There is not a single best way to reduce the deficit in the country by 60% in the next 8 years. The short as well as long-term consequences of spending cuts and tax increases must be considered. The possible way is however the combination of both. With cutting the spending and increasing the taxes the reduction of economic growth can be seen. However, the economic deficit must be reduced because of the current increasing interest costs and spending among others on Social Security, and health insurance and it is estimated to grow to about 100% by the year 2035 (Committee for a Responsible Federal Budget, n. d.).
The rich group and the highest percentile where the wealth is being concentrated in the United States should carry the biggest burden. The income distribution is disproportional and so should be the taxes. The burden should be carried by the ones who can contribute the most, which means the rich in the country. The increase by a % among the wealthiest in the country can have greater impact as by increasing taxes for more than a % among low or middle income individuals. The people and the companies such as oil and other companies should be paying more in taxes since they are having benefits from the natural resources. The burden should be increased on the companies and corporation investments and returns since by making more profit, more can be given to the common good and to the national budget. With more money comes also greater responsibility. All in all, they are in the majority the ones who contribute the most to the degradation of the environment, climate change and other negative impacts as a consequence of their work.
The plan to reduce the deficit in the next couple of years includes different cuts in different areas in the budget path, defense, domestic and social security, health care, tax expenditures and revenue. The Federal Budget deficit can be reduced with the reduction of troops in Afghanistan to 30.000 by the year 2017, with which the $680B could be saved. The gradual reduction is possible, but not the elimination of the troops in the area which is still unstable. The further reduction of discretionary spending must be continued, which could result in saving of additional $320B. In order to reduce the deficit the cuts are needed in the area of defense, security and foreign relations. The foreign aid cut by 25% could result in saving of $150B. The U.S. Naval Fleet should be reduced to 282 ships in the fleet despite the plans to increase the ships which is still a reasonable measure which would not result in diminished international and national security. The reduction would result in saving of $110B. With military having more and more civilian areas of work the replacement of 70.000 military with civilian personnel could result in $30B saved. The economic spending should be reduced with the limiting the highway funding to revenue. Further on, because of the ageing of the population the normal retirement age should be raised to 70. To continue, the health care expenditures are going to grow in the future and hence the modification of the health care system is needed. The public option in the health exchanges should be established as well as modernization of the Medicare, because of the ageing of population and the increasing ratio of beneficiaries and working population. The agreed tax increases and spending cuts are also presented in the Figure 1, which were derived from the budget simulator (Committee for a Responsible Federal Budget, n. d.).
Figure 1 Choices to stabilize the debt
Source: Committee for a Responsible Federal Budget, n. d.
References
Committee for a Responsible Federal Budget. (N. d.). The Budget Simulator. Retrieved from:
http://crfb.org/stabilizethedebt/
