progress graph

YES, YOU CAN!   (Balance the Federal Budget)

Give it a try!

Most of us could probably do a better job than the current batch of politicians in Congress.  Here are the major categories of revenues and expenditures in the President's 2012 budget from OMB (Office of Management and Budget).   All you have to do is to find the right mix of increased revenues and decreased expenditures to bring us closer to a balanced budget for 2012, while still keeping essential services intact.   Who knows- it may be easy for you.   Good luck...

Ground rules:
1. Some expenditures are very important to a large number of voters. Cutting them will provoke a strong backlash. This will quickly end your political career.  Although this calculator will allow you to cut those categories, you will see a flashing red warning if you try to do it!

2. We would like the budget to be balanced, with a deficit of 0. However, during a recession, this is not practical. Government expenditures are needed to support the economy, while at the same time tax revenues are smaller. Therefore, at this point in time, it should not be necessary to bring the deficit all the way to zero.

3. In real life, most expenditure cuts and revenue increases can't be done all in one year, and will have to be phased in over a few years. But for the purpose of this exercise, we suggest that you ignore this fact and decide on the actual numbers that you would like to see, as though the changes could be made immediately.

4. You may note that the recent debt ceiling deal reached by Congress, for all the pain it caused, does not balance the budget-- it only takes a first step. You can do much better than that. Your job here is to work on the entire budget for one year. Let's get started...


REVENUES

(per year, in billions)

EXPENDITURES

(per year, in billions)
See www.whitehouse.gov/omb/budget
Click on "Explore the Budget" on that page to see a helpful graphical view of the budget categories
Projected Revenues per 2012 Budget
OMB Historical Tables 2.1: Receipts by Source
Individual Income Taxes 1140.5
Corporate Income Taxes 329.3
Social Insurance 925.1
Excise Taxes 103.1
Other 129.5
TOTAL 2627.5


Change Income Tax Rates
Income
bracket
Rate Additional
revenue
$0 -
$8350
This rate ranged from 20% (in 1960)
to 10% (in 2011)   %
0
$8350 -
$33950
This rate ranged from 24% (in 1960)
to 15% (in 2011)   %
0
$33950 -
$82250
This rate ranged from 32% (in 1960)
to 25% (in 2011)   %
0
$82250 -
$171550
This rate ranged from 49% (in 1975)
to 28% (in 2011)   %
0
$171550 -
$372950
This rate ranged from 67% (in 1960)
to 33% (in 2011)   %
0
$372950 -
higher
This rate ranged from 81% (in 1960)
to 35% (in 2011)   %
0
Total additional revenue (B) 0
Short cut: set all income brackets to the rates that were in effect in:
2011
Obama
1995
Clinton
1985
Reagan
1975
Ford
1960
Eisenhower
(Brackets have been adjusted for inflation)


Possible Additional Revenue Sources
select
Impose a price on emissions of greenhouse gases (88.2 B)  See details
0
select
Derivatives and speculation tax
(63.5 B or more)  See details
0
select
Repeal the December 2010 estate tax reduction  (28.1 B)  See details
0
select
Increase Excise Tax on motor fuels
(increase by 25 cents   -- adds 20.9 B)
Or choose different amount      See details
0
select
Impose a Fee on Large ("Too-big-to-fail") Financial Institutions  (4.1 B)  See details
0
Total new revenues 0


FINAL TALLY

TOTAL REVENUES 000
TOTAL EXPENDITURES 000
DEFICIT (red)
or SURPLUS (green)
(Starting deficit:  0)
000

Congratulations! You have reduced the deficit by more than $150 billion. This is all that the failed "supercommittee" was being asked to do for the first year.
OMBYouSubtotals
SOCIAL SECURITY 747.3 747.3
NET INTEREST on the debt 235.3 235.3
HEALTH CARE
Medicare 479.5
Medicaid 271.5
Other health care 53
Health Research 39.5
Total health care 843.5 843.5 843.5
NATIONAL DEFENSE
Operations 294.2
Other 269.2
Military personnel 155.1
Total defense 718.5 718.5 718.5
VETERANS BENEFITS
Income and housing support 53.7
Health care 51.1
Other benefits 16.8
Total veterans 121.6 121.6 121.6
INCOME SECURITY
Food & nutrition assistance 105.5
Earned income & child tax credits 69.7
Unemployment compensation 94 94
Housing assistance 59.3
Other income security 211.4
Total Income security 539.9 539.9 539.9
EDUCATION & JOB TRAINING
Student financial aid 21.6
Funds for school districts 16
Special education 13.4
Other education & job training 52.2
Total education 103.2 103.2 103.2
TRANSPORTATION
Highways & other ground 69.7
Other transportation 32.4
Total transportation 102.1 102.1 102.1
INTERNATIONAL AFFAIRS
Development & humanitarian assistance 29.1
Other international affairs 17.9
Security assistance 14.5
Total International 61.5 61.5 61.5
NATURAL RESOURCES
Pollution control & other 21.3
Water & land management 20.5
Total natural res. 41.8 41.8 41.8
TECHNOLOGY PROGRAMS
NASA 16.8
Other science & labs 14.5
Total technology 31.3 31.3 31.3
Immigration & law enforcement 30.2 30.2
Response to natural disasters 16.4 16.4
OTHER GOVERNMENT PROGRAMS 136.1 136.1
TOTAL EXPENDITURES 3728.7 3728.7
Total cuts in expenditures0



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