James Leroy Wilson's blog

Tuesday, April 26, 2005

Create Your Own Federal Budget

Via Logan Ferree at Democratic Freedom.

I wish the game had a 5% cut option, because a 5% spending cut across the board would go a long way toward balancing the budget. It means, largely, laying off one federal worker out of every 20. Retirements and hiring freezes would make that fairly smooth.

But cuts started at the politically unfeasible 10%, rendering the entire exercise a fantasy no matter your politics. So I went the "utopian libertarian" route given the parameters of tax-cutting we are given. We can not reform the tax code, but we can double the size of all tax cuts of 2001 and 2003, and double the size of all deductions.

So that's what I did. I increased everyone's tax cuts, deductions and exemptions by 100%. Even for the rich and for corporations. My reasoning is that the private sector had to have enough capital to absorb the number of laid-off federal workers (and lost business in which the federal government was the client). Also, it is a means to encourage a business-friendly, and therefore job-friendly, environment for corporations and entrepreneurs.

After seeing that that put me $1.3 trillion in the hole, I set about to eliminate every unconstitutional federal program except Social Security and Medicare (because of the number of people utterly dependent on them) and to cut even the constitutional ones by 70%. Even that kept me in the red by a couple of hundred billion - such is the Social Security/Medicare share of the budget. So I eliminated the prescription drug benefit, and made cuts of 20-40% on some other Social Security and Medicare items to finally get a $9 billion surplus.

I still came out with a nearly $1.188 trillion budget, about $550 billion absorbed by Social Security and Medicare, $167 billion for veterans and retired federal employess, and over $200 billion on debt financing.

That leaves roughly $270 billion for actual "government" beyond mere redistribution - and over half of that amount is for defense. Roughly $900 per capita. Not bad for a $10 trillion economy.

You can play the game here.


  1. It's fun to tinker around with. I didn't have a bit of a problem with the increments of 10% or more; such a game amounts to "What I'd do if I were dictator for a day," anyway, so why not knock yourself out?

    What bothered me was the inability to cut out deductions and then lower rates so as to be revenue neutral.

    I eliminated virtually every form of differential tax exemption (exept those like the EITC that apply to the destitute), every form of direct subsidy or tax credit for business activity, all the tax cuts to the top 15%, and drug war expenditures, severely cut military expenditure, and then doubled the tax cut to the bottom 60%. The wonky stuff that I didn't know what it was, I left alone. I came out with around an $800 billion surplus.

    Of course, if I'd been able to lower corp income tax rates enough to offset closing the loopholes, the surplus would have been considerably lower. The corporate tax is paid only by firms in the competitor--oligopoly firms just pass it on to the consumer.

  2. My criticism of the lack of a 5% was not for my sake, but for moderates confident that even lots of programs they believe in good lose some of the bureaucracy.

    I agree about the tax cuts. I would eliminate all the deductions but also cut taxes very sharply.