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If you want to lower the deficit...

David Leonhardt, New York Times columnist and reporter

TEXT OF COMMENTARY

Kai Ryssdal: President Obama made another plug for his $50 billion infrastructure program today. That's the one that nobody in the White House wants to call an economic stimulus program. Mostly because of the political agita over how much the government ought to be spending to create jobs and what might that do to the budget deficit?

Commentator David Leonhardt says the whole conversation about the deficit needs to change before we're going to get anywhere.


David Leonhardt: Let's face it -- a lot of the talk about the deficit ends up being pretty vague. Politicians want to cut spending, but they don't say which spending. They want fundamental tax reform, but they don't explain how that will bring down the deficit.

So here's a little rule: If you want to be taken seriously when you rail against the deficit, you need to support one of the following four policies. Better yet, support more than one.

Ready for the four? One, cuts to Medicare. Two, cuts to Social Security. Three, military cuts. Four, tax increases. Any budget expert will tell you that we simply cannot fix the deficit without doing at least one of those four.

The Congressional Budget Office projects that by the year 2035, the annual deficit will be almost $2 trillion. Let's imagine that we make big cuts to every government program that's not our list of the big four -- bigger cuts than Ronald Reagan made -- to things like education and transportation. How much money might that save? Only about $100 billion. You can even double that figure and assume truly radical cuts. Even then you have saved a measly 10 percent of the projected deficit in the year 2035.

The reason is that these programs make up only a modest share of government. The three biggest programs -- by far -- are Medicare, Social Security and the military.

But we can do something about those programs. We can clamp down on Medicare spending that hasn't been shown to make people healthier. We can raise the retirement age for Social Security. We can reduce wasteful military spending; though, by itself, that won't be enough. And we can definitely raise taxes. As a share of GDP, taxes are now at their lowest level since 1951.

What we cannot do is just wish the deficit away. We've promised ourselves more government that we've paid for, and that can't continue.

So which of the big four do you choose?

Ryssdal: David Leonhardt writes The Economic Scene column for The New York Times. If you've got ideas for cutting the deficit, give 'em a try on our website. We've got a budgeting game called Budget Hero.

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Whats best for America.
2000 Temp tax cut
2001 9/11
2002 rescind temp tax cut due to war on
terror, afghanistan, iraq.
2003 raise social security cap
2004 to 2011 make medicare single payer
system.
2001 trim defence spending.

PROBLEM SOLVED
let democrats and republicans fight over gun control, abortion, global warming,etc.

Mr. Leonhardt is right on the money - pun intended. The question remains: How do we take the steps that he presents when our fiscal policies are determined by career politians whose decisions are highly influences by special interests and multinations via lobbyists? The policy makers have no accountability (not getting re-elected...really? And if not then so what? They can become a lobbyists or work for a corporate entity that they supported while in office). The Political Machine is running unchecked and is little more than an extension of large corporate interests.

Cuts in each of these major programs and a tax increase should be obvious to anyone who takes the time to look a the numbers. Its a pity that neither of our two political parties have the guts to tell the American people the truth. It also a pity, that we only elect people who tell us what we want to hear and not what we need to hear. We get the government we deserve.

There is one other strategy to reduce the deficit. This strategy is to make the entire economy more efficient, which will reduce the pain necessary to reduce the deficit relative to broad equal cuts, which will cut into the muscle as well as the fat. For example, if you reduce alcoholism and drug addiction there might be 80% less crime according to a Maine policeman. As a result, we might be able to reduce expenditures on police by over 50%. If we reduce preventable disasters like Katrina and possibly the banking collapse, we can increase efficiency, decrease reconstruction, decrease poverty, and decrease welfare subsidies simultaneously. Only one system can provide this efficiency and that system is PoliticalSheepdog (please read Chapter 2 at http://politicalsheepdog.com/bookfinal.pdf (15 min.)).

This conversation by Mr. Leonhardt is a breath of fresh air to the deficit discussions. To often the core problems of the deficit: Medicare, Social Security and the Defense budget are not brought up. But once the problems are identified the solution is simple. Eliminate Medicare, Social Security, and reduce the Defense Dept. budget. The government has shown repeatedly that it can't provide these services in a sustainable and responsible manner.

I think he is grossly incorrect and misleading because Medicare and SS are in separate, self-sustaining trust funds and not subject to the federal budgeting
process. Any savings from Medicare or SS would benefit those funds and not the
general budget. Conversely, Medicare and SS are not the reason we're in this
hole - any money spent on Medicare and SS does not come out of the general
budget.

So only two real options: raise taxes or cut military.

5- Cut all transportation taxes and privatize the *entire* highway system. As part of the leasing agreement for the national highways, require free and prioritized HOV access for buses, 3+ person carpools, and vanpools - then let the market dictate how people get around.

Lease payments should be dedicated to public transportation, pedestrian, and bicycle projects that pass some sort of test for effectiveness.

But the larger issue is this: we don't need to cut the deficit. In fact, we need to make it bigger - preferably with payrool tax cuts and bigger infrastructure spending.

The U.S. is a soveriegn currency issuer in a floating exchange rate regime. Ass such, the financial "rules" it lives by are completely different from those you or I do, and an attempt to make it live by the same rules as you and I will impoverish us all.

More people nee to become aware of what has come to be called "Modern Monetary Theory" (MMT). To learn more, go to Warren Mosler's blog at http://moslereconomics.com.

While I agree that major changes in the budget will come from one of the four sources, I think there is an initial step toward addressing the deficit that can be taken now. It seems most politicians are in favor of cutting the deficit as long as it doesn't affect their district or state. But any serious attempt to reduce spending will have to affect every House district or state. During this election cycle, every candidate should be required to answer the question, "What funding does your (city/county/district/state) currently receive that you would vote to eliminate?" I would require that the answer be 1) specific dollar amounts and/or programs that would let voters evaluate the candidate's priorities, and 2) substantial, such as at least 10-20% of money now coming from the federal treasury. Subsequent to this, I would also suggest a legally binding process where a representative commission in every state or district would identify what the people in that constituency are willing to give up in their area, preferably with some specific dollar target in mind. Perhaps sharing ownership of the problem more widely would focus the debate on real issues instead of righteous arm waving.

@ Christine Morton
US foreign aid is less than 3% of the budget deficit and cutting it all off won't help much at all. Plus, US foreign aid actually makes people like the US more, and so saves us money on defense, and foreign aid helps keep disease down in foreign countries so saves us on medical expenses when the diseases get exported, and it makes conditions more bearable for people at home so we have less of an illegal immigration problem. Foreign aid is also a diplomatic strength of the US. It does us little good to cut it off, and helps us immensely to keep it. I think a cost benefit analysis would show we should actually increase it.

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