Monday, December 6, 2010

Deficit Reduction simplified

It's clearly not as simple as this, but it's still pretty simple. If you want to reduce the federal deficit you need to combine increased revenues with decreased spending. The Deficit Reduction Commission's recommendations rely overwhelmingly on reducing spending through cuts and reforms to programs that help "the rest of us" in favor of maintaining lower taxes on corporations and the wealthy.

I give you the Daily Kos compilation, Deficit Reduction Graph-O-Rama

Ezra has this chart, "the single best explanation of why it's so much easier to say you want to cut government spending than it is to actually cut it."
spending poll graph
The blue line reports the results of an Economist/YouGov poll asking people "If government spending is reduced in order to balance the budget, which of the following government programs should receive lower federal funding than they currently do?" The red line is the percentage of the budget these programs actually account for.
The only program that more than a third of the public wants to see cut is foreign aid. Bummer, then, that it accounts for less than a single percent of the budget.
But the fact that people want a smaller budget deficit but no reductions in actual spending is old news, and well accounted for in Congress. What's interesting about this chart, however, is that a sizable minority of the population wants to cut defense spending. In fact, defense spending's size of the budget and the number of people who want to cut it match up much more closely than most of the other two bars on the graph.
Which leads to one of the best blog posts on the deficit, ever, from Dave Johnson at
Dear Deficit Commission,
It's not hard to figure out why we have a huge deficit. It's so easy I don't have to use words. Here are some pictures:
Bill Clinton raised taxes on the rich. Bush cut them.
Now, about that huge national debt...
The second chart kind of explains itself. The third chart can help you find a place to get some money:
Defense Budget
(Note: There is no more Soviet Union.)
In case that isn't clear enough, try this:
Defense Spending and Debt chart
Let me know if you still have any questions.
Add to this whole mix the general public support for raising taxes on the wealthy, including support from some of those wealthy people, it's actually not that difficult to figure out where the money can come from, and where it should go.

Me again: I don't think reducing military spending and raising taxes on the wealthy are the only solutions necessary to control federal spending, but these two avenues are clearly the low hanging fruit in the tree of options. Let's start there and then move toward trying to find ways to capitate health care expenditures (allowing Medicare/Medicaid to negotiate prices with pharmaceutical & device manufacturers would be a start) and spur the economy (which would create increased tax revenue without raising taxes).

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