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RC Holiday Bonus: Vote for the Best Fiscal Ciffhanger!

Original post made by Tom Cushing on Dec 18, 2012


If you'll return with us now to the tales of yesterweek, you may recall that the Concord Coalition's game of Principles and Priorities invites players to resolve the Fiscal Cliff in their own fashion, according to the financial implications of 41 federal budget choices. Below are brief descriptions of the three finalist teams' solutions, chosen because they actually completed the game -- under less than waterboard-level duress (if only slightly, in one case).

You may vote for the Winner by emailing your choice to dxraucouscaucus@gmail.com , between now and midnight, Christmas Eve. There's a Primo's best pizza riding on the outcome, and who knows, the winner might share!

To achieve a (ahem) balanced approach, spending and revenue collections were divided into four categories: General Spending, Defense/Security, Health Care/Social Security and Taxes/Revenues.

The "Responsible Moderates" team may sound like a mythical beast to folks at both political extremes, but they weighed-in to cut General Spending by $123B, modernizing roads and schools, but cutting allocations for NIH and water quality, and ending farm and AmTrak subsidies. They would also eliminate the one-dollar bill. They cut Defense by just over $1 Trillion ($872 of which assumes orderly withdrawal from current miss-adventures) and Health Care/Social Security by $1.51 Trillion, notably by block-granting Medicaid long term care, and raising both Medicare premiums and the taxable earnings cap for Social Security payroll taxes (actually a "revenue enhancement"). Under Taxes, they'd reform the system into three simple brackets -- 10/16/26%, thereby raising $1.3 Trillion. Finally, they'd end oil/gas subsidies, raise the gas tax by 25 cents and tax global corporate profits, thereby raising another $415B. NET budget effect: 10-year surplus of $4.4 Trillion (and massive unemployment among tax lawyers).

The "YanquillaDoras" saved $78B in General Spending, (agua, escuellas y NIH -- si! Roads, no!). Their Defense cuts were slightly higher at $1.05T, cutting some R&D and a missile defense upgrade. Health Care/Social Security was also similar to the RMs, at $1.46T; they would further regulate med-mal lawsuits and punitive damages. As to Taxes, the Yanquis would keep the current system, let All Bush2-era tax cuts expire, phase-out the mortgage deduction, end oil/gas subsidies and tax global corporate profits, thus raising $373B. Net budget effect: $2.96T surplus over 10 years.

Finally, the "AlaMojos" would cut deeper into General Spending " they don't like schools, roads, NIH, water or AmTrak, but they'd keep the sawbuck, all to the tune of net $235B saved. Defense was similar to the others, at $1.05T saved. In Health Care, they'd "save" the same $457B from the payroll tax hike, but, as oldsters, they were kinder to Medicare/Aid, saving about half the amounts of the other two teams ($727B). Again taxes were a major differentiator, as they'd extend the Bush2 rates only under $250K incomes, impose a surtax on incomes over $1 million, and they would continue mortgage and charity deductions: netting-out that category at -$2.17T. Overall, the AlaMojos left us $160B in the hole, over 10 years.

Here's an attempt at a 10-year summary chart -- if it fails to convert, I will send you the detailed spreadsheet, upon email request.

RespMods Yanquis MoJos

Gen Spend $123B $78B $235B

Defense $1.01T $1.05T $1.05T

HC/SocSec $1.51T $1.46T $727B

Taxes $1.75T $373B -$2.17T

TOTAL $4.39T $2.96T -160B

Now, don't you think you could have done better; don't you wish you'd entered? Too bad, no pizza for you -- but you can still help pick the winner, so please vote!

Comments (2)

Posted by Roz Rogoff, the San Ramon Observer
on Dec 19, 2012 at 1:30 pm

Roz Rogoff is a registered user.

Tom,

The Fiscal Cliff is about as real a danger as the Mayan end of the World Actually if the World ends in two days, we won't have to worry about the Fiscal Cliff at all.

However, Paul Krugman says not to worry about it. Here's a link to a column he wrote over a month ago. Web Link

Interesting observations, no?

Roz


Posted by Tom Cushing, a resident of Alamo
on Dec 19, 2012 at 3:35 pm

I'm a big Krugman fan. The Mayans, not so much. If they were so good at seeing into the future, they should've done something to head-off their own collapse. Global warming lesson?

Krugman is right about the "cliff." The only potentially very damaging element is the otherwise meaningless debt ceiling, again. If we self-inflict that wound, again, it may truly be a sign of a well-deserved, coming apocalypse.


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