Sunday, December 30, 2012

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
Deficit under "fiscal cliff" scenario: $142 billion -$1200-$1000-$800-$600-$400-$200$0$200$400$600$800$1000$1200
Your plan: $232 billion surplus 2020, projected

Select from the following categories:

Increases in Tax Revenue
Cuts to Annually Appropriated Spending
Cuts to Benefits or Entitlements

Let Tax Cuts Enacted Under Bush and Obama Expire

Let tax cuts originally enacted in 2001, 2003, and 2009 expire as scheduled; let estate and gift tax provisions enacted in 2010 expire as scheduled; and do not index the AMT for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

Modify Existing Taxes
Limit to 15% of the value of a tax deduction, down from a maximum 35% currently for the highest earning taxpayers
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.
Apply an excise tax on high-cost health plans in 2014 instead of 2018, and apply the tax to more plans
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
Prevent deductions for charitable contributions unless the donations exceed 2% of a taxpayer’s adjusted gross income
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

Establish New Taxes
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 »

Defense Spending (Set Each Year)

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

Non-Defense Spending (Set Each Year)
Allow the automatic spending cuts from the debt-ceiling deal to go into effect
Eliminate grants to large and medium-sized airports

Next: Cuts to Benefits or Entitlements »

Health-Care Programs
Raise the eligibility age for Medicare to 67, up from 65*
Add a government-run health-care plan to the new insurance marketplaces*
Require prescription drug makers to pay a rebate to the government on drugs purchased by some people in federal health programs
Limit patients’ abilities to sue doctors for medical malpractice
Social Security

Gradually raise the age at which workers are eligible for full Social Security retirement benefits, to as high as 70, up from a range of 65 to 67

Gradually raise the earliest eligibility age for Social Security to 64, up from 62
Reverse the order of the two-step process to calculate Social Security benefits, which would encourage some people to work longer
Make Social Security benefits tied to a worker’s average earnings over 38 years instead of 35 years, which generally would include more years of lower pay

Other Mandatory Programs
Allow the automatic spending cuts from the debt-ceiling deal to go into effect(Included in "Fiscal Cliff")

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