Balance the Budget

To Improve Fiscal Policy

Americans in polls tell us they favor an increase in social security benefits, education, infrastructure improvements, environmental protection, and scientific research and want a cut in foreign aid.

In nearly all walks of life, Americans realize that spending by the federal government is wildly out of control. The same standard for managing our household budget does not apply in Washington. Massive deficits are chronic, and government debt and the interest paid on that debt are at an all-time high—a record $37 trillion, or more than $101,000 for every man, woman, and child in America today.

This crushing debt undermines national growth opportunities and could quickly force the United States into an economic crisis. America needs to cut spending, reform the tax code, and support more vigorous economic growth as measured by GNP and GDP, thus reducing interest costs on the debt and lowering costs for families.

An Alternative Approach

My approach begins with the following non-starters:

• Across-the-board budget cuts do not work.

• No cuts in Social Security benefits.

• No cuts in Medicare benefits.

• No reductions in military spending or military member benefits.

• No reductions in military veterans’ benefits.

• No undercutting climate and environment protections and innovations.

• No reduction in law enforcement or homeland security programs, including federal initiatives that may result in defunding police.

So, with that said, where can the budget be cut, the deficit reduced, national economic growth encouraged, and middle-class families better protected?

• Eliminating the U.S. Department of Education and shift its programs to the states where education policy more rightly belongs would represent a $75 billion savings on an annual federal budget of $83 billion-plus.

• Merging the Small Business Administration with the U.S. Department of Commerce would represent an $800 million savings.. Twenty-eight million small businesses, critical to the lifeblood of the American economy and jobs, are over-regulated and should be equally important to larger business enterprises.

• Capping Medicaid benefits per state but keeping the federal matching rates would result in a $50 billion savings.

• Eliminating the mortgage interest deduction but providing a 15% refundable tax credit on up to $300,000 of mortgage principal would save $30 billion annually.

• Privatizing the U.S. Department of Transportation for ground transportation, fees, tolls, and wiser transportation infrastructure investments supported by public-private-philanthropic partnerships would yield $30 billion in annual savings.

• Applying a carbon tax would generate $19 billion in new revenue.

• Requiring the U.S. Department of Health and Human Services to fix the fee per beneficiary to cover spending, thus treating the disease and not each healthcare provider's service to a patient, would save $10 billion.

• Having the U.S. Department of Housing and Urban Development pool housing finance assistance with public-private-philanthropic partnership initiatives would save $10 billion.

• Privatizing the U.S. Department of the Interior parks and recreation programs with a social benefit cap on profits would save $10 billion.

• Privatizing Amtrak and other rail subsidies through the U.S. Department of Transportation would save $7 billion.

• Cutting foreign aid by 25% and targeting consistent, rational standards for when and why foreign aid is granted would yield $5.5 billion in savings.

• Ending the U.S. Department of Labor employer training programs and leaving that to state discretion for competitive enterprises would save $4.9 billion.

• Ending oil and gas subsidies through the U.S. Department of Energy would save $4.1 billion.

• Ending telecom subsidies would save $3.6 billion.

• Ending the U.S. Department of Justice state & local discretionary grants would save $2.6 billion.

• Adding a U.S. Department of Labor immigrant visa fee through employer applications would generate $1 billion.

The total amount saved from budgetary changes would be an estimated $267.4 billion.

Economic Growth from the GNP and GDP Perspective

• Additional investment in NASA would yield $7 for every $1 invested, generating higher-paying wages and income and corporate-generating tax revenue each fiscal year.

• The Medical Innovation Zone/American Transformational Innovation Trust proposal I have advanced would generate far greater revenue from public-private-philanthropic partnership investments, manufacturing, energy, the trades, immigration jobs, and improved exports versus imports.

• The flat fair tax proposal would take the burden off the middle class for generating income-related revenue, make the wealthy pay an equal percentage of their income, and assure that those under the federal poverty rate are paying $0 in taxes. This flat tax might generate $1.46 trillion if there is a maximum 10% flat tax on individual income.

• Payroll taxes would remain the same for Social Security and Medicare.

• Capital gains and inheritance taxes would be limited to 10% or eliminated if revenues permit.

• An estimated $650 billion in corporate taxes would be realized by adopting a reasonable corporate minimum tax on adjusted gross profits on all U.S. and multinational operating companies, raising $1.12 billion in revenue.

• That said, this new plan might expect to generate:

  • $1.46 trillion in flat fair tax revenues.

  • $1.66 trillion in current payroll tax revenue.

  • $1.22 trillion in corporate tax revenue.

  • $234 billion in current other tax revenue.

  • $1.8 trillion in economic growth-related tax revenue.

  • Yielding $6.374 trillion in tax-related revenue.

If current budget outlays of $6.5 trillion are reduced by $267.4 billion in proposed budget cuts, outlays would then be $6.23 billion offset by $6.37 billion in revised tax-related revenue, balancing the budget under current circumstances.

Cost reductions for families would come, under this plan, in the form of:

• Tax relief

• Food prices

• Pharmaceuticals expenses

• Medical expenses for related services

• Energy efficiency

• Housing credits

• Education credits

• Transportation

• Charitable credits

Of course, we know that reducing the budget deficit with program cuts and federal agency consolidations, reforming the progressive tax code with a replacement fair flat tax, increasing U.S. economic growth, and reducing family costs will take time.  We also know that the comprehensive budget and tax reform proposed here will be subject to give-and-take in the legislative process.

Even if some of these proposals do not hold, then there are a mountain of other budget reduction options available to consider.

Either way, this proposal is a starting point for serious fiscal policy debate in 2024 and beyond, and it needs to begin in earnest now.  It is long overdue, as Congress has so aptly proven with recent budget and appropriation actions or inactions that have so far not benefited the American public.