Thursday, July 19, 2012

A Bold New Federal Budget

The President of the United States has not signed a federal budget into law in a few years.

According to the Congressional Budget Office (CBO) the federal government got 2.3 trillion dollars in 2011.  (source: CBO)

According to the same source, the federal government spent 3.6 trillion dollars in 2011.

That is a deficit of 1.3 trillion dollars in 2011. (US$1,300,000,000,000)

The Democrats and Republicans have had a hard time agreeing on a budget.  Even budgets like Representative Paul Ryan's budget, which still includes a deficit, have not gained enough support to be passed.

Check out the CBO graphic.  It makes it easy to read and understand the budget, even if some of us do not believe all of the numbers.

Let me propose a budget that, perhaps, can get bipartisan support and get passed.

First lets understand the big parts of the budget:

US Federal Budget 2011


Personnel Income Taxes: $1.1 trillion
Corporate Income Taxes: $181 billion
Social Insurance Taxes: $819 billion
Other : $211 billion

Total: $2.3 trillion


"Mandatory Spending:"

Social Security: $725 billion
Medicaid: $275 billion
Medicare: $480 billion
Other: $545 billion

Discretionary Spending:

Defense: $700 billion
Non-defense: $646 billion

Interest: $227 billion

Total: $3.6 trillion

Surplus (Deficit): ($1.3 trillion)

Tim's Budget


Reduce all income taxes to 10% (with 0 exceptions or credits)

Maintain Social Insurance: $819 billion

Eliminate "other"


Defense: $500 billion
Interest: $227 billion

Total expenditures so far: $727 billion

Social Insurance less Defense and Interest spending: $92 billion

Then the democrats can spend $92 billion plus all revenue from 10% income tax on anything.  We will remove all "mandatory" spending.  The democrats can spend all of total revenue, less $727 billion, on absolutely anything. (If they want to spend $1 trillion on abortions, or art, or education, or helping the poor, or whatever, then that will be okay.)

The benefits of my plan for the Republicans are: 1. a balanced budget 2. reduced income taxes and income tax complexity.

The benefits of my plan for the Democrats are: they can do whatever they want with the majority of the budget.

My plan is not ideal, but in a system where Democrats get 1/2 of the spending power, and the Republicans have the other half, then this could be about as good as we can get.

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