David Leonhardt gives us this interesting interactive NYT graphic (and article) showing the deficit reduction options. They give you a worksheet and various options to reduce the deficits:

Here is how I “solved” the shortfall — 61% of the fix are spending cuts, 39% of it was more taxes:

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Budget Puzzle: You Fix the Budget


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Try it yourself!

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click for ginormous graphic (PDF here)

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Of course, the discussion as to why we should be fixing the deficit in a mediocre recovery is not broached . . .

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Source:
O.K., You Fix the Budget
DAVID LEONHARD
NYT, November 13, 2010
http://www.nytimes.com/2010/11/14/weekinreview/14leonhardt.html

Category: Current Affairs, Economy, Taxes and Policy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

45 Responses to “Deficit Problems? You Fix It!”

  1. foosion says:

    >>Of course, the discussion as to why we should be fixing the deficit in a mediocre recovery is not broached . . .>>

    That’s really the key point. The public is focused on jobs and the economy (recent poll – 56% cited these as the top priority, only 4% cited the deficit). The media and chattering classes are focused on the deficit.

    Fix the economy and the deficit improves. Fix healthcare and we don’t have a deficit problem (as Dean Baker says, if healthcare costs equaled the costs in any of the 35 countries with higher life expectancy, we would be running surpluses). Focus on other things and you’re being counterproductive.

  2. Why do We presume that current ‘Spending’ is, at all, Efficient?

    assuming, of course, that this a a presumption..

    and, this, obviously, focuses on ‘Spending’..hoots of ‘radical de-regulation’ to the contrary, shouldn’t we be as concerned with, fearsome, “Paper Tiger” that confronts Citizens od Any ‘walk of Life’?

    http://search.yippy.com/search?input-form=clusty-simple&v%3Asources=webplus&v%3Aproject=clusty&query=Cost+of+Regulatory+Burden+in+the+U.S.

    “It isn’t the Rate(of Spending), It’s the Rules(that bind us)”
    ~~

    and, toward the Post, in light of ‘Veterans’ Day’, We should be intent on creating fewer ‘Veterans’..

    If We, really, wanted to ‘Support our Troops’, and diminish the likelihood of ‘terrorist attacks’ on ‘our Homeland’, We’d bring them Home.

    The last thing We can afford is an ‘Security’ Industrial Complex(SIC), on top of our MIC..

    http://search.yippy.com/search?input-form=clusty-simple&v%3Asources=webplus&v%3Aproject=clusty&query=Cost+of+the+Military+Industrial+Complex

    http://search.yippy.com/search?input-form=clusty-simple&v%3Asources=webplus&v%3Aproject=clusty&query=Cost+of+the+Security+Industrial+Complex+DHS

  3. quiddity says:

    Worksheet stated for Social Security “This analysis treats Social Security as part of the total federal budget.” Does that mean that the current surplus is reflected in the $1.345 trillion hole?

    In any event, bringing Social Security into a fix for the deficit is one way to gut the stand-al0ne program.

  4. Petey Wheatstraw says:

    We’re going to have to print and distribute money to fix this.

    And, MEH is exactly right: cut the MIC budget (by 66%, or so), and dismantle the Security State apparatus before it becomes self-sustaining.

  5. Julia Chestnut says:

    Social Security is part of the deficit?

    I smell propaganda.

  6. call me ahab says:

    waste of time-

    deficit’s don’t matter-

    Cheney said so (so it must be true)

  7. franklin411 says:

    I have a $300 billion surplus in 2015 and a $550 billion surplus in 2030. 51% from taxes, 49% from spending cuts. Ironically, just about every tax increase on that list mentions that it would merely return tax rates to Clinton-era levels.

    Now, Clinton created 22 million jobs as President–the second largest number of jobs created behind LBJ. If creating 22 million jobs is what people mean when they claim that tax increases would “crater” the economy…sign me up for some cratering!

  8. beaufou says:

    The problem is global, balancing this stuff is a joke.

  9. ZackAttack says:

    That was easy. So what’s all the fighting about, then?

  10. super_trooper says:

    @ franklin411,
    I don’t follow your argument. Did Clinton increase the taxes as much as would be needed to balance the budget now? Call me crazy but the impact of any increased will depend on what it’s increased from (or to).

  11. The Window Washer says:

    Great minds think alike. I would say Barry leans center left and I center right. I bet most people would come within 5% of the 40/60 split.
    41%
    59%

    @ Julia Chestnut & quiddity
    Social Security started cashing in intergovermental holdings. So it’s now cash flow negative. That run off creates a demand on revenue as it comes due.

