[OldWiseGuy]

(4) Social Security and Pensions
Change to a Norwegian style system where funds for pensions and in our case, SS as well, are invested in the global marketplace.

The economic downturn has gutted many pension funds that are invested in the markets. Thankfully SS is safe from those risks and should be kept that way.

Even throughout the recession, the Norwegian pension fund remained strong.This is a much better system than the pyramid scheme we currently use for SS.

SS has also remained strong.

 

[Steve Petersen]

The economic downturn has gutted many pension funds that are invested in the markets. Thankfully SS is safe from those risks and should be kept that way.




SS has also remained strong.

If your pension is invested TOTALLY in stocks, you are asking for trouble. Divide in thirds: cash, bonds and real estate/stocks. Have enough in cash and bonds to hold you over for 15 years. The rest in stocks and real estate. Distribute 4% of your money from stocks into the others opportunistically. You should not have to worry about market fluctuations.

 

[OldWiseGuy]

If your pension is invested TOTALLY in stocks, you are asking for trouble. Divide in thirds: cash, bonds and real estate/stocks. Have enough in cash and bonds to hold you over for 15 years. The rest in stocks and real estate. Distribute 4% of your money from stocks into the others opportunistically. You should not have to worry about market fluctuations.

I'm a contrarian.

In the early '90's everyone was selling their rental property to buy stocks. I bought rental property.

Many who held real estate mortgaged it to the full to invest in the market. I paid off my mortgage in 10 years.

I recently sold my rental property and put the money in FDIC insured cd's, where I also had put all of the income from the building since I paid it off.

I started with $20,000 of my own money, which grew to over $500,000 in 18 years.

Sittin' pretty with no need to risk anything.

 

[Jeffwhosoever]

One analyst thinks we should go over the cliff and into recession. Maybe like letting forests burn in Yellowstone rather than putting out the small fires, then the big one comes along.

Why It’s Best for the US to Fall Off the 'Fiscal Cliff' - US Business News - CNBC

 

[doubtingmerle]

One analyst thinks we should go over the cliff and into recession. Maybe like letting forests burn in Yellowstone rather than putting out the small fires, then the big one comes along.

Why It’s Best for the US to Fall Off the 'Fiscal Cliff' - US Business News - CNBC

But you did not mention why Gambles thinks this may be needed. The article states:

“The best thing that happens is we go off the cliff. That (a recession) is what the U.S. economy needs,” Paul Gambles, managing director at MBMG International, a financial advisory firm, told CNBC Asia's “Squawk Box.”

The $600 billion in tax hikes and government spending cuts, set to take place in January 2013 if policymakers do not reach a compromise for avoiding them, are essential to debt reduction and the long-term balancing of the U.S. budget, Gambles said. [Emphasis added]​

Jeffwhosoever, do you or do you not want to reduce the deficit significantly? If so, then you yourself are saying that you want the fiscal cliff and agreeing with Gambles. Gambles is saying (correctly) that reducing the deficit substantially will cause financial trouble, but that it is best to do this and suffer the "small fire" of the fiscal cliff, rather than accumulate unmanageable debt.

You argue for deficit reduction and then complain about the fiscal cliff! How can you possibly do that? It is deficit reduction that is expected to cause the fiscal cliff. If you want significant deficit reduction, then you also want the fiscal cliff.

 

[doubtingmerle]

bibleblevr, you propose a "good start" rather then state how much you would reduce where. I would be interested in knowing how many "slices" you would like to take out of each area. Let's look at your "good start".

(1) Defence Budget
Many Counties around the world rely on our military power to keep them secure, countries such and S Korea and Taiwan spring to mind. Many such nations have booming economies and spend a fraction of what we pay on military spending as a percentage of GDP.

I say, If they would like our military presence, we should sell it to them at cost. Of course there would be a long phase in period as not to shock their economies.

This means Billions of dollars worth of foreign currency coming into our economy. Our defence spending would be drastically lower than current levels

Are you saying to force other countries to pay for our protection, or asking for donations, or selling worldwide police services?

Forcing them to pay is taxation without representation and wrong.

Asking for donations isn't going to get us much.

Selling police services is a good idea, but its difficult to see how our military would keep things safe only for those who pay. How much do you think this would save?

I prefer a global scale back in military.

(2) Welfare to Workfare
All government assistance (Within reason) requires commensurate hours of work. Failure to meet requirements results in an end to benefits.

