coynedj wrote:One more comment, then I go home and watch the Olympics all night.
Federal spending has increased, but not nearly as much as revenue has decreased. If the deficit is purely a spending issue, then cuts would involve some very difficult choices.
Using the 2011 budget for these figures, I see a deficit of 38% of total spending. So, to get to balanced, 38% of spending would have to be cut.
Defense and internal security take up 20% of the budget. Social Security takes another 20%. Medicare, Medicaid, and CHIP (another medical support program, targeted toward poor children) take 21%. "Safety net" programs take 13%, Interest on the debt 6%, Federal retiree and veterans benefits 7%, transportation infrastructure 3%, and everything else 10%.
To get the 38%, let's eliminate the "everything else" category, though some of that (such as the Federal court system, food inspection, though maybe not Congressional salaries) is surely worth keeping around. Then let's get rid of the "safety net", quite a choice to cut whenever the economy suffers and thus people are out of work. We need 15% more. Cut the defense budget in half, and throw 25% of the people out of Medicare/Medicaid/CHIP.
That's the kind of cuts that are needed if we define the deficit as 100% spending and 0% revenue.
The problem with this approach is that ultimately, if we don't get the budget in balance over the long run, the government/economy/currency will collapse. To all of our regret.
The problem with increasing taxes is that as taxes go up, the incentive to avoid taxes also increases, so that when taxes are increased, revenues never increase as much as projected.
The way to increase government revenue without damaging the economy and without crowding out private funding (and investment decisions made on market principles rather than political grounds) is for the economy to grow.
While there are undoubtedly economies which can, and should, be obtained within the defense budget, if there is anywhere a society must err on the side of spending more, rather than less, it is defense. Too little on defense is national suicide; too much by contrast will not destroy the nation.
The place to start in cuts, of course, is to eliminate all welfare aspects of the tax code (which you so nicely describe).
Most of the federal bureaucracy could be eliminated, say 85% other than DoD and 30-40% of DoD (civilian).
Eliminate all entitlements (some will have to be done over time, as with SS and Medicare) and return those functions to the states, but eliminate barriers to interstate commerce in such things as insurance. Local governments and civic charitable institutions can perform those functions at appropriate levels locally more efficiently, with better oversight and knowledge of local conditions. Different states may well take different views of what is appropriate, what work requirements to impose (or not), and what they're willing to pay for, and citizens can vote with their feet. At some point, people are ultimately responsible for their own actions and we should not create incentives to avoid responsibility. Few people begrudge helping the 'deserving poor' (to use a politically incorrect phrase), but national level solutions make it virtually impossible to sort them from those who are not trying very hard to take care of themselves because they think someone else will. The question isn't whether there will be provision for the unfortunate, it's whether it will be administered locally and/or privately where there is immediate accountability to those who are paying, both on the part of the administrators of the aid and the recipients, or at a national level where accountability is almost completely attenuated.
It would also be easier to exclude illegal aliens from all government benefits (other than emergency medical care which would precede immediate deportation).
I don't agree with your point that government cuts would hurt the economy as a whole, though there would surely be short term dislocations, which would be individually painful. Still, 75 years of well intentioned attempts to use the federal government to alleviate economic problems and reduce poverty have helped some, but only at the cost of the destruction of the family structure of the poor and the diminution of the sense of individual responsibility for one's own welfare upon which this country was founded.