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My plan for reducing the federal budget deficit

September 12, 2010

 My plan to reduce the federal deficit: 2010 to 2100 - Excel 2007 and 2010

My plan to reduce the federal deficit: 2010 to 2100 - Excel 97 and 2003

The attached files are MSExcel documents. Presented in a table format, the numbers represent how much would be added or removed from the federal budget deficit over the next ten years due to each specific change I make to the budget . Next to most changes, I have included a rationalization/reason. Beneath that table, I have also included my estimate for the yearly and total budget deficits before my modifications (as it is now) and after my modifications.

Calculations, raw data, and some more interesting numbers are in the full excel file, which I will email to anyone who is interested. In that file, you can modify certain values like interest rates, growth rates, etc. to fit whatever scenario you see for America’s future.

My numbers come mostly from the CBO (Congressional Budget Office); some are from internet articles from credible websites. Generally, I feel like my estimates are conservative in that they assume America’s future will be worse than predicted. Although it can’t be seen here (once again, anyone who wants to see the raw numbers is free to email me for the full excel file), using figures already available, per-year growth in federal income was estimated between 3 and 4 percent. After the year 2029, a date after which I could find no reliable numbers for, I tied federal income to predicted growth in GDP, which, oddly enough, fit in the same range. For general increases in federal spending, one could assume that it would also be tied to GDP and therefore would rise as fast as federal income. However, being a pessimist, I assumed growth in federal expenditure of between 5.5 and 6.5 percent, disregarding every “expert” estimate that had this at a lower figure. By doing this, I am basically adding 2-4 percent of “negative pressure” on the budget, just because I know how the folks in Washington like to spend uncontrollably.

In the end, this reduces government spending as a % of GDP to a low of 9% and to a close of 13% in 2050 (from a projected 35% in 2050). Predictions are very accurate until 2030. After around 2050, a lot of variations come into play; at that point, of course, a lot of assumptions come into play.

Ultimately, I want to get people talking about we can fix our budget problem in this country. If you believe the polls, Americans strongly concur that our deficit must be reduced. But the same polls show that Americans also want no programs to be cut and also want no tax increases. You may think some of the proposals and cuts I have made are bad for America. Please; tell me why they won’t work and start a discussion! I am sick of the mindset in Washington where, IMO, because they don’t have the will to get these things done, they make up excuses for not reducing the budget…. 

Just in case:

Because people might say I am not an economist: I am not, at least not by profession. But like I said, I use pessimistic estimates when it comes to growth, and otherwise, my numbers come straight from reliable sources, not my own calculations. Any calculations I have made should be described in the posted table.

Because people might say I am coming down too hard on the rich: my family generally falls into the higher (95+) tax brackets. I myself have taken advantage of the capital gains tax several times, and by my estimate, have saved about 250,000 in taxes thanks to the capital gains tax.

Because people might say I come down too hard on wall street: I don’t work for any financial companies or anyone on wall street, but I do have an investment portfolio, a portion of which is invested in companies like Citigroup, Bank of America, etc.

Because people might say I come down too hard on the military: I have never served in the armed forces, but I am an American who supports our troops, and thinks the best way we can do that is by taking them out of needless wars, by having programs that keep troops happy and healthy, by ignoring the military-industrial complex, and by supporting foreign policy that does not induce hatred of America abroad. 

Let’s start the discussion!

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6 Comments leave one →
  1. Tao Chen permalink
    September 12, 2010 7:24 PM

    That is pretty ambitious man….the numbers look good, but I don’t see how you can cut taxes that much and still have a surplus.

  2. Anonymous permalink
    September 13, 2010 3:58 PM

    what is “BCB” that you mention?

    numbers look very complicated! Do you cut the income tax 70% or 90%? I c both #s listed….

    Also as a Ron paul supporter, I love your ideas about defense spending, but i think you way overdid it. i don’t think we can cut the budget that much and still be safe…

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