Eliminating the Deficit

I think everyone can agree that reducing the deficit and the national debt should be one of our priorities. It is certainly not the only priority and not necessarily even the most important, but a priority none-the-less. It is of course a somewhat painful process but actually quite a simple one. The cost of Government has to be reduced to an amount less than its income.

Now, there are two factors to accomplishing this, reduce expenses and increase income. Most of the current focus is on reducing expenses since increasing income, is associated with raising taxes, a more unpopular idea than the fiction that Government spending reductions are not also a tax on the American people. When the Government spends money, it goes somewhere, either to the public or business that employ the public. Government workers get paid for providing a service, whether they get paid more than they should or less, if they are not there the service they provide will be diminished.

Of course it is important, as it has always been to eliminate waste and excessive spending. However when you hear about the tremendous amount of Medicare fraud in this country, it is not because we have too many Medicare auditors, it is because we have too few. Years ago I remember a time when the state I live in decided to save money by reducing workers. This included sales tax auditors. Of course for every sales tax auditor the state eliminated, they lost about 10 times as much is tax collections. Eventually they wised up and hired most of them back.

If we have waste or non-productive workers, they should be eliminated, but this needs to be balance with the cost benefit analysis Government has so much trouble with. If we have a lot of Medicare fraud, we need more auditors to eliminate it. If we have tax fraud we need more IRS employees. Each agency should be able to figure out the best use of their resources, if they can overcome political interference.

Remember that the entire discretionary non-defense portion of the budget is only a little over $500 Billion, not an insignificant number but not even close to the reductions needed to eliminate the deficit. Further, reductions in these numbers would likely lead to more fraud in the programs they oversee.

In reality then we need to address the need for entitlement programs and whether they are a cost effective use of the taxpayers' money. The recent bi-partisan commission has made some recommendations that need to be considered. Whether these are enough is hard to say, and politics being what it is, the debate will probably gut many of the recommendations'.

We need to include defense in this discussion because it is such a large part of the budget. The size of our defense requirements and our capacity to support foreign interventions needs to be scrutinized. The trillion dollars we spent in Iraq and Afghanistan over the last decade has not helped the deficit by any means and the benefit received has been hard to determine. Is American safer now than it was? As terrible an event as 9-11 was, was our reaction the most effective way to prevent another one? Remember that the Soviet Union was ultimately destroyed by overspending on defense. We have to avoid making the same mistake. Defense spending should guarantee that we are fully capable of defending this country in all potential scenarios. We certainly need to maintain allies and have joint support initiatives, but can anyone truly explain the current mission of NATO and why we have troops stationed in Europe?

Realistically, with everything on the table, the trillion dollar deficit will not be eliminated by spending reductions. If the economy improves, tax income will increase naturally but it is unlikely to be enough. We need to get smart as a nation and increase economic activity here, to increase our tax base. The easiest thing to do would be to get off our dependence on foreign oil and use domestic resources, such as natural gas, biodiesel, and ethanol. Renewable energy is a wonderful idea but we need to do something right now. We also need to revamp the way we tax business.

We need to tax products sold in this country and not tax business profits. Our current system effectively punishes American companies who operate in this country.