12 Days of Solutions, Day 10: The 19% Solution
December 19, 2012 at 1:52 pm in News by Tea Party Patriots 17 Comments
In March 2011, Reason Magazine published an essay entitled “The 19 Percent Solution.” Written by Nick Gillespie and Veronique de Rugy, it pointed out a very simple fact related to the federal budget: we can balance the budget without raising taxes, and do it in a way that accepts political reality.
According to Gillespie and de Rugy – admittedly, in March 2011, so the exact figures may be different 21 months later – the Congressional Budget Office (CBO) expects federal revenues to reach 19% of Gross Domestic Product (GDP) in the near future. As such, federal spending needs to go down to 19% of GDP.
Let’s do some calculations to see how this would work:
- According to USDebtClock.org http://usdebtclock.org/, America’s GDP is $15.52 trillion.
- The Fiscal Year 2012 budget was $3.538 trillion, according to Fox Business.
- Using these numbers, the federal budget was 22.8% of GDP in Fiscal Year 2012.
- Thus, spending needs to go down by 3.8% of GDP – or about $590 billion – to bring spending to 19% of GDP.
- Unfortunately, this would still would leave a massive budgetary imbalance, as revenues in 2012 were about 16% of GDP. But just over half of the deficit would be gone, a worthy accomplishment.
Now, de Rugy and Gillespie argue lowering spending to 19% of GDP can be done over a certain period of time, in order to live within political reality. As Tea Party Patriots, we know that political reality has little bearing on actual fiscal reality. Additionally, reality can be changed by outside influences – after all, political reality is based entirely upon what politicians vote for, and activists can be influential in changing who and what politicians support. So we’ll look at how this can happen in one year.
First and foremost, low-hanging fruit in the budget should be cut. Tens of billions are spent on farm subsidies, unused federal property, other corporate welfare, etc.
Second, defense spending must be cut. Reformation of the contracting system, closing bases overseas, better oversight on programs, and a simple one-year audit should show that well over 10% of defense spending can be cut in one year.
Third, a 2010 Heritage Foundation paper estimated $47 billion could be saved simply by bringing federal employee compensation in line with private sector equivalents.
Bringing spending within constitutional boundaries – a key part of the Tea Party Patriots’ platform – includes eliminating unconstitutional departments, or at least aspects of them. It would be simple to cut huge parts of the Department of Education, Department of Transportation, Department of Homeland Security, and other agencies. This could easily save $100 billion annually.
Selling federal lands, especially west of the Mississippi River, would diminish federal spending and provide a temporary boost in federal revenues that should go to deficit reduction. This would have the added benefit of allowing more energy and other land cultivation that would expand employment and the federal tax base. The potential here is unknown, but clearly enormous.
Reformation of the federal grant system would claw back billions in unused grant dollars. A report by Senator Tom Coburn (R-OK) estimates almost $700 billion is sitting unused, but the federal government has no way of bringing the money back to the Treasury without legislative changes.
At the end of the day, the federal government has a tremendous waste, fraud, and duplication problem. Duplication may, according to Senator Coburn’s office (based upon two GAO reports) account for almost 10% of federal spending. This is at least $300 billion in annual spending that could and should be eliminated.
Welfare spending – such as that found in the still-dangerous farm bill legislation sitting in Congress – should be drastically reformed.
Obamacare should be repealed.
Finally, Social Security, Medicare, and Medicaid must be reformed. Most importantly in the short-term, means-testing to both Social Security and Medicare should be implemented. Also, better oversight in both Medicare and Medicaid would help to diminish the $70 billion in improper payments found in the combined spending of both programs in 2010.
At the end of the day, more than $590 billion needs to be cut from the federal budget. But the measures listed above would be a good start to actually balancing the budget, especially as the economy slowly improves. Also, all of the above spending cuts do not include interest savings, which would be significant, especially over time.
The 19% solution still has the federal government spending too much. But if Washington ever gets serious about cutting spending, it can look to this blog post – and Tea Party Patriots as a whole – for ways to actually bring the federal government back to fiscal sanity.
Selling the land inthe west has several problems. Most of the BML land is desert nobody wants. The DOI land like national forests makes the government money through lumber sales and oil and gas leases.
Jerry,
How would anybody know whether anybody wants the land, or not, unless it’s put up for sale?
And why would we want the government to “make money”? Is that one of the reasons we created our government? So “it” could make money? What makes you think that’s authorized, or even a good idea?
Mr. Sickler, the article is stating the gov’t could sell land to help offset the deficit. Your statement, “why we would want the government to make money?” is absurd and stupid. The Tea Party is trying to think out of the box to help solve problems not just nitpick and complain.
Jerry was implying that there was no sense in trying to sell government lands because nobody would want it, which is nonsense. He went on to claim that the government makes money from this land that nobody would want, which seems to belie his earlier statement.
I am in favor of selling government held lands to reduce the deficit, although I doubt that proceeds from land sales would be used for that purpose.
As for the government “making money” by competing with private landowners, who also sell timber and mineral resources, I oppose it. The government was not created to be “in business”.
