I am advocating that President Obama and Democratic leaders not wait until December for the President's fiscal commission to make recommendations on spending cuts and tax increases. Democrats need an issue that changes the conversation, make a classic Clintonian tack, by making a weakness into a perceived strength.
I am advocating that at a minimum Congressional leaders take the lead and lead on fiscal responsibility to inoculate themselves from Tea-baggers and win back Independents needed to grow the Democratic coalition needed to keep the House and Senate firmly in Democratic hands this fall.
If Dem leaders can put together a Blueprint for America's Debt Future, with practical spending cuts, spending increases, and revenue increases then Democrats at large will show the American people they can lead on the issue of fiscal responsibility, while at the same time preserving the social safety net that Democrats have been advocating and most Americans want to keep.
Democrats can show the American people that cutting the deficit and holding the size of the debt isn't a zero sum game of all spending cuts or all tax increases. That there is another way of increasing spending for veterans benefits, education, investments in Federal R&D, increasing the federal Medicaid match to the States, and most importantly keeping SS and Medicare viable through the next century.
However trade offs will have to happen. Targeted cuts with defense spending, severe reduction preferably an elimination of troops in Iraq & Afghanistan, tax increases, targeted spending cuts, and adjustments to eligibility of social programs all will have to occur.
There is a very cool budget simulation that is online where anyone can try their hands at getting the federal debt to 18% of GDP by 2018. The Committee for a Responsible Federal Budget sponsors the website. It looks like they are a bipartisan group of former congress-people, staff, and budget wonks. Yes the options they use are limited but they avoid getting to far into the weeds and take a comprehensive look at the most important budget topics. Here is the link http://crfb.org/...
Current Choices: Stabilize the U.S. Det
Iraq and Afghanistan
*Reduce Troops to 30,000 by 2013 Savings -$740B
Bush 2001/2003 Tax Cuts
*Reduce Lower Rate Cuts by Half and Let Upper-Income Cuts Expire
increase debt $2,060B
Discretionary Spending Growth
*Grow Regular Discretionary Spending with Inflation Neutral $0 Savings
Defense, Diplomacy & Security
*Enact Administration's Proposed Weapon System Cuts savings -$30B
*Cut Foreign Economic Aid in Half savings -$110B
*Expand Veteran's Income Security Benefits increases debt $30B
*Cancel Missile Defense System savings -$50B
*Reduce Spending on Ship Building Savings -$50B
*Increase Homeland Security Spending increases debt $50B
*Reverse "Grow the Army" Initiative savings -$90B
Domestic Social & Economic Spending
*Enact New Jobs Bill increases debt by $210B
*Index Current (Post-Stimulus) Benefits to GDP increases debt $140B
*Freeze Average Unemployment Benefits at 2009 Levels savings -$50B
*Double Funding on Adoption and Foster Care increases debt $70B
*Increase Funding for the Education of Disadvantaged and Disabled Children increases debt $290B
Social Security ***Controversial but some Middle Ground could be found***
*Raise the Normal Retirement Age to 68 savings -$110B
*Gradually Reduce Scheduled Benefits (by 30% in 2080) savings -$100B
*Use An Alternate Measure of Inflation for COLAs savings -$100B
*Increase Years Used to Calculate Benefits savings -$40B
*Include all New State and Local Workers savings -$80B
*Institute a Minimum Benefit increases debt $130B
Health Care
*Expand Coverage to an Additional 5 Million People increases debt $130B
*Increase Cost-Sharing for Medicare savings -$100B
*Raise Medicare Premiums to 35% of Costs savings -$140B
*Increase the Medicare Retirement Age to 67 savings -$80B
*Increase Medicaid Funding to States 57% to 60% increases debt $140B
Other Spending
*Eliminate Certain Outdated Programs savings -$40B
*Cut Federal Workforce by Five Percent (Waste & Inefficiency)savings -$130B
*Reduce Farm Subsidies savings -$80B
*Expand Spending on Federal Research & Development increases debt $100B
*Cut Earmarks in Half savings -$80B
*Increase Mass Transit Funding increases debt $60B
Revenues
*Increase User Fees Across the Board revenues -$40B
*Sell Certain Government Assets revenues -$70B
*Impose Financial Crisis Responsibility Fee revenues -$80B
*Reform International Tax System revenues -$120B
*Enact Carbon Tax or Cap-and-Trade revenues -$330B
*Increase Gas Tax by 10 Cents per Gallon revenues -$80B
*Enact Five percent VAT With Partial Rebate revenues -$630B VAT would exempt items like housing, food, etc and would have a rebate for lower and middle class tax payers.
*Gradually Increase Dependent Exemption by $3,500 increases debt $190B
*Impose Surtax on Income above $1 million revenues -$190B
*Gradually Increase Payroll Tax by One Percentage Point revenues -$130B
Raise Social Security Payroll Tax Cap
*Raise Cap to Cover 90% of Earnings revenues -$420B
*Reduce Corporate Tax Rate from 35% to 30% increases debt $390B
*Index Tax Code to Alternate Measure of Inflation increases revenues -$80B
*Improve Tax Collection (Reduce Tax Gap) Increases revenues -$20B
Tax Expenditures
*Convert Mortgage Interest Deduction to a 20% Credit savings -$190B
*Limit Itemized Deductions for High-Earners savings -$250B
*Curtail State and Local Tax Deduction savings -$470B
*Make Research & Development Tax Credit Permanent increases debt $80B
*Expand the EITC and Child Tax Credit increases debt $90B
*Extend "American Opportunity" College Tax Credit increases debt $60B
*Replace Employer Health Care Exclusion with a Flat Credit (In Place of Excise Tax) savings -$340B
Go ahead and see what trade offs you are willing to make...although none of the cuts are optimal there is a realization on my part that with every cut, increases, and tax increases there are trade offs of the least bad option. Of course this is all relative to ones' perception of the issues. so go ahead an post your results.
My results were a reduction of debt to 59% OF GDP BY 2018 which gives me some wiggle room on taxes and/or spending.
Of course the President is worried about politicizing the process even more than it will eventually be. However I think congress should take the reins and pull this President along or give him a chance to give a third option (Democratic congressional leaders, Prez budget committee, and the President).