Balancing the budget: Tucker’s approach

My son, Tucker, is in grad school now, in the MPP (Master of Public Policy) program at the University of Utah.  For a class assignment, he was asked to balance the federal budget.  He created a spread sheet, looked at opinion polls, and, without raising taxes, by cutting spending only, eliminated the deficit.  (He was also not allowed to use any dodges like ‘eliminate waste and corruption’). His baseline was the budget for the 2010/2011 fiscal year; those being the most recent reliable figures available to him. Turns out it can be done!  You can actually balance the budget without raising taxes.  Yay.

He began by cutting military spending by 60%.  He dismissed 60% of all current military personnel, and closed 60% of all military bases world-wide.  This would reduce our ground forces to their lowest level since before the Second World War.  But we would still spend more on the military than any other country on earth.  So we’d probably still be fine.  (All those men and women currently serving their country would simply have to come home and find a job).

Tucker then proposed cutting $181 billion from Medicare.  He would cut $75 billion from hospital insurance, $75 billion from supplemental hospital insurance, and $20 billion from prescription drugs.  This probably would mean that most hospitals and providers would refuse to accept Medicare patients, but, as Tucker put it, ‘that would encourage a robust private market’ to help those seniors’ able to afford it.

He cut $144 billion in income security.  This would involve a 50% cut in military retirement benefits, a 33% cut in unemployment benefits, a 14% cut in food stamps, a 43% cut to low income housing subsidies, and massive cuts to the Child Tax Credit and Earned Income Credit. It would be good for poor people to be booted out of the hammock of government dependency.

He decided to only cut Social Security by 11%.  This was accomplished by raising the retirement age to 70, by means-testing benefits, and by cutting all benefits by $50 billion, including $15 billion from disability benefits.

Other Health sector costs were cut by $80 billion, which he achieved by massively cutting mental health and substance abuse programs, cutting the NIH budget by 33% and Indian health benefits by 50%.  He would also cut $60 billion from Medicaid grants to states, instituting a block grant program similar to the one proposed by Paul Ryan.

The Veteran’s Administration lost 28% of its budget, with $15 billion cut from Veterans’ hospitals and another $15 billion from Veterans’ compensation and pensions.  He also cut Education programs by 33%, with $9 billion cut from elementary and secondary education, and $10 billion from higher education.  Bye-bye Pell Grants.  He also eliminated the American Opportunity Tax Credit.

Foreign aid is never popular with voters, and so Tucker cut it drastically, a 50% hit on all foreign aid, including $5.5 billion in international security assistance, and $3 billion from State Department operations.  So much for preventing another Benghazi; embassy security is a luxury we can’t afford.  So much as well for cooperating with other nations in fighting the war on terror.

Tucker cut 84% of the $29 billion we spend on Science, Space and Technology.  A lot of this is achieved by eliminating NASA.  He also cut $23 billion from the Justice Department, including essentially eliminating any border security budgets.  He also cut $16 billion from Transportation, $10 billion of which comes from cutting highway maintenance.  Potholes just add a little spice to the driving experience.

Tucker cut $20 billion combined from the Agriculture and Environmental sectors. That gives some idea of the real-world savings achieved if you eliminate the EPA.  It also includes a 50% cut to the National Oceanic and Atmospheric Administration.  We don’t really need to know if a hurricane or tornado is likely to hit.

The last four categories, Commerce and Housing, Community and Regional Development, Energy, and General Government were also cut $15 billion total.  This essentially eliminates FEMA, the IRS, the Postal Service, and all Small Business loans.

Tucker’s budget-cutting priorities were determined by opinion polls.  He decided to just make the cuts people told pollsters they wanted.  Most of these cuts, however, would be unpopular.  The only federal spending cuts that enjoy majority support are cuts in foreign aid.  So although the cuts he proposes to defense spending aren’t actually very popular, they’re comparatively more popular than, say, cuts to Social Security or Medicare.

I also found Tucker’s conclusions really interesting.  Polls consistently show that the public generally supports cutting the federal budget, and generally supports a balanced budget amendment, by fairly wide margins.  But polls also show that people oppose most specific cuts.  Even hard-core rock-ribbed Tea Party conservatives don’t want to cut military spending, Medicare or Social Security.  Foreign aid is generally unpopular, and so is ‘welfare,’ broadly construed.  But no one thinks benefits they personally receive should be eliminated.

This has been a fun post for me–my son did all the work.  Yay!  But me add this: if the Tucker budget were implemented in its entirety, I believe that the result would be catastrophic. It would pull hundreds of billions of dollars out of the economy, resulting in a contraction far more severe than the Great Depression or the 2008 world-wide financial crisis. I also predict that any politician from either party to propose or support the Tucker budget would find his career in American politics to be very short indeed.  ‘

I do believe that current deficits are, in the long-term, unsustainable.  But eliminating them requires a combination of tax hikes and spending cuts gradually phased in.  But whatever approach we take to fiscal policy, we can’t let budgetary concerns slow growth. The goal, obviously, must be to grow the economy.  Absolutely nothing in the Tucker budget would achieve that.

 

2 thoughts on “Balancing the budget: Tucker’s approach

  1. LauraH

    Love your statement about…. all the military men and women will just have to come home and find jobs. I didn’t realize there were so many extra decent paying jobs out there 🙂

    Reply

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