Sensible Ideas To Cut The Budget

Recently the Republicans, by their refusal to compromise on a reasonable budget, forced the sequestration cuts on Americans -- cuts that mainly fell on the most vulnerable Americans. Now they want more cuts, and once again, they want to protect the rich while making vulnerable Americans (children, veterans, poor & disadvantaged, unemployed, elderly, etc.) pay for those cuts. And shockingly, President Obama seems to want to go along with it -- at least partially. He has proposed cuts to Medicare and basing cost of living raises on a new way to figure inflation -- the chained CPI.

Going to a chained CPI would amount to a back door way to cut benefits for veterans and for Social Security, and would more quickly push working Americans into a higher tax bracket -- and the president said he would be willing to do it for only very small increases in taxes for the rich. Both the presidential and Republican proposals are a rather hard-hearted way to cut the budget, and both should be rejected. There are better ways to reduce the budget -- ways that are more ethical (because the burden wouldn't be put on the most vulnerable people) and would reduce the budget quicker by saving or raising more money.

Richard Eskow, over at the blog of The Campaign for America's Future, has come up with several good ideas -- and all of them make a lot more sense than either the Republicans' or the president's plan. Here are his suggestions (along with how much they would save over a ten year period):

1. Close the multiple loopholes in the capital gains laws - $174.2 billion.
There are currently a number of loopholes that allow people to declare their earned income as investment income -- which allows them to pay a capital gains tax on it, which is much lower than the tax on earned income would be.

1A. Eliminate the capital gains tax completely - $900 billion.
Why should different types of income be taxed at a different rate? This allows the rich, who make most of their money from investment income, to pay a much lower rate than Americans who actually work for their income. Income is income, and it should all be taxed as earned income.

2. Eliminate the Bush tax cuts for everyone making more than $250,000 a year, instead of the higher limit agreed to last December - $183 billion.
This was the threshold that President Obama originally wanted, but he let the GOP talk him into a much higher threshold -- and that is now costing this country about $18.3 billion in revenues each year (which is more than the chained CPI would save).

3. Reduce the budget for U.S. overseas military bases by 20% - $200 billion.
This country has over 800 foreign military bases. We could close many of them without hurting our ability to defend ourselves (and our friends). In fact, I think they could be cut by a lot more than 20%.

4. Allow the government to negotiate with drug companies - $220 billion.
This should have been done long ago, and would create more savings than the proposed cuts to Medicare. And it's something that other countries routinely do. If Canada can negotiate with the drug companies to save their citizens money, why can't the U.S. do it? The answer is, of course, that too many of our congresspeople have been bought off by Big Pharma.

5. Enact DoD-friendly cuts to the military budget - $519 billion.
We currently spend nearly half of the entire world's military spending (and more than the next 15 or 16 biggest spenders put together). There is simply no good reason for us to continue doing that. Much of it is because we continue to fund corporate projects that either don't work or the military has said is not needed. We could easily cut this amount without hurting our defense capability -- and still be spending far more than any other country.

6. Enact the Fairness In Taxation Act, which would create new and higher tax brackets for those making over a million dollars - $872.5 billion.
These brackets would range from 45% for millionaires to 49% for billionaires -- and those new brackets would still be far less than those groups had to pay during the Eisenhower administration, when the top tax bracket was about 90%.

7. Eliminate corporate tax loopholes - $1.24 trillion.
This one thing would bring in 10 times the amount that going to a chained CPI would bring. And there is no reason why these corporations shouldn't be paying their share of taxes -- especially when you consider that their profits are bigger than they have ever been (and they are currently sitting on trillions of dollars -- much of it hidden in off-shore accounts).

8. Create a financial transactions tax for high-volume Wall Street trading - $1.8 trillion.
This tax could be very low (like 0.5%) and still bring in a huge amount of money to our treasury -- and it makes a lot of sense. If the poor, and other Americans struggling to survive must pay sales taxes when they buy goods and services they need, why should the financial giants get a free ride on their high-volume trading?

All of these are good ideas that would not hurt vulnerable Americans -- and all of them would balance the budget much faster than the crazy chained CPI idea.