Make Your Own Deficit-Reduction Plan

I am going to try this myself, I am not an accountant, but it can not be that hard, congress seems to be having a little bitty problem, cannot count in plain math....My Plan follows in next blog post, there are two documents below to help explain deficit reduction .

Unless lawmakers can agree on measures to reduce the deficit, standing legislation will do it for them. Under the "Fiscal Cliff" scenario, the Congressional Budget Office projects a deficit of $142 billion by 2020, or a $1.102 trillion deficit if some tax cuts are extended and other policies remain in effect. Try your hand at balancing the budget by selecting from some options outlined by the CBO:

Projected deficit in 2020, in billions

Current course: $1.102 trillion deficit 2020, projected

Select from the following categories:

Increases in Tax Revenue (3 pages)

$0

Cuts to Annually Appropriated Spending  (1 page)

$0

Cuts to Benefits or Entitlements   (1 page)

$0

• Let Tax Cuts Enacted Under Bush and Obama Expire

The following two options are mutually exclusive:

 Let tax cuts originally enacted in 2001, 2003, and 2009 expire as scheduled; let estate and gift tax provisions enacted in 2010 expire as scheduled; and do not index the AMT for inflation(Included in "Fiscal Cliff")

Extend certain tax cuts originally enacted in 2001, 2003, and 2009 for taxpayers with income below $250,000 for households and $200,000 for individuals; extend estate and gift tax provisions enacted in 2010; and index the AMT for inflation

• Modify Existing Taxes

Limit to 15% of the value of a tax deduction, down from a maximum 35% currently for the highest earning taxpayers

Eliminate the deduction for state and local taxes

Increase the payroll tax that funds Medicare’s hospital insurance fund, which pays for hospital stays, to 3.9% from 2.9%

Increase to $170,000 the amount of earnings subject to the Social Security payroll tax, and adjust for inflation in future years. The 2011 maximum was $106,800.

Phase out the mortgage-interest deduction over a decade beginning in 2014

Increase the share of Social Security and Railroad Retirement benefits subject to taxes

Apply an excise tax on high-cost health plans in 2014 instead of 2018, and apply the tax to more plans

Tax employer-paid premiums on certain benefits, like for disability and workers compensation

Require businesses to take smaller deductions each year for big-ticket investments by extending the period for depreciating equipment to a maximum 39 years from a current maximum of 20 years

Increase the gasoline tax to 43.4 cents a gallon from 18.4 cents, and the diesel tax to 49.4 cents from 24.4 cents

Tax “inside buildup” – the interest, dividends, and other investment income earned through certain annuities and life insurance

Prevent deductions for charitable contributions unless the donations exceed 2% of a taxpayer’s adjusted gross income

Tax interest earned on municipal bonds and compensate state and local governments with a subsidy equal to 15% of the interest paid on the bonds

Repeal a deduction used by oil companies, filmmakers and manufacturers for producing domestically instead of overseas

Increase the amount of money coming in to the Social Security system by requiring state and local government employees to join and pay the payroll taxes

Slow the growth of spending on Social Security and other government benefits by changing the way cost-of-living increases are calculated

Establish New Taxes

Impose a 5% value-added tax – a type of consumption tax – on a wide array of goods and services including home purchases

Tax greenhouse-gas emissions by setting up a program to force polluters to buy a permit for each ton of carbon dioxide emitted into the atmosphere

Next: Cuts to Annually Appropriated Spending »  123 

Reduction in billions

• Defense Spending (Set Each Year)

The following two options are mutually exclusive:

Keep 2013 spending levels where they were set in the summer 2011 deal to raise the debt ceiling(Included in "Fiscal Cliff")

Allow the automatic spending cuts from the debt-ceiling deal to go into effect

Prevent military retirees and their families from signing up for the cheapest version of Tricare, the military health-care program

Reduce by 0.5 percentage point the pay raise for civilian government workers, whose pay has been frozen since 2011

Increase what Tricare recipients pay for prescription drugs

Lower pay raises for members of the military

• Non-Defense Spending (Set Each Year)

The following two options are mutually exclusive:

Keep 2013 spending levels where they were set in the summer 2011 deal to raise the debt ceiling(Included in "Fiscal Cliff")

Allow the automatic spending cuts from the debt-ceiling deal to go into effect

Limit highway funding largely to the revenue generated by the 18.4-cent-a-gallon federal gasoline tax

Reduce by 0.5 percentage points the pay raise for federal government employees, whose pay has been frozen since 2011

Eliminate federal grants for wastewater and drinking water infrastructure

Reduce funding for the National Institutes of Health

Increase the share of rent that low-income tenants pay in federally-subsidized housing

Increase passenger fees for airport security and air-traffic control

Eliminate some federal financing support for local rail transit programs

Reduce federal funding for developing new energy technology

Eliminate 11 grant programs for elementary and secondary education

Eliminate grants to large and medium-sized airports

Restrict Pell grants to fewer, needier students

Eliminate funding for national community service programs, such as AmeriCorps

Finance the Food Safety and Inspection Service, a public health agency, through fees on meat and egg processing facilities

Next: Cuts to Benefits or Entitlements  123
 

• Defense Spending (Set Each Year)

 The following two options are mutually exclusive:

Keep 2013 spending levels where they were set in the summer 2011 deal to raise the debt ceiling(Included in "Fiscal Cliff")

Allow the automatic spending cuts from the debt-ceiling deal to go into effect

Prevent military retirees and their families from signing up for the cheapest version of Tricare, the military health-care program

Reduce by 0.5 percentage point the pay raise for civilian government workers, whose pay has been frozen since 2011

Increase what Tricare recipients pay for prescription drugs

Lower pay raises for members of the military

• Non-Defense Spending (Set Each Year)

The following two options are mutually exclusive:

Keep 2013 spending levels where they were set in the summer 2011 deal to raise the debt ceiling(Included in "Fiscal Cliff")

Allow the automatic spending cuts from the debt-ceiling deal to go into effect

Limit highway funding largely to the revenue generated by the 18.4-cent-a-gallon federal gasoline tax

Reduce by 0.5 percentage points the pay raise for federal government employees, whose pay has been frozen since 2011

Eliminate federal grants for wastewater and drinking water infrastructure

Reduce funding for the National Institutes of Health

Increase the share of rent that low-income tenants pay in federally-subsidized housing

Increase passenger fees for airport security and air-traffic control

Eliminate some federal financing support for local rail transit programs

Reduce federal funding for developing new energy technology

Eliminate 11 grant programs for elementary and secondary education

Eliminate grants to large and medium-sized airports

Restrict Pell grants to fewer, needier students

Eliminate funding for national community service programs, such as AmeriCorps

Finance the Food Safety and Inspection Service, a public health agency, through fees on meat and egg processing facilities

Sources: Congressional Budget Office; Joint Committee on Taxation

Note: Some of the options listed here interact with one another, so the sum of the estimates here would not equal the savings if all options were enacted at the same time. Read the full CBO report for more detail on these figures.
*Cost estimate doesn't include changes based on the Supreme Court's ruling that Medicaid expansion in the new health-care overhaul is optional for states.

Credits: Chris Canipe, Madeline Farbman, Siobhan Hughes, Phil Izzo, Kristina Peterson

 43692 DeficitReduction Screen