U.S. Budget Simulator: Can You Set a Fiscal Policy that will Stand the Test of Time?

[civ_king]

I got it to 36%, too bad there was no way to increase the maximum tax rate to 60% (the way the US tax system works almost no one would pay even 50%)

 

[~Corsair#01~]

This simulator really seems to push the idea that the only way to fix the deficit is through revenue increases rather than spending cuts.

I got the debt down to 54% in 2020 by about a 3:1 ratio of revenue options rather than spending cuts. Didn't go with the moonbase option though.

 

[bugwar]

This simulator really seems to push the idea that the only way to fix the deficit is through revenue increases rather than spending cuts.

I got the debt down to 54% in 2020 by about a 3:1 ratio of revenue options rather than spending cuts. Didn't go with the moonbase option though.

Frankly, I am wondering why a 6% general reduction in annual spending per year won't get the job done in 11 years.
Since I didn't make the browser budget app, I guess I don't get to make that option available for the players.

The Fed pulled in $2 trillion last year, and spent $3trillion. So income was about 66% of expenses.

Drop spending by 6% per year, and in eleven years income matches expenses.
But that would be too easy to understand, and not require a degree in macroeconomics to propose.

 

[Cutlass]

Frankly, I am wondering why a 6% general reduction in annual spending per year won't get the job done in 11 years.
Since I didn't make the browser budget app, I guess I don't get to make that option available for the players.

The Fed pulled in $2 trillion last year, and spent $3trillion. So income was about 66% of expenses.

Drop spending by 6% per year, and in eleven years income matches expenses.
But that would be too easy to understand, and not require a degree in macroeconomics to propose.

That doesn't work because it will cause a major reduction in the size of the US economy.

 

[KMRblue1027]

That doesn't work because it will cause a major reduction in the size of the US economy.

Which in turn would decrease revenues because the tax base will shrink causing the need for more cuts thus an endless cycle begins and the American people are those who lose.

 

[Cutlass]

Which in turn would decrease revenues because the tax base will shrink causing the need for more cuts thus an endless cycle begins and the American people are those who lose.

Conservatives can't be bothered with cause and effect.

 

[bugwar]

That doesn't work because it will cause a major reduction in the size of the US economy.

Let us see if I got this right. Please check my math, I may have the zeros wrong.

The U.S. economy is $15 trillion annually.
The Fed budget is $3 trillion annually.
Six percent of $3 trillion is $180 billion.
$180 billion divided by $15 trillion is about ONE percent.

If one percent is “...a major reduction in the size of the economy”, then I don’t think those words mean what you think they do.

 

[Cutlass]

Let us see if I got this right. Please check my math, I may have the zeros wrong.

The U.S. economy is $15 trillion annually.
The Fed budget is $3 trillion annually.
Six percent of $3 trillion is $180 billion.
$180 billion divided by $15 trillion is about ONE percent.

If one percent is “...a major reduction in the size of the economy”, then I don’t think those words mean what you think they do.

You're ignoring how economics works. It's not a zero-sum-game. All those cuts come out of consumption spending. That means businesses will cut investment and lay off workers.

 

[bugwar]

You're ignoring how economics works. It's not a zero-sum-game. All those cuts come out of consumption spending. That means businesses will cut investment and lay off workers.

Riight.

I keep forgeting that spending $99 dollars instead of $100 is a MAJOR REDUCTION in economic outlays.

 

[KMRblue1027]

Riight.

I keep forgeting that spending $99 dollars instead of $100 is a MAJOR REDUCTION in economic outlays.

That's not how economics works at all. Every amount you add or subtract has exponentially more impact the larger the numbers you use. There is a huge difference between $500 Million and $400 Million. Like Cutlass said it's not a zero sum game and the bigger the number the larger the ripple effect.

 

[Cutlass]

Riight.

I keep forgeting that spending $99 dollars instead of $100 is a MAJOR REDUCTION in economic outlays.

You can ignore economics all you like. Reagan did, and doubled the national debt. Bush did, and doubled the national debt.

We know what happens when we do it your way, because it has been done. And it has a 100% failure rate.

 

[bugwar]

That's not how economics works at all. Every amount you add or subtract has exponentially more impact the larger the numbers you use. There is a huge difference between $500 Million and $400 Million. Like Cutlass said it's not a zero sum game and the bigger the number the larger the ripple effect.

Interesting viewpoint.
So if you can't reduce spending to balance the deficit, how does one keep us out of Greeceland?

 

[bugwar]

You can ignore economics all you like. Reagan did, and doubled the national debt. Bush did, and doubled the national debt.

We know what happens when we do it your way, because it has been done. And it has a 100% failure rate.

So reducing spending to get it in line with your income is not economics?

