By Skip Robinson Ph.D.
The U. S. Congressional Supercommittee fell from the sky in flames. (Not that it was any great surprise.) It could not reach its goal to manage a bipartisan agreement for $1.2 trillion or more in new revenues and cuts – which could have significantly begun to flag the lowering of the federal deficit. Their failure, however, does not at all absolve the U. S. as a country from doing more thinking. How could the U. S. Congress save and raise that much money? One crucial characteristic of a democracy is that, especially in times of crisis, it calls on its citizens to think.
Here follow 23 ideas gathered from recent reports of Congressional research offices (which describe 105 methods for finding savings and raising revenues of a significant size). The 23 methods outlined here walk away from the current proposition to use only immense budget cuts and layoffs to reach the goal. Here, instead, you will find a set of methods which could attract independents, moderates, Democrats, Progressives and even libertarians to a number of the methods, including revenue increases on those who have by far the most. These 23 ideas represent a potential $8 trillion in savings and revenues (over 10 years), each one analyzed and estimated by the U. S. Congressional Budget Office and, in some cases, the Joint Committee on Taxation. The CBO and JCT between them considered over 105 options on how to raise revenues and cut costs and, in the analysis, made estimates about how much each method could contribute to lowering the national debt. Each idea could potentially garner wide-ranging support across this country.
Here is a sample list of what could be accomplished: 23 different ways that the U.S. could use to bring in over $8 trillion - in logical savings sources and reasonable raises to federal revenues. A small minority of people and even fewer economists believe that program cuts alone would possibly suffice to work on the debt without horrible effects on our national economy, our much-too-high unemployment rate, and in the lives of millions of U. S. citizens. Most professionals scoff at that notion that cuts alone would do.
The set of actions outlined below (as an example of what could be developed by citizens thinking together) could save almost seven times the goal set for the Supercommittee, which was $1.2 trillion. So even one-seventh of these suggestions would be enough to reach the Supercommittee’s goal.
The sources of these 23 revenue increase estimates and savings calculations are major analytic reports this year by the non-partisan U. S. Congressional Budget Office and the Congress’ Joint Committee on Taxation. The 23 ideas in this report today are taken from among those 105. (These 105 ideas had been studied at the requests of members of Congress. See notes at the end to find on-line access to these reports, if you wish.) The figures presented below in parentheses ( ) are shown in the billions or trillions of dollars of estimated savings and revenue increases over the next 10 years.
These savings are shown here under five general categories: The Nation, The Rich, Business, Ecology, and Self-Defense. (There is also a note at the end that shows five other subjects which have potentially vast dollar value potential toward balancing the budget, but which are not estimated here, beyond the scope of this paper.)
Estimated dollars to be applied to debt reduction
over the next ten years are shown in billions
of dollars (in parentheses below)
The Nation: • Allow Social Security to negotiate its own prescription drug costs ($750 billion estimated savings over ten years); • Increase taxes on alcohol to help offset the actual
destructive costs to society and government ($60 billion over ten year)s; • Keep the new health reform plan in force. (Annual savings estimated from switching to the new national health care reform plan passed last year is $450 billion estimated savings over ten years); • Add a “public” plan to the health insurance exchanges that are being set up as part of the new health care reform plan ($88 billion savings over ten years); • Expand Social Security coverage to include new state and local government employees ($96 billion over ten years).
The Rich: • Increase by 1% the ordinary income tax rates on the top three tax brackets ($139 billion over ten years). • Raise taxes on capital gains ($49 billion over ten years); • Increase the maximum taxable earnings for the Social Security payroll tax ($457 billion over ten years); • Limit the tax benefit of itemized deductions to 15% ($1.18 trillion over 10 years); • On the highest earners, expand Social Security contributions from 12% to 17% ($470 billion over ten years).
***Note: 72-80% of Democrats plus a majority of both Republicans and Independents are known to favor a tax increase on incomes above $500,000.
