Debt Reduction Simulator
 

dola

The general point is that realistic budget cutting is very hard to do.

Yeah because everyone wants free shit.

Yeah, seemed pretty easy to me. Reduce spending, reduce entitlements, raise taxes.

Consequences be damned!

I didn't say it was going to be easy to do in real life. And just for fun, I then went through and just cut everything to see what would happen. Down to 34% of GDP. Wonder how low my popularity would be?

Aren't there going to be consequences either way?

And proceed to never be elected again and have all of your policies reversed ASAP (that is the ones that make it through the other parties in Congress). The societal will isn't there to reduce entitlement programs and raise taxes to the necessary levels.

I must have missed the part of the simulator where we were required to reduce debt to 60% of GDP by 2018 AND run a successful re-election campaign.

Well, of course. But I think albion's point is that the exercise is intended to cause you to think about those sorts of things, not simply select all of the options to get a "Congratulations!" message at the end of the exercise.

It's also interesting to move this in the other direction, and project where a hardcore liberal agenda takes the debt.

I think its safe to say that regardless of party or personality, whoever tries to actually fix this will be voted out after the fact.

And most of my changes were done by cutting defense spending, raising taxes, and raising retirement ages / benefits. None of this seems unlikely in the future.

But the exercise is pointless if you take the position that in real life, there is no way to successfully achieve the goal.

Hard choices and unpopularity is a given in order to address the issue, right? So I think you make the argument that we can either deal with this now, or wait until our lives as we've come to enjoy them effectively end. Presumably, someone embarking on this track would have been elected under the premise of attempting something this radically preventive to begin with (or, at least, given fair warning that he/she intended to undertake such an endeavor if elected).

I'm all for low taxes and less government spending/interference, but thanks to our previous and current leaders, having what I want now is all but impossible (and it didn't take this exercise to figure that out). So at this point, I'm all for taking some pain in the near term to get us to a point where we can take everything back down and run government reasonably within our means. I mean, it's the only option we've got at this point.

That's where I am - "small government" isn't a realistic option if you're already in a crisis. Small/Big government isn't as important as affordable government. If we can afford free federal ice cream for everyone every Sunday afternoon, great. But if we can't, it's hard to justify.

As long as I don't need votes from the rich, retirees, farmers, or anyone tied into the military or NASA, I should get re-elected pretty easily.

:)

Or if we decide we need even more weapons and even more corporate welfare. :p

Exactly. Raising taxes in this scenario isn't to start or increase a bunch of entitlements that I wouldn't support in the first place, it's a responsible reaction to the crisis we're in, in an effort to get us back to a realistic small government option.

Yup, I should have included that too. Everyone wants to spend.

I cut enough in other places that I decided to keep NASA - seeing as though I'd need a place to live once I got voted out of office. :D

At base, I hope that things like this make people realize that the politicians who state and/or imply that we can restore fiscal sanity without touching Social Security, Medicare, defense spending, or taxes are either stupid or lying.

I think that a lot of citizens (with the encouragement of the political establishment) still hold the fundamentally un-serious belief that the federal government could balance the budget tomorrow and still have room for a tax-cut by cutting foreign aid and the National Endowment for the Arts.

It's not true. We either pay more taxes, lose some retirement benefits, have a less funded military, or (ideally) do some combination of all of these. The other alternative is the fiscal abyss.

I got it down to 58% with cuts in entitlements and etc and making the changes to the tax system to clean things up.

I got it down to 61%. That was tough.

I guess that depends on what you define as "hardcore liberal".

If any cuts to military spending qualify as "hardcore liberal," there's over a trillion dollars in savings just in the military options presented alone.

Spent an extra $140 billion on food stamps with the COLA adjustment, made some changes in Medicare to increase incoming revenue (both of which I would expect to be inline with "hardcore liberal" under the definition I presume we're playing with).

Expanded health care coverage, increased mass transit funding, implemented cap-and-trade, increased certain taxes (payroll, social security), doubled the dependent exemption, curtail deductions for "high income earners," expand the tax credits for the working poor and make permanent the college-for-community-service credit, began the excise tax on high-value health plans five years sooner.

All of that got me to 59% of GDP by the deadline.

Granted, if I continued any of the Bush tax cuts, that changes things, but would preserving any of those be "hardcore liberal" or "political expediency"?

A cartoon version of a liberal budget (lots of tax increases and lots of new spending on everything except military/homeland security) leads to: 70% of GDP.

A cartoon version of a conservative budget (lots of tax cuts and cuts to all spending except military/homeland security) leads to: 78% of GDP.

Where was the option to increase the taxes on the top 2% of earners..... Oh it wasnt there damn and that would make up for most of the difference too and it is only one check box. Damn us hardcore liberals for not writing this program.

It's like the Kobayashi Maru test in Star Trek.

Well to start off, this game only lets you play with the assumptions the creators made... so there are more things that could be cut or spent on than are represented here... but it does have a nice cross-section to give you a feel for general themes.

