At the suggestion of Jason Grumet, president of the Bipartisan Policy Center in Washington, D.C. who spoke at the Clinton School in November, the Clinton School student body used the New York Times’ interactive federal budget tool to create a suggested list of proposed cuts, reforms and tax additions to the budget which, collectively, would lead America to a balanced budget by 2030.
These budget recommendations have been sent to Arkansas’s two U.S. Senators, Democrat Mark Pryor and Republican John Boozman.
Clinton School of Public Service Student Body Recommendations:
Breakdown: 29% savings from tax increases, 71% savings from spending cuts.
Please note; the Projected Savings to Deficit are for 2030 as calculated by the New York Times. Recommendations in Order of suggested importance:
1. Reduce military to pre-Iraq war size and further reduce troops in Asia and Europe ($49 billion)
According to the bipartisan Sustainable Defense Task Force, this “would cap routine U.S. military presence in Europe and Asia at 100,000 personnel, which is 26 percent below the current level and 33 percent below the level planned for the future. All told, 50,000 personnel would be withdrawn.”
2. Reduce nuclear arsenal and space spending ($38 billion)
Would reduce number of nuclear warheads to 1,050, from 1,968. Would also reduce the number of Minuteman missiles and funding for nuclear research and development, missile development and space-based missile defense.
3. Millionaire’s tax on income above $1 million ($95 billion)
Currently, the top tax brackets starts at about $375,000. In past decades, it started at much higher income level, after inflation is taken into account. This option – which the House passed last year but the Senate did not – would create a new 5.4 percent surtax on income above $1 million.
4. Cancel or delay some weapons programs ($18 billion)
This would cancel the purchase of expensive equipment, like the F35 fighter jet and MV-22 Osprey, with less expensive equipment that the bipartisan Sustainable Defense Task Force judged to have similar capability. It would delay other purchases. Research and development spending, which the task force considered a relic of the cold war arms race, would be reduced.
5. Reduce Social Security benefits for those with high incomes ($54 billion)
Currently, initial Social Security benefits are determined in a way that allows them to grow with economy-wide wage growth,” says the Committee for a Responsible Federal Budget, a private group in Washington. Under this proposal, workers below the 60th percentile of the lifetime earnings distribution would continue to have their retirement benefits grow over time with average wage increases. But the benefits of top earners would grow more slowly – with inflation – while benefits for workers just above the 60th percentile would grow at a rate between inflation and wage growth.
6. Impose a Carbon Tax ($71 billion)
This would tax carbon emissions, starting at $23 per ton of CO2. The tax rate would increase at a constant annual rate of 5.8 percent, from 2012 through 2050. Consumers would receive a partial rebate.
7. Cap Medicare growth starting in 2013 ($562 billion)
This would cap the Medicare growth at GDP growth plus 1 percentage point, starting in 2013. Among other things, this would crack down on many hospitals and doctors with the highest costs.
8. Impose a Bank Tax ($103 billion)
This would tax banks based on the size of their holdings and the perceived riskiness of those holdings. Larger, riskier banks would pay more tax, both to discourage them from taking big risks and to help cover the costs of future financial crises.
9. Eliminate farm subsidies ($14 billion)
Many economists argue that farm subsidies distort the workings of the market and largely flow to big agricultural businesses. As the Congressional Budget Office has noted, advocates of reducing the subsidies argue that doing so “could help small farms indirectly, slowing the rate” of consolidation.
10. Enact medical malpractice reform ($13 billion)
Many doctors believe so-called defensive medicine – ordering tests and procedures to avoid lawsuits – is a major reason health costs are so high. This option would begin to reduce the chances of large malpractice verdicts, and supporters believe, also reduce rising medical costs. The savings estimate comes from the Congressional Budget Office.
11. Reduce the number of troops in Iraq and Afghanistan to 30,000 by 2013 ($169 billion)
12. Eliminate earmarks ($14 billion)
13. Reduce Navy and Air Force fleets ($24 billion)
Under this proposal, the Navy would build 48 fewer ships and retire 37 more ships than now scheduled. Overall, the battle fleet would shrink to 230 ships, from 286. In addition, the Air Force would retire two tactical fighter wings and reduce the number of fighter jets it planned to purchase.
14. Payroll tax: Subject some incomes above $106,000 to tax ($100 billion)
When the payroll tax – which finances Social Security and Medicare – was created, it covered 90 percent of all income. Today, with a ceiling at $106,800, it covers closer to 80 percent. This option would gradually raise the ceiling, until 90 percent of income was again subject to the tax.
15. Cut 250,000 government contractors ($17 billion)
In the past decade, both the number of federal employees and the number of contractors rose. Recent estimates suggest that contractors outnumber federal employees by millions.
Savings by 2030 under proposal: $1.34 trillion
Currently projected budget shortfall for 2030: $1.34 trillion
Numbers, Projections and Descriptions courtesy of the New York Times. Budget Puzzle: You Fix the Budget originally published November 13th, 2010.
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