Business: • Introduce a small financial transactions tax, also called a “Tobin” tax, that is a very, very small fee on market trades. This was introduced here by Nobel Prize Winner James Tobin. (Note that David Stockman, Director of Ronald Reagan’s Office of Management and Budget, set the revenue increase estimate of $100 billion a year or $1 trillion over ten years.) Also note that Europe itself is approaching starting a “financial transactions tax on trades made in financial markets”); • Increase corporate tax rates by 1 percent ($101 billion over 10 years); • End subsidies for oil/gas/coal ($120 billion over 10 years); • Add fee on large financial institutions to help repay costs to the public of federal financial safety net provisions ($71 billion over 10 years); • Eliminate the “carried interest” preferential tax rate that has so benefited managers of financial partnerships such as hedge funds ($21 billion over ten years); • Eliminate “source rules exemption” for exports ($52 billion over ten years); • Tax world-wide income as it is earned, rather than waiting for it to be “repatriated” to the U.S. perhaps years later (if at all). ($114 billion over ten years)
Notes: G.E. just earned $14.2 billion in international profits, including $5.1 billion of profits in the U.S., yet paid no tax. New major news reports catalogue the pattern of nominal tax payments or no payments at all. The New York Times, Thursday, November 3, 2011: “A comprehensive study released on Wednesday [by Citizens for Tax Justice] found that 200 of the biggest publicly traded American companies faced federal income tax bills equal to only 18.5 percent of their profits during the last three years – little more than half of the official corporate tax rate of 35 percent and lower than their competitors in many industrialized countries…Using information from the companies’ own corporate filings…the study concluded that a quarter of the 280 companies owed less than 10 percent of profits in federal income taxes and 30 companies had no federal tax liability for the entire three-year period.” (Corporate taxes used to provide about 1/3 of federal budget revenue; now corporate taxes provide 9 percent.)
Ecology: • Reinstate Superfund taxes (about $25 billion revenues over 10 years.); • Impose a price on emissions of greenhouse gases ($1.2 trillion over ten years); • Eliminate Department of Energy loan guarantees for construction of new nuclear power plans and reactors. (approximately $36 billion over ten years).
Self Defense: • Reduce funding for the Defense Department by 1% per year ($862 billion savings over ten years); • Put in place the proposed self-imposed Defense Department cost-reductions they offered ($33 billion a year, would lead to about $300 billion over ten years); • Cut the number of aircraft carriers to 10 and the number of Navy Air Wings to nine ($620 billion over 10 years)
Note: Five other categories of savings or revenues show potentially major capacity to lower the federal deficit: **Eliminate duplicative federal programs as recommended by the General Accounting Office (vast potential $ savings); **Bring troops (and consultants) home from Afghanistan ASAP; ** Increase estate taxes on larger estates; ** Institute a “windfall profits tax” on “big oil; ** Draw down U.S. troops abroad faster.
Note: The Pew Research Center and others report that 56% of Americans want to accelerate troops coming home.
The estimated savings overall from these 23 savings and revenue increases, taken together, could lower the federal deficit over 10 years by over $8 trillion. Since the Congressional “supercommittee” had been aiming to reach over the next ten years $1.2 trillion of new savings and revenues to go into debt relief, this sample gathered here of 23 methods has the capacity to generate almost seven times that goal. Remember, if even one-seventh of the ideas on this list could be negotiated, that figure would reach or surpass the $1.2 trillion goal.
Skip Robinson Ph,D. lectures in Psychology at Sonoma State University. He has taught at the University of San Francisco, University of California, Berkeley Extension and, San Francisco Extension, Seattle University, as well as with the Conflict Resolution, Research & Resource Institute, Inc. (CRI), Tacoma.
Note #1: The Joint Committee on Taxation report (March 2011) is titled Estimates of Revenue Provisions Contained in the President’s FY 2011 Budget Proposal. This was the primary analytic tool used here. The Congressional Budget Office report is titled Reducing the Deficit: Spending and Revenue Options. If you wish, on the web, just Google those report names.
Note #2. Although not included in these revenue and savings figures above, consider the opportunity for the U.S. to renegotiate NATO dues to reflect an equal cost per GDP from each of the large member nations. This might save the U.S. as much as half its current obligation, which would be, if I understand the math, in the range of $150 billion per year. (It would seem fair that now, in the U.S.’s present economic condition, in general it cannot afford to quite so deeply subsidize the world.)
Note #3: Many thanks for the invaluable and timely assistance of Ms. Alene Seward,
Office of Congresswoman Lynn Woolsey, for her help, including putting me in touch with recent CBO and JCT reports which show these suggestions for such robust potential savings and revenue increases.