With a mostly leftist agenda (and slightly libertarian although no libertarians would agree with it), I got it down to 57% of GDP.

I generally increased benefits to the poor/workers, left low/middle class tax cuts, raised taxes on rich (because I believe that is the best way to overall get the budget back on track), and slashed military expenditures mostly in the form of stopping pointless wars or what I consider bloat programs.

Also being anti-subsidy in general helps, as well as anti-pork.

I do think cuts in social security and medicare are needed in the long term (though I managed to get that balance without doing so), however I think you do that by intelligently reducing costs and wheening us away from the entitlement programs, not by slaughtering lots of old or nearly old people in the name of cost reduction while increasing the taxes on the young.

I do think its possible to slash a lot of debt from the budget and still be a bleeding heart. You just need to be viciously efficient with what you do choose to spend on (i.e. only spend to prevent human misery, do not spend to pork up some businesses who loosely claim they have some value... anything worth a profit doesn't need government support, it just needs an absence of government interference).

If we got out of the political pony show, which has lost all touch with reality anyway, and started attacking this budget, I think you could run a publicly popular campaign of budget fixing. To succeed from a populist perspective, you need to quit handing out money you don't need to, cut spending, cut lower bracket taxes, and raise higher bracket taxes. Spending is already being squeezed for stupid reasons across the board, just scream 'economic crisis' and governments start going into a slashing frenzy. Might as well do planned slashing and get things under control.

Things not shown in this simulator that could help:

- Slash earmarks even more fiercely.

- Complete withdrawl from Iraq/Afghanistan

- Military spending reform (make the bidding more competitive and better match spending to real military utility, i.e. less superplanes with 3% better performance and more life-saving body armor for each troop in the field).

- Raise capital gains/dividends taxes, we are in a 'recovery' that is mostly finance-driven (i.e. useless). If we had another 5-10% it could make a difference for all those big rich guys who bought up a lot of stock when it was cheap over a year ago.

- Slash subsidies even more fiercely.

- Cut any pork that goes to a specific corporation (or such narrowly defined criteria that it targets a specific corporation)

- Require streamlined education administration nation-wide, reduce overhead expenses relative to spending on direct to student supplies by a set percentage each year until the numbers make sense again.

- Tighten 'descretionary spending' (really a very broad category and a huge chunk of money).

- Stop the stupid bailouts.

- Exercise these massive shares in banks and GM and reform their boards/execs from the inside.

- Cut a lot of federal jobs and contracts (and state level to while we are at it).

- Make multiple agencies funded by fines/taxes on the companies they regulate, and encourage vicious enforcement. For instance MMS actually fining BP every day they didn't meet blowout preventer testing requirements.

- Slash deductions and credits along with the lower and mid bracket rates... don't take the money from people in the first place, and make it less complicated on what they can get back from the government after the fact.

- Aggressive environmental taxation, basically carbon cap trade with some actual teeth to it. Make it a real business to operate cleanly, not just a pony show... kill off companies that can't make a reasonable spec for pollution profile.

- Reduce paperwork bureaucracies for running a business, particularly small businesses. If this means simplified tax code, less busywork, and maybe a little less revenue from fees/fines and dumb costs, it will be made up on the overhead for processing all that garbage being reduced, and doubled by businesses able to spend that money on more useful needs than government compliance.

- Create employer tax credits directly linked to employment expenditures, capped to middle class salary levels. The numbers on this can be gamed to allow for a net increase in revenue in theory (or even easier if you can reliably tie it to 'new employment' although I like the idea of just rewarding employment in general and letting the numbers converge to a positive over the long term). This is a subsidy of course, but it is a pretty clear incentive mechanism and it counterweights itself from increased individual tax revenue. Much more effective than the supply side pork spending we do now in a vague attempt to create jobs (guess what, they pocket most of the pork!).

I got it down to 56% for whatever that's worth and didn't touch education and barely touched health care. Do I get a cookie now? :D

I'm pretty liberal and it didn't seem too tough to me. The main ones I remember were cutting defense spending, raising the retirement age, and implementing cap-and-trade.

I keep getting about the same results, too: "You reduced the debt to 58% of GDP in 2018, and kept it at a sustainable level through 2030."

I'd love to see some sort of dividend, capital gains, and trading taxes and corporate tax reform.

Also, I tried to make it as realistic as I could- I still raised some spending but I didn't have too much tax exemptions and raised taxes quite a bit.

SI

I tried this with keeping these things in mind:

1) I can't go so far that I would be quickly thrown out on my ass and/or lose all congressional support because my party got thrown out on its ass.

2) I tried to go with what I thought would be benificial to the economy, instead of strictly looking at a budgetary outcome. Therefore, I did not simply raise every tax on the rich.

3) Most of my spending was on the middle class and lower class benefit programs (Making Work Pay, etc.). I picked a few of the rich tax increases, avoided the Payroll Tax increase, did not increase retirement age or the years used to calculate benefits.

I ended up with 74%