Ashley Clevenger
12/14/20018
CTC Macroeconomics
Deficit Spending
If we as a nation could understand the national debt it might help stop it. “Nothing gets solved, if they continue deficit spending.” (Scott McNealy, CNBC) With some knowledge and effort as a nation and a decisive president like Trump, we can balance the budget and help America be prosperous. Throughout Presidential history, only a few presidents have succeeded in having a balanced budget. President Dwight Eisenhower, President Lyndon Johnson, and President Bill Clinton. Some other Presidents had a year or so of balanced budget like President Nixon. For this project, I studied President Bill Clinton’s budget cuts and taxation to see how he had such success. During his presidency, he improved the budget by making tough cuts and increasing taxes, which won’t be a popular move with every citizen but for the U.S. to be successful, hard choices must be made. I view our national debt as I view household and credit card debt. In order to get it under control and paid off, everyone will have to feel a pinch, military, federal funded programs, government aid programs, international assistance, among others. To control debt, the nation must implement austerity, in other words, raising taxes and cutting spending. During President Clinton’s term he conducted welfare reform, increased taxes on the upper income, repealed cap on Medicare, raised taxes on fuel to 4.3 cents per gallon, raised taxes on social security, and cut the military budget.
If I was making financial cuts and choices I would make some hard decisions. The nation needs to be run like a business, not a charity. First I would hit the government aid programs like TANF, food stamps and WIC. I believe these can be streamlined and made more efficient. These are meant to be programs to help families or individuals get on their feet during times of hardship. They are not meant to be lived off for a lifetime. In America, forty-three million people are currently on food stamps. It’s embarrassing to the government that individuals are online in different forums bragging about the amount they get and how they have lived and are making no effort to get off government assistance. I think a new system would be more successful in saving money and discouraging people from being lifelong beneficiaries if they got rid of the EBT cards all together and the government funded bigger food banks where recipients can go each week to get their groceries. The food banks would be stocked with military grade food and essentials like eggs, flour, sugar, rice, beans, simple meats, milk, cheese, baby formula, diapers and any other bare necessities. If its good enough for our deployed troops it should be good enough for people on government assistance. This would prevent the epidemic we have recently of recipients selling their food stamps for half cash value. I further believe that anyone applying for government assistance that stays on it for more than six months should have to bring financial statements and attend some sort of financial prosperity classes. Right now, there is nothing that breaks the cycle of families being on welfare and frankly I see why, they can buy steak and shrimp and high grade foods that are not necessary. They could buy 5 pounds of ground beef for what a steak cost. I support helping poverty ridden families but I am a firm believer that I refuse to help you, more than you are willing to help yourself and I think it’s a stand the government should take as well. One thing about this that really upsets me is military members getting on food stamps. A sergeant in the army starting pay is two thousand and ninety dollars a month. That does not include housing allowance which can range but ours at that rank was eleven hundred a month. Military members also receive BAS which is basic allowance for sustenance which is usually around 360 for enlisted members. When a military member walks into the welfare office none of the additions are considered. They qualify for welfare being a Sergeant in the army with two kids because the government is saying they are a family of four living off simply two thousand and ninety dollars a month which is not the case. I think military should have to qualify off their full gross pay amount. I see too many enlisted members getting on assistance so they can afford a nicer car, or afford more trips. Americans need to learn to live within their means. Government assistance may seem like “free money” but it is not. Secondly, I believe all the healthcare systems can be streamlined and save money as well. I may not understand completely but I don’t see why we, as a nation, need Medicaid, Medicare, Cobra, and Obamacare as well as private sector. I feel strongly about these two factors, not because I have money but because at a time in my life I didn’t have money. I was a single mother putting myself though vocational school and working while barely keeping my head above water. I got myself and my daughter on Medicaid for a year during those few years. I made it and when I got to where I could I go of government assistance. I used it for what it was intended. I didn’t apply for food stamps, I cut my spending other places so I could afford food for my family. While I understand that not all families are able to do this and need assistance for some time, I also am sure that there is a huge imbalance of need versus people abusing the system. I think a full overhaul of the government assistance programs is needed to remedy this.
