The Blueprint for a Balanced Budget

America’s annual budget deficit is $1.3 trillion, and yet, Barack Obama and the Democrats refuse to seriously cut spending or to submit any budget that would seriously address the deficit.

Amidst this fiscal crisis, some are calling for deep defense cuts as a supposed solution. But the truth is that cutting defense, even deeply, would not even halve the budget deficit. Even proceeding with the sequestration of defense spending would not even dent the deficit. All that it would accomplish would be to gut America’s defense.

Meanwhile, some others propose steep tax hikes as a solution. Senate Democrats, led by Harry Reid, and Barack Obama even demand that as a condition of any budget deal and any agreement to stop the sequester. That would also be a mistake. Tax hikes do not reduce budget deficits; they increase them. Recall that, when George H. W. Bush agreed to steep tax hikes, the deficit almost doubled, from $156 bn in FY1989 to $290 bn in FY1992, when the voters rightly booted Bush out of the White House.

Defense should not be cut (at least not beyond the First Tier cuts mandated by the Budget Control Act of 2011), and taxes should not be raised. Instead, there is a better way: cut nondefense spending, discretionary and mandatory alike, and reform America’s extremely complex tax code. Here’s the deal.

Federal department abolition

Six federal departments should be abolished: the Departments of Health and Human Services, Education, Energy, Commerce, Agriculture, and Labor. The DOE’s defense-related programs should be transferred to the DOD, the Centers for Medicare and Medicaid should be retained but made independent, and the Bureau of Labor Statistics should be retained as a non-departmental agency.

Abolishing the Department of Education alone would save $122 bn per year according to Tea Party Nation. Abolishing the Department of Agriculture would save $130 bn per year according to NRO columnist Victor Davis Hanson.

Agency abolition

In addition, the following agencies should be abolished: the Occupational Safety and Health Administration, the National Labor Relations Board, the EPA (which would save $9 bn per year), the BATFE, the US Institute of Peace, the Peace Corps, the Americorps, the National Endowments for the Arts and the Humanities, the TSA (which should be replaced with private contractors), the Federal Transit Administration, the Fish and Wildlife Service (FAWS), the Government Printing Office, and the IRS (which would save over $10 bn per year).

Agency mergers

The following agencies should be merged with each other:

  • The Secret Service with the US Marshals;
  • The National Institutes of Health with the Centers for Disease Control and Prevention;
  • All agencies handling export licensing and export law enforcement, which should be conducted together with a comprehensive reform of America’s outdated export control system;
  • The Customs and Border Protection Agency with the ICE and the Border Patrol.

Program mergers

All federal programs found duplicative by the GAO and not run by any of the departments or agencies slated for abolition as stated above, must be merged with each other by topic. This should mean, among other things, mergers of welfare programs, thus reducing their number, their cost, and their duplicativeness dramatically.

Program termination

In addition, the following programs should be terminated:

  • The Temporary Assistance for Needy Families.
  • All foreign aid programs except foreign aid for Israel.
  • All DOS anti-HIV and child nutrition programs.
  • Funding for UN peacekeepers.
  • Dues to the UN.
  • Payments to the IMF.
  • Any subsidies for anyone or for any company.
  • Any funding for any sanctuary cities.
  • Any “Muslim outreach”, “climate change” or “climate research” programs – whether at NASA or elsewhere.

Welfare reform

The Congress should enact a comprehensive welfare reform, modeled on, but stronger than, the welfare reform of 1996 (which pertained to only one program, TANF), and stronger than the Welfare Reform Act proposed by the Republican Study Committee.

Furthermore, unemployment compensation should be tied to a job training program.

Tax reform

The Congress should adopt the FairTax, replacing America’s current huge, 66,000-page tax code with thousands of loopholes, 6 personal income tax rates, and multiple forms of double taxation with a simple, flat sales tax, to be administered by state governments (45 of which already levy a sales tax). It should also repeal the 16th Amendment so that the federal income tax can never return. Alternatively, Congress should enact a flat income tax at a rate of 15% with only two deductions – one for children and one for the taxpayer’s home.

Entitlement reform

The Congress should:

  • Means-test the Social Security and Medicaid programs.
  • Use FedEx’s methods of fraudbusting to root out fraud from these programs, which costs at least $120 bn per year, as proposed by former Speaker Newt Gingrich.
  • Make no changes (other than those described above) for anyone over the age of 55.
  • For younger workers, the retirement age should be increased gradually to 66, 67, 68, and ultimately 69 years (by 2032).
  • The Congress should also allow all workers younger than 55 to choose between the existing system or leaving the current system and contributing solely to their own IRAs or 401(k) accounts. In other words, the Congress should adopt the Chilean model.
  • Medicaid should be block-granted to the states.

Other policy changes

The Congress should:

  • End the Afghan War by no later than FY2015 and use all the resulting savings for deficit reduction.
  • Replace the $1, $2, and $5 notes with coins.
  • End the War on Drugs, and tax drugs. (The savings would amount to $77 bn per year.)
  • Legalize and tax gambling.
  • Terminate the purchase of naked body scanners.
  • Cut its own budget by 20%.
  • Stop printing documents and start using electronic documents only.
  • Reduce the budget of the Executive Office of the President by 50%.
  • Reduce the federal travel budget by 50%.
  • Reduce the federal vehicle fleet by 50%.
  • Ban all earmarks and “Committee Initiatives” permanently.
  • Repeal the Davis-Bacon Act, the Dodd-Frank Act, and the Sarbanes-Oxley Act.
  • Repeal President Obama’s healthcare plan.
  • Order NASA to utilize private space companies to the maximum possible level and reduce its budget by 10%.
  • Privatize Farmer Mac, the TVA, the NPR, the Corporation for Public Broadcasting, Amtrak, AIG, GM, and Chrysler.
  • Gradually sell federal lands.
  • Authorize offshore oil drilling, drilling in the National Petroleum Reserve – Alaska, in the ANWR, and in shale formations.
  • Deny any benefits to illegal aliens.

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