The Daily Mail
Early analysis: Obama's 2014 budget numbers are based on bad math, phantom revenues, imagined spending cuts and a middle-class tax hikeWhite House promises $1.8 trillion in deficit reduction, although similar previous claims have been debunked
- New method of measuring cost-of-living increases will lower benefit payouts and push middle-class earners into higher tax brackets
- Speaker Boehner's spokesperson: 'Any deficit reduction will come exclusively from tax hikes'
- Administration's formula depends on cost savings from Obamacare, which may be more costly to implement than previously thought
The only way we will ever fix our national budget is to scrap the current budgeting system. No more cost plus budgets. We need an income minus system. The way that would work is we would take the total 2012 revenue ($2.450 trillion) multiple by a factor less than one (75% works good) and that's all the money the federal government gets to spend. The left over portion serves two main purposed 1. since revenue projections are just that, projections, it keeps us from over spending if there is a revenue deficit and 2. any extra revenue must be divided between two uses a.) 50% to a rainy day savings fund and b.) extra debt reduction.
What that looks like: The feds would still have a mind blowing $1.84 trillion to pay off the current debt and to waste on vote getting schemes AND we as a nation would bank $310 billion for a rainy day AND pay off $310 billion of public debt early, saving ourselves interest payments and restoring our national credit rating. Since 10 year projections are all the rage, lets do one assuming all things remain constant. At the end of ten years we would have $3.06 trillion in the bank and would have paid off early $3.06 trillion of the $17 trillion public debt.
Assuming that we stopped all borrowing as part of this budget methodology, and assuming 1/30th of the public debt would be paid off each year as part of the normal debt payment: federal debt would be less than $9.429 trillion or 55% lower than today. For the record, I didn't try to factor in interest payment savings, those numbers are straight debt reduction excluding interest savings.
This type of budgeting won't fix everything. We still have trillions in unfunded entitlement programs like social security and medicare. What this does is get the balance sheet going in the right direction and lay the ground work for reducing all federal taxes. Tax reduction is vital, because if our economy is ever going to turn around and grow its way out of the hole we are in, taxes will have to be lower. Which can only happen if the spend thrifts in DC are brought under control.