With all the talk about raising the debt ceiling going on right now, I thought it would be funny to pontificate a bit about what I would do if suddenly I had to cut a bunch of spending so as not to default on interest payments (i.e. if I were the government, what would I cut).
Before getting into that, I wanted to just point out one hilarious thing that happened today in light of my post on social security last week. Obama said that he couldn't guarantee that social security recipients would get their checks if the debt ceiling wasn't raised. To that I say "yeah right." First off, social security still brings in more than it pays out, so the debt ceiling should have nothing to do with that. Second, if Obama is that dumb to not pay social security to a huge part of the voting block, the elderly, then he will lose every state in the next election.
Ok, that off my chest, here is what I would do to not default on interest payments to China et all:
1) Suspend foreign aid except third world nations. Sorry, but can't afford that at the moment!
2) Increase amount of collections agents at the IRS - that's right, this should be a money maker and I would pay on commission so that they would only get paid if they bring in checks
3) Suspend all tax subsidies for ethanol biofuels. These are a joke anyways and need to be done away with
4) Pull out of Libya and force the UN actually do something for once in a military engagement without the US
5) Suspend the pay of every politician in congress, the senate, and the oval office. This would force them all to get real and cut a deal to get this stuff done. I would also suspend all their benefits including use of private government jets, healthcare, etc. Pressure is on now :).
6) This would all hopefully stem the tide, but wherever I needed to make up money, I would just mandate a X% cut across the board to make up for the remaining deficit and force everyone in the government to actually get efficient. Necessity is the mother of invention.
Here is what I would do to tame the deficit:
1) Have social security tied to average life expectancy and make it so everyone gets on average 5 years of social security. That would cut about 10ish years off of payments to social security recipients after it it phases in. Not sure how to phase in exactly, but would probably be over about 10 years.
2) Put in a cap on the amount of money paid out by the government for medicare per year probably at about 80% of what is paid out currently on average. Also add in a 10% coinsurance payment requirement for all non-essential procedures and doctors visits (i.e. exclude yearly physicals, mamograms, etc). Coinsurance can be reduced to 5% if it can be proven the person is in "excellent" physical condition.
3) Have a 10% coinsurance payment for all medicaid non-essential procedures (similar to my medicare part). This can be reduced if it can be proven that the person is in "excellent" physical condition as well.
4) 5% cut to every government department if needed. If the government can't find a way to cut 5% of the waste including ridiculous contractor payouts, bloated benefits, unproductive workers, expensive software suites, etc, then Comcast is the best company on Earth.
5) Reform the tax code to make it simpler and hire more collectors for the IRS to get the government the money it is owed. Again pay them on commission and make them go after tax evaders and non-filers hard - it is ridiculous how hard it is to navigate tax law and equally ridiculous that only the very rich are every even targeted for evasion.
Let me know if you agree! Follow me on twitter @mdperovich if you don't already.
Interesting thoughts, particularly concerning the last few points regarding the deficit. These are complex problems, for which the solutions are also complex and often imperfect. Despite budget cuts (current and proposed), the main cost drivers are Medicare and entitlements, which you highlight. The difficulty with (1), is that life expectancy is difficult to gauge and there is a good deal of variability around the average. At what point do you compute the life expectancy at which social security payments are made? You life expectancy changes over the course of the lifetime. For example, if you make past age one, your expected year of death increases because you've made it passed the year associated with infant mortality.
ReplyDeleteWith regard to (2), the budget cap is essentially what they do in England, and has been tried, to a certain extent in Oregon. It results in rationing of procedures and interventions. For example, Britain's National Institute for Health and Clinical Excellence assesses medicines and recommends whether they be covered based on a pre-determined "cost-effectiveness" (See http://www.nejm.org/doi/full/10.1056/NEJMp0806862) This type of rationing isn't necessarily right or wrong, but just depends on societal goals.
For (4), again it's difficult to come up with an objective metric that determines whether government expenditure is "needed". It's true that we hear about some egregious misappropriations of tax dollars by most people's standards, but for other everyday things it's difficult to say. For example, I get paid by the government and I'd argue that my salary along with others are in line (perhaps less) than a comparable salary in the private sector. I'd also argue that my benefits are far from bloated. What may appear like an expensive software suite, could be a tool that drastically improves my productivity.