The Federal and State budget deficits are closely related to the prior three major problems, especially the Jobs problem. How many of you know that the Federal budget deficit is about 10% of GDP now (a huge increase over its "normal" level)? Putting 15% of the 20% of the workforce (3/4ths) who are unemployed and underemployed to productive work would likely solve that Federal and State deficit problem.
The Federal government wastes huge sums on agriculture subsidies, on education spending and on its payroll. Almost all federal programs could be eliminated and no one would notice.
I. Agricultural subsidies. Why do they exist? Get rid of the whole department except information gathering systems.
II. Education spending. Education was better in the 1950s and 1960s when the Federal government spent nothing on education. Keep only a student loan program.
III. Payroll. Pay and benefits of Federal employees is far too high. Those levels should be cut until the demand for such work falls.
IV. Military Retirement. Early military retirements should be limited to those serving in combat regiments - the people risking their lives. Supply another units would be eligible IF they are exposed to combat, proof being the respective combat badges. Otherwise, collection of retirement pay should begin at age 65.
V. Poverty programs should be consolidated into a simple Social Safety Net. Get rid of all those government social workers. The private sector does that better.
VI. The National Shared Health Benefit will eliminate most of the "Health" half of the Health & Human services Department. Item#V got rid of the other half.
VII. Apply the rules for military retirements in item IV to FBI and all other federal police forces.
VIII. Commerce department. You guessed it. Get rid of all of it except for the information gathering. Ditto the Labor Department.
IX. Stop defending the rest of the world. They now have the capability to defend themselves. Cut back to maintain effective alliances. Keep a smaller, but very effective military. Let Europe fight & pay for its own defense. Ditto Japan and Korea. Let all those places who want missile defense pay for its cost. Keep a strong Navy, Air Force, Army and Marine Corps, though. Keep technological superiority: spending on less than superior weapons is a waste.
X. Eliminate all foreign aid except disaster relief; its not much, but why isn't it zero?
Using debt is GOOD, though, for true investments: fair student loan programs; investment in superior military equipment; investments in parks and historic sites pay off with tourist dollars; investments needed for the Energy and Transportation Solutions. All those are necessary investments for our long term prosperity. DEBT IS GOOD if used for productive, important investments. US greatness was created by investments FUNDED BY DEBT. Alexander Hamilton proved that in the year of the founding of the nation. The US Constitution was created to help solve a pressing need for cooperative investments by states in water projects. The US highway system, the rail network, and the early canal systems were created by investments funded by DEBT.
Reagan's investments, funded by DEBT, in a superior military won the cold war and gave us all, and the whole world, incalculable benefits. Those planes, aircraft carriers, tanks, soldier training programs and missile defense research did it. The US had a budget deficit then, but it paid off.
Visceral rejection of debt is IDIOTIC. Focus on the spending and sell the long term bonds to fund good, long term investments.
All the cuts above combined the tax reform I have already written earlier will reduce Federal Debt to a rock solid, productive level.
What do we keep? What do we Increase?
That's for next week.
Word of the Day
None today; I overslept due to excesive snow shoveling work.