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Tuesday, May 31, 2011

Getting America off the road to bankruptcy?

Battle of the Budgets

Is it too late to get America off the road to bankruptcy?

Since America is on the road to bankruptcy, we've got to make some changes. What would you do?
The Peter G. Peterson Foundation gave $200,000 to six think tanks to write budget proposals. The money went to the conservative American Enterprise Institute and Heritage Foundation; the "liberal" Center for American Progress, Economic Policy Institute, and Roosevelt Institute Campus Network; and the Bipartisan Policy Center.
On my Fox Business show tonight, representatives from most of these think tanks will summarize their proposals, and I'll have the audience pick its favorite. It's a "Battle of the Budgets." The winner will get one of the Emmys I won during my days as a consumer reporter. I know, it's corny, but I produce a TV program. If the subject is budgets, I'll use any gimmick to make it interesting.
The proposals:
The American Enterprise Institute plan would reduce the debt-to-gross-domestic-product ratio to 60 percent. It's 68 percent now.
AEI would preserve most military spending, but cut Social Security by giving every retiree an $850 monthly check and not letting 62- to 65-year-olds collect benefits early. The payroll tax would be eliminated on people 62 and older to encourage them to stay in the workforce. The age for Medicare would rise to 67, and the program would be revamped into a government subsidy for private insurance. AEI would eliminate farm subsidies and the child tax credit. AEI would replace all current taxes with a consumption tax like the "Fair Tax."
The Bipartisan Policy Center plan would cut the debt to about 50 percent of GDP within 25 years. It would freeze military and discretionary spending, require people with incomes over $106,000 to pay more into Social Security and "slightly" reduce benefits for the wealthy. Medicare spending growth would be limited to the GDP increase plus 1 percent. Beneficiaries could move to private plans.
The center would cut the top corporate tax rate from 35 percent to 27 percent and establish a new 6.5 percent "Debt Reduction Sales Tax."
Yikes! A new tax! I'm reminded of Milton Friedman's words: "Nothing is so permanent as a temporary government program."
The Roosevelt Institute claims to reduce our debt to 63 percent of GDP. The plan would cut spending by ending the Iraq and Afghanistan wars by 2015, but make no cuts in Social Security, Medicare, or Medicaid. The institute wants more spending on "domestic investment"—universal preschool, the safety net, transportation, and worker retraining. Roosevelt's tax plan would cut corporate rates by 3 percentage points, but create a new "too big to fail" tax on banks and impose a new "financial transactions" tax.
Under the Economic Policy Institute's plan, jointly written with Demos, our debt would increase to 90 percent of GDP. Military spending would be cut by $960 billion over 10 years. People making over $106,000 would pay more into Social Security, but Medicare and Medicaid would not be touched. The plan calls for $84 billion a year more in discretionary spending than President Obama wants—more for early childhood education, child care, public transit, rural broadband connectivity, and research and development.  
EPI and Demos would repeal the George W. Bush tax cuts on high-income people; enact a 50 percent tax on estates worth over $10 million, a financial speculation tax, and a surcharge on top earners; tax capital gains and dividends as ordinary income; and increase the gasoline tax. It's good to hear what liberals would do if they were in power.
Finally, the Heritage Foundation plan is the only one that would actually balance the budget. Federal spending would gradually drop to 18.5 percent of GDP, below the modern average. Heritage would preserve most military spending, but Social Security and Medicare benefits would be phased out for individuals making over $110,000 a year. The eligibility age would rise to 68 and then be indexed to life expectancy.
Heritage would replace all taxes with a simple flat income tax, with deductions remaining for higher education, charitable donations/gifts, and mortgage insurance.
As a libertarian, I'm underwhelmed. This year, our government will spend an astounding $3.8 trillion. We need to eliminate entire agencies, departments and missions. None of these think tanks do that.
John Stossel is host of Stossel on the Fox Business Network. He's the author of Give Me a Break and ofMyth, Lies, and Downright Stupidity. To find out more about John Stossel, visit his site atjohnstossel.com.


  1. Libertarians are loons.

    A think tank is a place where a bunch of people that have never run a business, or been elected dog-catcher come up with inane ideas about how politicians can run the business of the U.S.

    First rule: We're damned close to a Depression, so be damned careful about "sudden" moves.

    Second Rule: Identify the problem(s.) They are: Spending is about $0.5T too high, and Revenues are about $0.5T too low.

    Third Rule: Nothing works if the Economy's not Growing; almost everything works if it is.

  2. Right now, they haven't figured out #2. Small Businesses are not being formed. These are the job-creators. If they don't start up there can be no recovery.

    Small businesses aren't forming because the traditional financing stream (borrowing against the house) isn't available, and because the would-be future entrepreneur isn't seeing any demand.

