- Entitlements for Senior Citizens: $1.15 trillion ($700B for Social Security, $450B for Medicare)
- Income Security Programs: $770 billion ($290B for Medicaid, $480B for other programs)
- Veteran Benefits: $60 billion
- Debt Service (i.e. interest payments): $140 billion
- Defense Spending: $710 billion
- Everything Else: $760 billion
After the jump are the ideas. These are necessarily long-term ideas. Even the easiest of them would take a decade to implement, but the journey of a thousand miles begins with a single step. A decade from now, I will still only be 35, and, with any luck, most of the current Congress will no longer be screwing up our country.
(1) Don't tax and spend...Spend and tax!
Let's face it. We need to raise taxes. Over the past generation and a half, the amount of our economy that is made up by the federal government has expanded by leaps and bounds, and the federal income tax rate has steadily declined, with the exception of a tiny boost during the Clinton era. In order to sustain the federal government (which I think is a good thing) taxes must be higher.
Let's put this in perspective. If you simply threw away Social Security and Medicare, we would have just about an evenly balanced budget. The story of the Silent Generation (and now the Baby Boomers) is this: Complain about out-of-control government spending while demanding free money. You want to talk about fiscal responsibility? First pass a new law that says that every person over 65 who votes for a Republican has to forfeit all Social Security and Medicare benefits. We must raise taxes.
However, in the short run, while our economy is still in the tank, spend! Pass another stimulus package to prime the economy, and then raise taxes once the economy gets going. There are plenty of places where stimulus money could jump-start new project and new jobs: I sat on a train for two hours in the middle of Connecticut today because Amtrak can't run a train from Boston to New York without something breaking down.
(2) A Stitch in Time Saves Nine...and a Country
The American approach to alleviating the effects of poverty is backwards. As I showed above, income security makes up 21% of federal expenditures. Poverty is an enormous drain on our economy, and we're fighting it all wrong.
Consider the following: In the United States, prenatal and neonatal medical care is so poor that we rank 44th in the world in our infant mortality rate (with 1st as the lowest). Eight percent of births are underweight (compare to less than 6% in Canada). On the educational side of things, one in eight American children has fewer than ten books in the home (compare to 1 in 15 in Canada). Poor children hear only a fraction of the number of words than their middle-class or wealthy peers do. You can put all the money you want into elementary and secondary education, but if a child shows up to first grade not knowing how to read, you're starting from a huge deficit.
The money that we pour into welfare, medicaid, and education can be drastically reduced if we target funds earlier. Prenatal care, neonatal care, activities for infants, early childhood education. These things are the silver bullets that can prevent children from continuing the cycle of poverty. This action has to be undertaken locally, but states have no money, and more likely than not the money (and the political will) will have to be federal.
(3) Fix Health Care. No, really fix it.
The United States pays more per capita than any other country for health care. And it doesn't have to be this way. Most of that money does not make care any better. As this New Yorker article describes, costlier health care often means worse health care; we are victims of a fee-for-service system that rewards over-treatment of patients. There are many causes of our spiraling health care costs (which I will not get into here), but we need systemic change on this front. How we do this I am not sure. How the federal government can help I'm not sure. But something needs to be done.
(4) Cut Defense Spending
Perhaps the most politically dangerous suggestion on my list is cutting defense spending, which makes up about 50% of all discretionary spending. Look at this entry from Matthew Yglesias. Defense spending today is higher in real dollars than it was at the peak of Reagan-era spending, when we were trying to make the Soviet Union collapse in upon itself. Granted, a lot of it is going to Iraq and Afghanistan, but we should make it a top priority to reduce those line-items in the federal budget as quickly as possible.
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