    I’m sure someone else here

  12. The Window Washer says:

    By the way that SS cash flow change hit right on schedule( I think the window was 2010-2012). We’ve known for about 30 years and have done nothing.

  13. willid3 says:

    i tried the austerity budget to solve the budget deficit.

    didn’t work

  14. Patrick Neid says:

    $1265 in cuts, $665 in revs, $575 surplus.

  15. mark says:

    The long term deficit is all about health care costs. Nothing.Else.Matters.

    In the short term, the percent of the population either unemployed, working part-time because they can’t find full time work, or have given up looking for work entirely is approaching 20% of the work force. Fix that first, then worry about the effing deficit.

  16. franklin411 says:

    @Super Trooper
    No, I’m just saying that I reject the idea that slight adjustments in tax policy massively alter the jobs situation. The argument everyone makes against letting the Bush tax cuts expire is that letting taxes rise would kill jobs. I regard that argument as utterly ridiculous. Clinton increased taxes and 22 million new jobs were created. Bush cut taxes and we lost 7 million jobs. I’m not saying that increasing taxes created jobs and cutting taxes necessarily killed jobs, but rather that jobs creation has almost nothing to do with slight changes in tax policy.

    Even if we increase taxes to Clinton-era levels, taxes would be historically low by American and definitely by world standards.

  17. Mean Mister Mustard says:

    One flaw I suspect in this model: a surplus in 2015 does not reduce the 2030 shortfall. My 2015 numbers are $200 billion in surplus, but my 2030 seems to still be at a $100 billion deficit because the model doesn’t shrink the projected shortfall…

  18. number2son says:

    What Dean Baker says:

    http://www.cepr.net/index.php/beat-the-press/

    So what color should we paint the school?

  19. James says:

    Of course, the discussion as to why we should be fixing the deficit in a mediocre recovery is not broached . . .

    ——

    Really? From the article: “The 2015 deficit does not need to be closed immediately, when the economy remains weak” . . .

  20. ronin says:

    Fixing the deficit is extremely easy.

    a) Arrest the real perpetrators who planned and carried out 9/11

    b) Shut down homeland security

    c) Shut down the CIA

    d) Shut down major parts of the Pentagon

    e) Shut down military bases around the world

    f) Confiscate Haliburton, Blackwater, KKR and others and liquidate all their assets

    End of story. Until all these steps are done we all are wasting our time, energy, and brain power.

  21. DL says:

    “Here is how I ‘solved’ the shortfall — 61% of the fix are spending cuts, 39% of it was more taxes”.

    . . . . . . . . . . . . . . . . . . .

    I could live with that. But among the many questions would be that of how does one limit the growth of those programs that are growing most rapidly?

    Whatever happens, the most important thing is that people get their heads out of the sand and start facing reality.

  22. DL says:

    What I would like to see is three separate bills voted on: one from the deficit reduction commission, one put up by the Republicans, and one put up by the Democrats.

    Obviously, none of the three bills would have a snowball’s chance in hell of actually passing both houses (and being signed by Obama). But I think that the mere act of putting these three plans “on the table”, and voting on them would provide a huge step forward in the debate.

  23. liqal says:

    1% Solution

    Increase taxes across the board by 1% annually
    Cut spending 1% annually

    Congress can move from 1 bucket to another but the 1% solutions stays.

    You can use any number such as say .5%, it will work. The power of compounding placed on the budget will eventually lead to a resolution of the budget…. and that is what the markets want to see.

    Too draconian for present economic activity ? The start with .1% rather than 1% and double it every year. .2%,.4%,.8% …….

    Watch rates start to fall again.

  24. some_guy_in_a_cube says:

    “Projected 2030 shortfall”……2030 – WTF, is this some sort of joke?

    Here are the only 2 predictions you can take to the bank in 2030:

    1) People will LOL at the above projections, as well as at the forecasters.

    2) Some wag or wags will project some kind of catastrophe in 2060 using brilliant, thoughtful, sincere, ponderous, well-intentioned but, alas, linear reasoning. The amen chorus will nod, wring their hands and consider it seriously. They will all also be viewed as laughingstocks 30 years hence.

    Cheers boys.

  25. lalaland says:

    Here’s mine: http://bk.ly/vMI

    Although, to be fair, I did appoint a commission to do that for me.

  26. lalaland says:

    If the investor class doesn’t find a way to make an honest living soon, I’m going to turn myself into temporary installation art and vomit on the steps of Wall Street every morning until crap like this stops (I can think of no other way): http://www.nytimes.com/2010/11/15/business/15lawsuit.html?hp

    “Large banks, hedge funds and private investors hungry for new and lucrative opportunities are bankrolling other people’s lawsuits, pumping hundreds of millions of dollars into medical malpractice claims, divorce battles and class actions against corporations — all in the hope of sharing in the potential winnings. ”

    Some people in this country have to stop being renters and start contributing something…

  27. philipat says:

    Of course, the discussion as to why we should be fixing the deficit in a mediocre recovery is not broached . . .