 

[Cutlass]

So reducing spending to get it in line with your income is not economics?

Not in the real world it's not.

What you are missing is that you are asking the wrong questions. There is no reason that we cannot afford these programs, we are choosing not to afford them. The correct comparison is if you had a 40 hour a week hourly pay job, and you only bothered to show up 20 hours, spent as if you if you were working 40, and complained about the debts. The debts are your choice. But the spending, that is food and shelter, not luxuries and leisure items.

If you cut the budget that much, what you are cutting is food and shelter. The federal government has only small amounts of spending that isn't necessary. Sure, you could end the war on drugs, and cut the military way back. But you don't see the people most whining about the budget proposing those things. Romney actually wants to increase the military budget far above what the military says it needs.

The rest of the federal budget comes down to a fairly small part which is law enforcement, regulatory enforcement, and support for science. And a larger portion which is healthcare and income support. Healthcare is the only place there is a lot of money to be saved over the long run, and that can only be saved through changes to healthcare provision in the country itself, not just the budget.

Income support is more straightforward, and no money can be saved there. More people are old, so more people are owed Social Security. More people are poor, so more people qualify for other income support. You are not going to get major savings out of Social Security no matter what you do. And tossing the poor out on the street to die is not going to save the government any money either, because if you do that you will weaken the economy. And so tax revenue will fall. Not to mention that it directly raises government costs in other ways. Those people don't just crawl under rocks and die.

So you plan to make the economy far weaker than there is any reason for it to be, just so that you can claim that you're spending less money.

Seriously, you are choosing to be poorer because it is your goal to be poorer. Why is it not obvious that people who understand the situation do not want to make the same choice?

 

[Mise]

I got it to 58% by 2021, but tax increases accounted for 2/3rds of the total. It should account for no more than 1/4tr, ideally. I soaked the rich, basically, because it was the easiest way to raise money. I'm not entirely sure how the US federal government wastes its money tbh; I'm more familiar with the UK, so it's difficult for me to say whether the US overspends on e.g. welfare, health or education.

 

[bugwar]

Not in the real world it's not.

What you are missing is that you are asking the wrong questions. There is no reason that we cannot afford these programs, we are choosing not to afford them. The correct comparison is if you had a 40 hour a week hourly pay job, and you only bothered to show up 20 hours, spent as if you if you were working 40, and complained about the debts. The debts are your choice. But the spending, that is food and shelter, not luxuries and leisure items.

If you cut the budget that much, what you are cutting is food and shelter. The federal government has only small amounts of spending that isn't necessary. Sure, you could end the war on drugs, and cut the military way back. But you don't see the people most whining about the budget proposing those things. Romney actually wants to increase the military budget far above what the military says it needs.

The rest of the federal budget comes down to a fairly small part which is law enforcement, regulatory enforcement, and support for science. And a larger portion which is healthcare and income support. Healthcare is the only place there is a lot of money to be saved over the long run, and that can only be saved through changes to healthcare provision in the country itself, not just the budget.

Income support is more straightforward, and no money can be saved there. More people are old, so more people are owed Social Security. More people are poor, so more people qualify for other income support. You are not going to get major savings out of Social Security no matter what you do. And tossing the poor out on the street to die is not going to save the government any money either, because if you do that you will weaken the economy. And so tax revenue will fall. Not to mention that it directly raises government costs in other ways. Those people don't just crawl under rocks and die.

So you plan to make the economy far weaker than there is any reason for it to be, just so that you can claim that you're spending less money.

Seriously, you are choosing to be poorer because it is your goal to be poorer. Why is it not obvious that people who understand the situation do not want to make the same choice?

So I take it that you see no problem with an annual Federal income of $2trillion, and spending budget of $3trillion?

 

[Cutlass]

So I take it that you see no problem with an annual Federal income of $2trillion, and spending budget of $3trillion?

Which has nothing to do with what I actually said. Economic theory says to run deficits in bad times. We are in bad times. The rest of the time taxes should be raised to pay for it. Under current circumstances no responsible person would be looking at significant spending cuts. So if you insist that now must be the time to reject sound economics, then tax increases are the only choice.

 

[bugwar]

Which has nothing to do with what I actually said. Economic theory says to run deficits in bad times. We are in bad times. The rest of the time taxes should be raised to pay for it. Under current circumstances no responsible person would be looking at significant spending cuts. So if you insist that now must be the time to reject sound economics, then tax increases are the only choice.

Sound economics eh?
Run a deficit when things are bad, eh?

Gee, with all those sound macroeconomic theories, pity it didn't work out for Greece.

 

[Mise]

Greece ran a deficit when things were good.

 

[bugwar]

Greece ran a deficit when things were good.

Just out of curiosity, isn't that what the U.S. did?