Cost of government is reduced as some jobs can be done by welfare recipients

With a larger percentage of the population producing goods and services, the economic pie just got bigger, YUM

Workfare already is the law, and has been for 2 decades.

Putting everybody to work is a good idea. How exactly do you plan to do that?

(3) Healthcare reform
Moving to healthcare savings accounts for all Medicare and Medicaid recipients. More power in the hands of the consumer, medical decisions will finally have price as a consideration forcing hospitals to compete to offer patients a greater value,

Allow the buying of health insurance across state lines to enable competition amongst insurance companies,

Malpractice laws are ridiculous, those must be changed, enough said

In other words you are eliminating Medicare as we know it. This would be hugely unpopular, and would surely leave many seniors uncovered.

Out of state insurance and malpractice were covered at http://www.christianforums.com/t7675968/ .

(4) Social Security and Pensions
Change to a Norwegian style system where funds for pensions and in our case, SS as well, are invested in the global marketplace.

Even throughout the recession, the Norwegian pension fund remained strong.This is a much better system than the pyramid scheme we currently use for SS.

I don't think we have a pyramid system. Most people break even in that they get about as much out of Social Security as they would have had if they had left the money to accumulate interest in their own account. Social Security, allows those who live longer to have more secure finances, and that is a good thing.

(5) Revenue Increase
Although many taxes must be slashed to make way for economic prosperity chiefly the corporate income tax, taxes on economically unproductive activities can be increased.

Although defining "Economically unproductive" may prove difficult, some classes of activities include advertising, and the production of certain non-durable goods, could fall into this category. What ought to be taxed specifically sounds like a topic for another thread,

What is "unproductive"? Movies? Sports? Vacations? I don't think government should be deciding what is "unproductive" and adding taxes based on what they don't like.

Taxing advertising would probably be a death sentence for newspapers and free TV, and much free content on the Internet.

(6) Energy
Our largest import is oil, not only would becoming energy independent benefit our trade balance but our national security as well.

Encourage domestic drilling enthusiastically.

Nuclear, geothermal, hydroelectric, wind, solar, and tidal energy options all need to be heavily encouraged as well.

In other words you would continue the current energy policies? We have been drilling, baby, drilling, and encouraging alternatives. The last 8 Presidents have all promised energy independence. Nothing to see here, folks. Keep moving. http://www.christianforums.com/t7695896/

 

[Gxg (G²)]

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. Once the economy improves, increase the eligibility age for SS, means testing for SS and medicare and Medicaid, get rid of Medicare part D (make it so govt can't negotiate prices for drugs). Increase capita gains taxes. Decrease corporate taxes. Increase taxes on the wealthy. Eliminate certain loopholes in the tax code. Tax churches that decide they want to try and influence political processes.

I think it'd be wise - in light of so many acting fearful of taxes being raised - to talk to the buisiness owners and see what their thoughts are on fixing the economy. For when talking to many actual small business owners and asking them what the biggest threat to their success is, you often will NOT hear 'taxes' as the answer. The answer will be 'big business'. The biggest contributors to the death of small businesses are Walmart, Home Depot, Staples, Applebees, CVS, Starbucks, Barnes and Noble and big agribusiness like Dole, Tyson, etc. Paying taxes is never pleasant, but having a level playing field to compete with bigger companies is a much, much bigger issue.

• The Lowdown on Obama's Small Business Plan
• Obamacare is good for small business / LJWorld.com
• International Business Execs Say Obama's Better for World
• Why do Some Businesses Prosper in Tough Times? | Reuters
• Fiscal Cliff Letter: Small Business Owners Urge End Of Bush Tax Cuts

More than 600 small business owners and executives wrote a letter to every member of Congress urging them to end the Bush-era tax cuts for the wealthy under any deal brokered to avert the so-called "fiscal cliff.""As businesses owners, none of us hire more employees simply because someone gives us a tax cut. We hire more employees when our customers demand more of what we have to sell," the letter reads. "When a teacher, firefighter, or construction worker building public infrastructure loses his or her job, many of us also lose a customer."
The letter also emphasizes that the Bush tax cuts for the wealthy do not generally aid small businesses, and suggests that the money could be better spent on infrastructure projects, education, or other efforts to strengthen the economy.

As it concerns removing a tax-excempt status, many churches are fearful of what will happen if that develops since they feel they can't speak on political issues..but they need to look up the requirement by IRC 508(c)