I looked at a budget simulator and made some cuts to see actual amount spent, and amounts cuts would save.(Crfb.org) I made the choices I did based on the idea of austerity and following President Clintons lead. First I made the choice to reduce the troops in Afghanistan to thirty thousand, saving six hundred and eighty billion. I made this cut because I believe we are past the point of making much progress in that region and there is an endless supply of terrorist leaders waiting to take the lead after each one we destroy. I think we should keep a military presence there for a few more years just to ensure we don’t have any unexpected attacks. Second I chose to further reduce discretionary spending which saved three hundred and twenty billion. This is an optional part of fiscal policy and in unnecessary when we are in the amount of current debt we have. Next I replaced the Joint Strike Fighter program with F-16s and F/A- 18’s which are a reasonable substitute but not as technically advanced, saving fifty billion. I also chose to cut international assistance by 25% saving one hundred and fifty billion. I don’t think we are at a financial place to be giving that amount to other countries. We are unable to help internationally if we go into financial crisis. I found conflicting info about our Navy strength. According to popular mechanics our Navy fleet right now has 440 ships. I decided to cut that number down to 230 ships saving us one hundred and ten billion. In the Army I replaced some military personnel with civilians, as the pentagon plans do. This will still leave four hundred and forty thousand. I trust our pentagon and if they think we can cut and still be safe then I agree with them. Next I limited highway funding saving us ninety billion. This would limit the amount of grants to states for highway development and give the gas tax time to catch up with the cost and increase revenue. As part of the assistance reform I chose to block grant food stamps and reduce to 2008 levels saving one hundred and forty billion. I also cut the TANF program. This option is the closest financially how I think a complete reform of all the programs would be saving us eighty billion. I don’t think that people should solely rely on social security as a retirement plan, with that being said I chose to raise the standard retirement age to seventy, saving 80 billion. This option rewards people who have saved and planned for retirement giving them to retire with personal fund before 70. Cola’s should be updated and have a better system of estimation. The new purposed COLA estimation should be used nationwide for all of the cost of living estimations for military as well as civilian, this choice saved one hundred and fifty billion. I repealed the individual mandate for healthcare that was set in 2010. I think this mandate did more harm than good for the middle working class, repealing it saved five hundred and fifty billion. Increasing Medicare premiums for high income beneficiaries cut 90 billion from the budget. If individuals have the income to help with cost then I believe they should. Along with the medical and assistance reform I decided to Block Grant Medicaid and Grow with Inflation Plus Population Growth saving eight hundred and sixty billion. This action would make grant money go to states in an allotted amount and then they can disburse and adjust the criteria as they see fit. Putting the power back in the states hands hopefully somewhat controlling the poverty rate and making eligibility more accurate as is being governed closer. From reading over the information provided, chained CPI sounds like it is more accurate. I am no economist so I trust that the professionals know what they are talking about. I chose to use the chained CPI for mandatory programs and tax codes saving one hundred and ninety billion. In my plan I instated an increase on gas tax of ten cents per gallon. With inflation and gas prices rising since Clintons administration I believe this would be about equal to the gas tax he implemented which will save one hundred and sixty billion. As I stated in order to get the national debt under control, everyone will feel the pinch so I am in favor of making a five percent VAT tax in order to work towards this goal saving six hundred and forty billion. Following Clintons administrations actions, I would impose a 5.4% surtax on income above one million and impose the “Buffett rule”, if I’m understanding right it would keep the upper percent of income earners from skipping out of taxes in loop holes. These actions together would save six hundred and forty billion. In this same set of fiscal moves, I would improve tax collection, attempting to close the tax gap, saving seventy billion. Lastly, I caped the charitable deduction amount to two percent of the individual’s income. I believe this move still encouraged charitable giving without letting it take up one hundred and seventy-four billion in tax write offs.
My final savings relative to current law in billions was five thousand three hundred and thirty with fifty eight percent of GDP. I was a little disappointed that I didn’t reach President Clinton’s rate of around forty seven percent of GDP but I believe my fiscal plan is a reasonable and attainable goal. If it has been done before, it can be done again. When proposing the budget to the nation I would explain it to them and relate it to house hold debt. I don’t think a lot of Americans understand national debt or how they are contributing. I think the US should pass some sort of reasonable law concerning the national debt. We shouldn’t, as a country, be able to put ourselves in this sort of financial position if it keeps going at this rate at some point we will have another depression era. Some argue that a surplus for too long a period will have negative effects like tax increase and budget cuts. I argue that after every event that drains our budget, like responding to September 11th, we should impose some sort of fiscal plan to replace funds. Again, just like a household, you have a savings account for emergencies and when you get a flat you have to dig into those funds to buy a new tire. Out of your next pay check or next several you must make some cuts so you can replace the funds in savings for the next emergency. So, you don’t go out to eat as much that pay period, or you don’t get you nails and hair done for a few extra weeks. Budget and debt is the same whether it’s your family or your nation. It affects all of us.