Deficit Reduction

In a recent interview with CNBC, Warren Buffett said that the federal deficit could be ended by simply making all members of Congress ineligible for re-election if there is a deficit of greater than 3% of the Gross Domestic Product (GDP). This is a good idea, but will not be passed, simply because members of Congress are not going to pass legislation that is not in their best interests.  Although Congress was intended to be a body that serves the people, in today’s environment they tend to serve themselves.

Michael Wald, an Independent Public Affairs Professional, wrote on FedSmith.com that the Congressional Budget Office (CBO) listed 115 options to decrease federal spending, or increase federal revenues without between 2017 and 2026. Some of the CBO’s recommendations include:

            1) Impose a 5% Value-Added Tax. The main idea of a value added tax is that the value of any product increases as it moves along in its production. Under this system, a tax would be imposed on a product at each stage of production, as its value increases. In effect, this would be a Federal Sales Tax. This would be a regressive tax, in that people of lower incomes would tend to pay a higher percentage of their income. We should be looking for progressive taxes, which tax higher percentages of income to those who can afford it.   

            2) Impose a tax on emissions of greenhouse gasses. This would be a good idea in that it discourages these emissions. It could make it more economic to continue to develop renewable sources of energy.

3) Increase the Payroll Tax Rate for Medicare Hospital Insurance by 1%. This would increase the burden for workers. Like the Value Added Tax, it would be a regressive tax. As I stated above, we should be looking for progressive tax solutions.

4) Increase individual income tax rates. This would mean that the wealthy would pay higher rates. Many would argue that this would cost jobs. However, the tax rates just after World War II were much higher, and the economy did just fine.

5) Impose caps on federal spending for Medicaid. This would mean that Medicaid would pay less than currently. Since providers would not be able to bill patients for amounts above these caps, the providers usually write these amounts off.  This would result in fewer providers willing to see Medicaid patients. Ultimately, it may result in more people of low income receiving no medical care.

6) Reduce the size of the military to satisfy caps under the Budget Control Act. Many people agree that our military is overgrown and wasteful. However, since  the current administration considers our military presence to be too small, this will probably be difficult to pass.

7) Reduce the Annual Across-the-Board Adjustment for Federal Civilian Employees’ Pay. This would amount to a pay cut for every federal civilian employee. However, inflation hits these people in the same way as it hits everyone else. Why penalize them for working for the government?

8) Reduce the size of the federal workforce through attrition. This is a way reduce the payroll without laying people off. However, the amount of work to be done would probably remain the same. How would all of this be done?

In addition, there are a few proposals that amount to different ways of cutting the salaries of federal employees. These would include:  1) Increase federal civilian employees’ contributions to the Federal Employees Retirement System, 2) Adopt a voucher plan and slow the growth of federal contributions for the federal employees health benefits program, 3) reduce pensions in the federal employees retirement system.

The CBO has also proposed options that would affect the general population as well as federal employees. These would include 1) Increase the payroll tax rate for Medicare Hospital Insurance (Part A) by 1%. 2) Increase premiums for Parts B and D of Medicare. 3) Raise the age of eligibility for Medicare to 67.

Of course, it would be up to the incoming administration and Congress to choose which proposals (if any) of the 115 on the complete list to pursue. Many of these proposals may appeal to the current Republican majority. 

Alliance Tax Advocate . Free Tax Consultation. Call Us Now 1.888.315.8269 #help #crookedhillary #clinton #jillnothill #gop #whereshillary #edtech #economy #ohio #nevertrump #strongertogether #trump2016 #maga #thursdaythoughts #trump #uniteblue #entrepreneur #tax #Taxes #IRS #pjnet #tcot #college #taxreturn #taxrefund #personalfinance #money

help crookedhillary clinton jillnothill gop whereshillary edtech economy ohio nevertrump strongertogether trump2016 maga thursdaythoughts trump uniteblue entrepreneur tax Taxes IRS pjnet tcot college taxreturn taxrefund personalfinance money

Recommended Posts