I apologize. I just started a thread on this not realizing this one was already here. I'll do a copy/paste. It's a giant brain fart on my part.
In the "lameduck" time between now and January where the next session of Congress begins and President Obama is sworn in for second term, there is massive amount of work (or perhaps not) related to avoiding the Fiscal Cliff as some are calling it.
How hard is this problem to tackle? The Businessweek article does a good job of summarizing it.
In the coming months the same president and largely the same Congress will try to fix the same problem: How to bring the $1.1 trillion federal deficit and $11.3 trillion public debt under control. More immediately, they need to avoid the brutal automatic cuts and tax hikes that will take place in January unless President Obama and congressional Republicans can reach some sort of deal. Although Republicans and Democrats persist in making it seem like bringing spending in line with revenue is some form of particle physics, there’s actually no mystery to the calculations. The money will come out of the nation’s $2 trillion entitlement programs. It will come out of the Pentagon’s $680 billion budget. And it will come from tax increases. There will be plenty of arguing over what to cut. There’s no arguing where the money is.
Except, of course, in Washington. Even after the failed 2011 debt negotiations set the country on course to this fiscal cliff, Republicans insist that the savings can be found elsewhere, no military cuts or tax hikes necessary. Paul Ryan, still the chair of the House Budget Committee—he lost the vice presidency but won an eighth congressional term with 55 percent of the vote in his district—has proposed, over the next 10 years, to cut in half the “nonsecurity discretionary spending” that makes up the rest of the federal budget. “That sounds OK until you start to look at what’s there,” says Philip Joyce, a professor at the University of Maryland School of Public Policy who spent five years with the Congressional Budget Office. “You’re talking Commerce, you’re talking NOAA, the weather service, the Economic Development Administration … they do real things.”
Outside the Capitol, nonsecurity discretionary spending is what people think of as “the government.” It includes the Treasury Department, the Department of Justice, the EPA, the FBI, and FEMA. These are services that are mostly necessary and desirable even by the standards of many small-government Republicans. They’re cheap, too. In 2011 this spending cost $371 billion, 10 percent of the total federal budget.
In a primary debate last November, Texas Governor Rick Perry remembered two departments he’d eliminate as president: Commerce and Education. Together last year, that duo cost $74 billion—2 percent of federal outlays, and 6 percent of the deficit. The Corporation for Public Broadcasting, which Mitt Romney said he’d cut out of the budget, requested less than $500 million this year, a comically small slice of the problem. But let’s make the calculation easy, and cut it all—the whole federal government aside from the Pentagon and entitlements. Fire every one of the 2.8 million federal employees, close the buildings they work in, and eliminate the government services they provide and … you wouldn’t even get the budget-cutters a third of the way toward eliminating the annual federal deficit. What’s more, since the projected growth in costs over the next decades comes almost entirely from entitlements, the amount that goes to the rest of government will become an even smaller part of the problem in the future.
Yes, there’s maddening inefficiency in government agencies. Getting rid of it is hard. “There is no line item in these departments that reads ‘waste, fraud and abuse,’” says Joyce. Almost all 20th century presidents have attempted to reorganize agencies or make them more efficient; but entropy keeps winning. That isn’t to say it’s not worth doing. It’s just a matter of priorities—and of recognizing that the conversation we can have about whether to shrink the Department of Education is not the same as the one we must have about how to shrink the federal debt.
The bottom line: Eliminating all government spending except military and entitlements will only save $371 billion—a third of the federal budget deficit.
The conservative argument will be that with all defense spending and the "discretionary spending" which amounts to what the government ought to be doing, you are at a trillion dollars. As the article notes outside of defense and entitlements, you are only talking about ten percent of all federal spending. It is impossible to avoid this cliff by only tackling 10% of the budget.
Most conservatives do not appear to want any military cuts to occur. However many libertarians and paleocons (including myself) wouldn't not mind for the U.S. to stop being the cop of the world and to start handling business at home and that would certainly save some money.
That said, the biggest and likely most untouchable piece of the pie is entitlements. Also with regard to "revenue" as the NBC chart shows, most tax increases will bring slower economic growth along with them.
So what can and should be done in your opinion?
I'll share additional thoughts but my first thought is that President Obama should simply avoid extending the "Bush" tax cuts for any additional amount of time. His claim was that they were responsible for fiscal sanity and economic growth during the Clinton years. Clearly a return to those rates, per his reasoning, should bring about a similar result. Democrats also claimed that the cuts didn't really give or return much to the middle class or working poor so they wouldn't have much to lose if they expired. You can't have your cake and eat it too though. If the rich got the majority of the cuts, then they should feel the majority of the pain when the cuts end. The best part about it from his perspective is it costs zero political capital and can't be stopped by supposedly obstructionist Republicans because they are simply set to expire. It takes action to carry them foreward. Do nothing at all and the rates and claimed prosperity of the Clinton years returns with no effort, no votes and no action by the President himself.