    All the would-be entrepreneur sees is sky high gasoline prices that are drowning his potential customers in a sea of desperation, and hopelessness. And Unemployment.

    First Thing - Go after high energy prices, and unemployment. Bring the Money, and the Jobs, Home.

  3. Get the Steelworkers, and Pipefitters, and Concrete Workers, and Plumbers back to work. Build Ethanol Refineries in every county.

    Half of the New Cars GM, Ford, and Chrysler builds in 2012 will be flexfuel. The number was 40% This year. The Infrastructure is there; all we need is the "Product."

  4. Poet, Abengoa, and Dupont can produce ethanol from corn stover, and wheat stalks, and sell it, profitably, for about $2.25/gal.

    Cars that can get the same mileage with E85, and gasoline are, basically, here.

    We need to move on this, Right Now.

  5. Add in All the costs in the Middleeast, and we're probably blowing $400 Billion/yr over there.

    For One Year's Expenditures over there we could be off "Imported" oil, forever.

  6. Just look at the States that are doing well. They are exporting Energy, Food, or Both.

    Wyoming, N. Dakota, S. Dakota, Mn, Ia, Nebraska.

  7. Small businesses aren't forming because the traditional financing stream (borrowing against the house) isn't available, and because the would-be future entrepreneur isn't seeing any demand.

    Excellent point, had not thought about that. The entire SBA lending system is geared to a personal guarantee and an SBA second mortgage recording.

  8. I was watching CNBC a while ago, and they were quoting Goldman, and some other High Octanes statiing, and I paraphrase, "The Economy is falling back And, We Don't Know Why!"

    The "Elites" are so far out of the mainstream of ordinary Americans that they might as well live on Mars.

    The ordinary family is spending $160.00 More every Month on gasoline than they were Last Year. That may not seem like all that much to the highly paid denizons of DC, and Manhattan, but That hurts like hell to the family trying to raise two kids on $500.00/mo, takehome.

  9. Almost 20% of our workers are either Unemployed, underemployed, or have given up on even looking.

    And, those "masters of the universe" can't figure out "why the economy is losing steam."

    And, then some loon like Stossel comes on and says, "the problem lies with Medicare payments in 2022. WTF?

  10. Is America on the road to bankruptcy or is the government suffering a cash flow crisis?

    Is the government really America?

  11. The Government is hopelessly out of touch.

  12. The thing is, the government might/could take us "tits up."

  13. Saudi Arabia has Significant Ownership in Fox News, and the Wall St. Journal. They are not going to identify the problem.

    CNBC is geared, exclusively, toward those that own stock in EXXON, BP, and CONOCO. They're not going to identify the problem.

    The Dems, and their supporting media, have some sort of utopian dream about everyone driving electric cars, and riding on Wind-powered rail. They're not going to identify the problem.

  14. Heh

    The "press" spent the whole morning sitting around, waiting for Sarah to get on the bus.

    Only one problem; the family snuck out early this morning, toured the battlefields, and headed for Philly.

    This is getting hilarious.

  15. If you're Ever going to "Sell" a stock Today would be a good day to do it.

  16. In My Very Humble Opinion, of course. :)

  17. Bring the US military back from Europe, Korea and Japan.

    Leave Afghanistan to the Afghans.

    Decommission five of the carrier task forces.

    Downsize the Army by 25%.

  18. Then, call in all Dept Heads, and tell them to Cut 10%.

    Then, make those Corporate Profits that are being "Sheltered" overseas, Payable NOW.

  19. But, after all that, you'll still have disastrous, and rising, energy costs, and 20% un/underemployment.

    And, a devastating "Imbalance of Trade."

  20. I get a real kick out of Sarah Palin, but she's, ostensibly, on the wrong side of the two issues that mean the most to me (biofuels, and healthcare.)

    Does she have enough "Independence," and Common Sense, to adjust once she gets in the White House?

    I hate to say it, but the best candidate is, probably, the 'Turn-Around Specialist" from Bain Capital. The ol' Mittster.


  21. Just when you thought it couldn't get any better -

    Of all the complaints about Sarah Palin and her bus tour, this one’s easily the strangest. CBS reports that the media has begun to grumble that Palin’s decision to keep them out of the loop on the tour’s stops have created a dangerous working environment for reporters:

    Chasing Sarah

    Make sure you read the comments.

    For pure entertainment, this baby-doll is hard to beat. :)

  22. Between her, and Romney, or Pawlenty, I'd probably "pull the handle" for one of the guys (likely, Romney,) but she sure is a hoot to watch.

  23. Between her, and Obammie, I'd just have to "get on the bus," and hope for the best. :)

    I just hope she's a little better "politician" than she's given credit for, and a little less of an idealogue than is believed.