    Ask David Cameron. Or just keep kicking the can?

  28. Jojo says:

    I solved the deficit problem in under 5 minutes choosing the cuts and changes below.

    I did not need to change the SS retirement age, the Medicare age, cut aid to sates, penalize noncombat military compensation, tighten eligibility for disability, allow the government to further muck with CPI (which I contend is now TOO LOW, NOT too high), implement a national sales tax or a carbon tax!

    But of course, I still stepped on a lot of political constituencies. :)

    Yea! Vote for me!

    ————–
    Cut foreign aid in half
    Eliminate earmarks
    Eliminate farm subsidies
    Cut pay of civilian federal workers by 5 percent
    Reduce the federal workforce by 10 percent
    Cut 250,000 government contractors
    Reduce military to pre-Iraq War size and further reduce troops in Asia and Europe
    Reduce Navy and Air Force fleets
    Reduce the number of troops in Iraq and Afghanist to 30,000 by 2013
    Enact medical malpractice reform
    Reduce the tax break for employer-provided health insurance
    Cap Medicare growth starting in 2013
    Reduce Social Security benefits for those with high incomes
    Return the estate tax to Clinton-era levels
    Return rates to Clinton-era levels
    Allow expiration for income above $250,000 a year
    Payroll tax: Subject some incomes above $106,000 to tax
    Millionaire’s tax on income above $1 million
    Eliminate loopholes, reduce rates (Bowles-Simpson plan)
    Reduce mortgage-interest deduction by converting to credit
    Bank Tax
    ————–

    Why hasn’t the capital gains exclusion for a sale of a house that you have lived in for 2 of the past 5 years come up for discussion? This benefit only encourages the trading of houses and a subsequent rise in housing prices?

  29. JayHank says:

    Is anyone else depressed that none of our politicians and very few of our partisans seem to be remotely interested in ever compromising about anything ever? And indeed, seem to have forgotten what “compromise” even means? Instead of a discussion about meeting part of the way we get this: any time someone mentions the deficit one group declares that tax increases are off the table, one group says that anything that even considers touching social security is propaganda, another group says we mustn’t touch defense, someone weighs in that discretionary spending isn’t part of the cost-curve problem and should be off the table, and finally someone says that cutting healthcare expenditure is basically genocide.

    I Get That You Like Social Security. I Get That You Like Tax Cuts. COMPROMISE. Everyone gives up a little bit of something they like in ten years so we get a consensus not to bankrupt the country in the 2020s. A retirement age of 69 for today’s 4-year-olds is not a human rights violation. A top marginal income tax rate of 39 percent is not socialism. We are going bankrupt only because our partisans are addicted to histrionics.

  30. miamiocean says:

    President Reagan raised Social Security payroll taxes in the 1980′s, gradually doubling them in anticipation of the boomer retirement years. The present “crisis” is a phoney baloney crisis manufactured by those who either have ulterior motives for the present large SS trust fund or are just willingly ignorant. There is an approximately $2.5 trillion trust fund built up over the intervening years to be cashed out over the next 20 years to pay for the boomer retirement. Where everyone gets confused is that the $2.5 trillion is in treasury bonds, not cash sitting in a bank or invested in Wall Street. The extra dollars were invested in supposedly the safest investment in the world – U.S. treasury bonds. I suppose it would have worked out so much better if it had been invested in stocks (not) or left as cash over the past twenty years to sit in an account and lose value to inflation.

    Now around 2032 it is true that Social Security payroll taxes will only cover 78% of the projected benefits. So like any insurance program, either the benefits will need to be reduced or the incoming premiums (in the form of payroll taxes) need to be increased. One could argue that giving the present large population of illegal immigrants a path to citizenship — and access to real jobs that pay social security taxes — would help, but that is another discussion.

    As a boomer approaching retirement, I get awfully tired of people dismissing the additional payroll taxes that I have paid since I entered the workforce, which were supposed to “prepay” for my retirement while maintaining the promised benefits during my parent’s retirement.

  31. jad714 says:

    At this point, no matter what solution you take, it’ll upset SOMEONE. Choose.

    http://www.philstockworld.com

  32. Patrick Neid says:

    With any luck this exercise will go viral and average folks will see how easy it is, despite the shrieks of those getting gored, to get to balance–even at this late date.

