The United States has a revenue problem as much as a spending problem. Using the trends of the last 100 years, by 2030 we will have a GDP of over $23 trillion per year. Using current current budget percentage rates we will have a federal budget of almost $6 trillion if we stay at 25 percent of GDP, which seems reasonable for a first-class country. But we only take in 18 percent in revenues. This is why we keep going more and more in debt.
To pay off our current debt of $14 trillion in 20 years, we need part of our budget to be surplus now. Let’s assume that 20 percent of the debt will never be paid off, as it is owed to ourselves in the form of pensions, mutual funds and personal retirement funds that will continue to roll over through generations. Thus, to pay off $12 trillion in 20 years we need a surplus of $600 billion a year, simplistically, paid to the debt.
Using the same trend analysis, in 20 years we will have another 60 million in our U.S. population and they will be almost twice as productive, from $47,000 per capita today, to $72,000 per capita in 2030. So it is likely that the tax base along with the economy will grow to cover the revenues/budget we need if we also do the following:
Put $600 billion a year of the current spending level toward the debt.
Cut $100 billion from the military budget, and then keep it at no more than 20 percent of the federal budget overall.
Cut billions out of the $400 billion spent on interest payments. Forty percent of the debt is owed to the Federal Reserve. For every 1 percent change in interest rate we pay per year, we pay about $100 billion and we currently average over 3 percent, so negotiate this down in order to spend less on interest payments. And as we have less debt, our Treasury bill will go down as well.
Cut oil subsidies by $50 billion, out of the $75 billion we spend now.
Cut billions out of the $500 billion we spend on health care entitlements — not with fewer services but with lower costs. We will lower costs of health care with competition for basic care via high deductibles and thus reform the health care system itself, and have regional health care funds for catastrophic needs, to take the burden off of business.
Move eligibility for Medicare and Social Security for everyone under 40 to age 70. After all, 70 is the new 60.
Invest $200 billion in infrastructure every year. Go into long-term debt for long-term investment and take advantage of lower interest rates. That is only 20 percent of what is actually needed.
Increase revenues to 25 percent of GDP with the higher burden on those who have been able to take the most advantage of the great infrastructure of this great country.
We must all come to some common understandings of where we want to be as a country in 20 years. This discussion is not about the little domestic spending items that bog us down. It is about the big things. We are a great nation and it takes money to make it run. We can debate how revenues are raised as long as it is fair, as long as it gives incentives to for a healthy middle class and builds jobs here at home. And as long as it keeps us a clean, healthy and free land of prosperity for all.