Problem #5: US Federal Budget Deficit
OK, this essay will be more of a list than the other have been, simply because it lends itself to a list format. The problem is the US budget deficit. Fortunately, the solution is fairly simple... or, more accurately, the necessary steps are fairly simple...
1) Restore progressiveness to US tax code: During 1950s, top bracket never dropped below 91%, and US had strongest economy in human history1. My suggestion: restore to rate under Kennedy: top rate of 77%
2) Change US laws to strengthen unions. Stronger unions will lead better-paid employees, better-paid employees will lead to higher incomes, and higher incomes will lead to higher rates of taxes collected.
3) Crack down on use of overseas “tax shelters” by corporations. Study suggests between $21 + 32 trillion stored overseas at end of 20102.
4) Tax incentives to on-shore factory jobs which have been offshored over the past 30 years
5) Lower overall corporate tax rate, but in exchange for steep reduction in tax write offs: effective US corporate tax rate is 27.1%, compard to 27.7% in other large economies3.
6) Cut military budget in half: we currently spend as much as the 11 countries behind us do combined4. If we cut spending in half, we’d “only” spend as much as the next 3 (Russia, China, UK).
7) Close Cold War legacy bases- do we really need bases in West Germany to prevent Soviet invasion from the East or a huge, controversial base in Okinawa, Japan?
8) Starkly reduce foreign adventures. The cost of Iraq + Afghan wars since 2001 is $1,461,888,840,4975.
9) Cut or eliminate most business subsidies, which totaled: $92 billion in 20066.
10) Use some savings from military cuts to invest in domestic infrastructure. We currently invest half on infrastructure than we did 50 years ago7, and good infrastructure is good for business8.
11) Finally, while, by statute, Social Security is not allowed to contribute a dme to the budget deficit, removing cap on earnings subject to Social Security tax keept the Social Security trust fund /solvent for 75 years9.
There- do the above, and you’ve balanced the US budget, reduced international tensions, and put Social Security on solid footing for 75 years. Easy.
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