The comment about “government making money… is a good idea” seems good at first glance, but you then have to ask: How many conflicts of interest will such a “tactic” create? And is the government trustworthy enough to be efficient, fair, and not be monopolistic while competing in the marketplace? And what about the private sector’s ability to either challenge or compete with such an entity? I’ve only scratched the surface, but if I were to try, I could come up with many, many more reasons for the are only about a hundred more issues I won’t mention…
Craig,
The more money that the state and federal government makes from selling timber or oil leases the less I have to pay in taxes. Are you in favor of higher taxes, I’m not?
The gov makes money from all kinds of stuff: boat registration, auto registraion, landing fees at airports. I’m happy with that as it keeps taxes lower.
I take it you’ve never been to AZ or NV? Most of the land is so useless you can’t even raise cattle. The land with water has been in private hands for 120 years when the government did sell it or give it away to settlers.
Plus when you sell an income stream you lose that forever. What if timber or oil go up in value by 400% in 20 years. The government would lose that potential if they sold it.
Let private interests own the land and use it in whatever ways they can discover to make it productive. They will do a much better job of this than the government, and the taxes they pay will be far more than what the government now “earns” from it’s use of the land.
We didn’t create our government to be “in business” and competing with private enterprise. I don’ think they have any authority to do it.
And yes, the government takes a lot of our money for “fees”, licensing us to do things as “privileges” that are actually our right to do anyway as free people.
At what point do we understand the private sector produces goods, the public sector services. A service in the private sector is charged against the good that it enhances the value of, such as transporting goods to market,the cost of trucking goes against that particular load.
A service in the public sector is montized via taxation, thereby it is charged against the populace as a whole, it inherently then degrades the free market as it enables unfair competition.
To simply macro-manage by percentile is a temptation, but for a free market to remain viable, the public sector services must be re-directed and severely limited.
As an example, if the total cost of infrastructure was la
id on a flat rate on all motor feuls at a rate that would biuld, maintain, and re-emburse the general fund, the local products would hold a natural advantage inany market.
It is my belief we need re-adress our entire supply approach before we can hope to reach a sustainable balanced budget.
Loon,
Are you one of those guys that think we should privatize FEMA?
As to FEMA, I am in transportation, and FEMA has, in every disaster I have hauled goods to, since hurricane hugo, been a great big money pit, the gvt,s job is the infrastructure, when we start giving out cash to private citizens, it seems most of it gets lost. Corruption! Imagine that! After hurricane katrina, a driver out of Maine put on his old louisville, fema told him to get better iron, he bought a nice old pete, then spent 6 weeks hauling the same load of ice, never unloaded it, took it to Toele Utah, went back to Toele after hurricane Ike, hauled ice from Utah to Baton Rouge!
Jerry, I’m one of those people who believes that the government has no Constitutionally authorized role in “managing emergencies”.
Even if they did, the government’s record for good management is horrible.
All sorts of disasters and emergencies were dealt with much more effectively, rapidly and cost effectively before FEMA was created.
Don’t privatize FEMA, just eliminate it.
Craig,
What to do with 200,000 homeless people after the next disaster? Let them starve? Shoot them so they don’t take food from people who have it? Let’s be serious.
Jerry, The free markets will take care of these people. I’m sure the job creators will figure out a way to profit from their misfortune.
Pertainant to the farm bill. As I see it, it is a means of purchaseing loyalty. Food stamps are nothing less than corporate welfare for entry-level employers, houseing enables degradeing the wages need be paid by the same,
As it enables operating bussinesses at below true market value. The entire concept of useing the ag department to supress wages is of negative value. The true value of goods and services within the private sector is being manipulated by the public sector, which, if it could produce a good is so inherently corrupt it can.t even function in a monopoly.
ATTENTION EVERYONE!
Enough is Enough! Hidden in the 3,000 page Affordable Care Act, aka OBAMACARE, which the supreme court declared is A TAX, has somehting much more terrrible than the infringement of our liberties that we all know about. Starting in 2014, a small, but morally significant increase in our payroll taxes are going to THE UNITED NATIONS! We are paying a UN TAX, to go to poorer countries to pay for THEIR HEALTHCARE. HE IS TRYING TO USHER IN A WORLD GOVERNMENT, through sneaky tactics like this. WE NEED TO REPEAL OBAMACARE, and STOP THE UN TAX!
The url I recieved from my congressman printed to 1100 pages, so I apparently got an abridged version, however, in that incoherrent mish-mash, I deciphered all sorts of things that would make Dr. Mengle proud. It is an assault on every principle our founders pledged life, property, and sacred honor to. The current group in D.C. is as decent as Hitler, Stalin, or Pol Pot. Who never broke any laws while they were in power. We have a limited time frame to do our duty to our grandchildren, I’m in.
All gold mining by the private sector, on federal lands in Nevada, is free, no money goes to the government for the gold, land, mineral rights, etc. Given the price of gold these days, we could have a lot of money from this source.