8 Tips on How We Could Cut the Deficit, Since Slashing Social Security Benefits Won't Help
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A twenty percent cut in that budget is extremely modest under the circumstances, and would save 1.6 times as much as the “chained CPI” cut.
4. Allow the government to negotiate with drug companies: $220 billion. (1.8x)
Current law specifically forbids the government from using its negotiating power to obtain lower rates for Medicare prescriptions – even though much of the research behind the drugs involved was performed at government expense.
If we allow the government to negotiate with drug companies, that will save an estimated $220 billion. That’s 1.8 times as much money as the “chained CPI” – and it comes from the drug companies, not vulnerable Americans.
(Source: Outterson and Kesselheim, Health Affairs.)
5. Enact DoD-friendly cuts to military budget: $519 billion. (4.25x)
A defense think tank conducted an exercise to help the military prepare for the possibility of forced spending cuts under sequestration (the so-called “fiscal cliff”). It convened what it called “a series of strategic choices exercises,” using “experts from across the defense community,” in order to decide how best to cut $519 billion from defense spending cuts over ten years.
The participants were not peaceniks – most were in the defense community, while some were Congressional staffers – and the think tank’s staffed by ex-military and military-friendly consultants. Nevertheless, they were able to come up with options that seemed acceptable by balancing short-term readiness with long-term preparation.
It was a surprisingly smart exercise – and it sounds like a very good way to build consensus around defense cuts (even though that was not its intent). A project leader described the exercise as “listening to the future,” while the report itself said that “Failing to recognize and make strategic choices is effectively a form of self-sequestration.”
We can listen to our future selves, since we’ll all need Social Security some day, and say: Make these cuts. That’s better than “self-sequestering” by letting politicians cut Social Security.
(Source: “Strategic Choices: Navigating Austerity,” Center for Strategic and Budgetary Assessments)
6. Enact Rep. Jan Schakowsky’s ‘Fairness in Taxation Act’ for very high earners: $872.5 billion. (7.15x)
In 2011 Rep. Jan Schakowsky introduced the “Fairness in Taxation Act,” which would have created additional tax brackets for very high earners. As Rep. Schakowsky noted at the time, today’s tax structure “fails to distinguish the merely ‘well-off’ from the ‘super-duper rich.’”
The bill adds the following tax brackets:
• $1-10 million: 45%
• $10-20 million: 46%
• $20-100 million: 47%
• $100 million to $1 billion: 48%
• $1 billion and over: 49%
It also taxes capital gains and dividend income as ordinary income for those taxpayers with income over $1 million.
The very wealthy would still be paying much less than they paid under Republican President Dwight D. Eisenhower, when the top rate was 91 percent. For that matter, these rates are lower than those we had under most American presidents of the last century.
This bill brings in more than seven times the “chained CPI” savings by asking the ultra-rich to pay their fair share, instead of targeting seniors and other Americans in need.
(Sources: Rep. Jan Schakowsky; <a data-cke-saved-href=" http://grijalva.house.gov/uploads/The%20People" href=" http://grijalva.house.gov/uploads/The%20People" s%20budget%20-%20a%20technical%20analysis.pdf"="">Economic Policy Institute.)
7. Eliminate corporate tax loopholes: $1.24 trillion (10x)
A 2007 Treasury Department report (prepared under President Bush) concluded that “corporate tax preferences” – that is, loopholes – resulted in lost revenue of $1,241,000,000,000 over a ten-year period.
That number looks pretty good – especially when it’s stacked up against the “chained CPI” figure of $122 billion.