  33. [...] How and When of Deficit Cutting By DAVID LEONHARDT Barry Ritholtz of The Big Picture blog completed our deficit-cutting puzzle, and his full list of preferred policies appears below. By e-mail, he [...]

  34. Kevin_In_Philadelphia says:

    52% tax increases, 48% spending cuts…gave me a $255B surplus in 2015, and a $501B surplus in 2030. I didn’t touch healthcare spending except to cap medicare growth in 2013.
    Amazing the money saved but cutting the military to Clinton-era levels and stopping throwing money at pointless weapons systems and worldwide garrisons.

  35. WFTA says:

    Well, I did it without a carbon tax, although I think an increase in taxes on fossil fuels with a rebate to low income payers should be enacted. Could have saved much more with a “massive government takeover of healthcare,” and probably provided better care for ALL Americans.

    I was 39% cuts and 61% revenue. The idea that doing anything on the revenue side is a non-starter is just moronic. The idea that we can only have 3 income tax rates is even more moronic. Having postmen delivering door to door on foot is moronic. This dollar gorging phenomenon we call Homeland Security is moronic.

    But the fact is that tax policy is controlled by the richest 1-2% of the population, like everything else. I predict that the Tea Partiers who call D.C. a cesspool will soon come to see it as a hot-tub (that analogy was borrowed but apt in every way.)

  36. Bokolis says:

    It seems that there is virtually no option to “solve” without chopping Medicare. While I don’t foresee myself needing such things (I don’t plan on sticking around much longer after losing the ability to slap up the average meatball), I empathize with the lot of you that don’t look good in genes. I wouldn’t cut it.

    Special times call for special solutions. I’d prefer to dust off all the brackets and- if/when the getting is ever again good- that we take a big wet bite out of those asses that we’ve fattened over the last 30 years.

    I’m not talking 90%, but a guy making $250k should not be taxed (virtually) the same rate as a guy making $2.5MM>>>a guy making $25MM, etc. The whales can afford to sic lawyers on the tax code, where the rest of us cannot. They should pay for that ability.

  37. gordo365 says:

    So we are in effect raising retirement age in order to pay for wars in Iraq and Afgan.

    The Iraq war wasn’t really “sold” that way. I remember Paul Wolfowitz saying it would pay for itself. He was so far off with his estimate (plus or minus a couple trillion) they made his head of world bank!

  38. James says:

    The How and When of Deficit Cutting – NYTimes.com says:

    [...] How and When of Deficit Cutting By DAVID LEONHARDT Barry Ritholtz of The Big Picture blog completed our deficit-cutting puzzle, and his full list of preferred policies appears below. By e-mail, he [...]

    —–

    Except . . . I don’t believe the list of solutions quoted in that blog reference above are from BR. See “Jojo” above.

    Nevertheless, Leonhardt makes the point – a point he’s made previously AND in his article BR quotes that short-term deficit reduction is not the critical concern. However, the discussion for long-term deficit/debt reduction must begin now or soon to ensure a long-term solution is viable. And, of course, there’s the political dimension – voters, many voters, want a serious discussion for a long-term solution to take place now.

  39. [...] points worth considering. Barry Ritholtz at the Big Picture blog comes up with his plan, but says “Of course, the discussion as to why we should be fixing the deficit in a mediocre recovery is… You can see Leonhardt’s response to that on The How and When of Deficit [...]

  40. FrancoisT says:

    I should pat myself on the back. I’ve solved the deficit.

    http://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html?choices=6v9345nv

    Now, everyone in the US shall hate me forever after! :-)

  41. Lord says:

    The secret here is to do it in as few changes as possible. The greater the number of options the more difficult persuasion and the greater the opposition. They are usually introduced to make it more difficult, not easier. So ignore all the low value targets; they aren’t worth fighting over. I solved it with 54% spending cuts, no domestic or military cuts other than reducing troops in the mideast, no Social Security changes beyond raising the cap to 90%, capping medicare and taxing healthcare to reduce its growth, letting tax cuts expire, adopting Obama’s proposal and the carbon tax, not because it’s necessary but because it the right thing to do.

  42. Joe Friday says:

    BR: “Here is how I “solved” the shortfall — 61% of the fix are spending cuts, 39% of it was more taxes”

    The only problem (and I’m not picking on you here) is that ANYONE who advocates more spending cuts than tax increases, or even any level of large spending cuts, is ignoring what failed public policies created the federal budget deficits.

    Since the independent non-partisan CBO reported that the vast overwhelming majority of the federal budget deficits resulted from the massive decline in federal income tax revenue directly from the numerous rounds of tax cuts for the Rich & Corporate enacted by the previous administration and Republican Congressional Majority, why would not reversing those failed public policies be the very first place to start ?