It is all very well to carp and whine about what others are saying about our federal deficit problem, but sooner or later, folks like me have to demonstrate what we would do if we were kings. I had a vague idea about what budget cuts and new taxes(you heard me) I would order, but no good way (or at least easy way) to calculate the effect of my wise and beneficent rulings.
Taa-daa! Behold the DIY Federal Budget Calculator.
Seriously, take a few minutes and wander through the choices to get an idea of what helps and hurts the most. I got to the goal and then some, but probably should have spent more time analyzing each item. My results:
But time may be shorter than even pessimists think. Bruce Bartlett starts the countdown, which he thinks hinges on ratings agencies.
What might trigger such a downgrade? The rating agencies have already told us what it will be: a rise in the federal government's interest payments to 20% of revenue, not spending. That is the limit of what the agencies view as acceptable. As noted earlier, given the status of federal interest payments as superior to all other spending, this is the logical position for the rating agencies to take. Whether they are right about 20% of revenue being the cutoff between manageable and unmanageable interest payments is an empirical question that their experience presumably informs.Although the recovery and unemployment are still the foremost concern, getting some ideas about how to reduce the deficit is clearly the most pressing need of government. At least being able to talk coherently about the numbers will require some homework, to say the least.
So when might we reach the 20% threshold? According to the Congressional Budget Office's forecast based on the administration's budget, that will come in about 10 years. Interest as a share of projected revenues will rise from 8.9% last year to 9.9% this year, 14.8% by 2015, 19.8% in 2019 and 20.8% in 2020. [More]
Feel free to share your plan.