Hey Congress, College Students Can Balance the Budget
Politicians in Washington, D.C. would like Americans to believe that balancing the federal budget is difficult. President Obama is proud of having reduced the budget deficit back to a number that would be an all-time record high if it wasn't for his first six years in office.
Proponents of big government claim there is no fat left to trim. Even supposed fiscally conservative Republicans like Rep. Paul Ryan generally propose budget plans that have a balanced budget many years into the future, if at all. The reality, however, is that balancing the budget really is not all that hard.
As a professor at The University of Georgia I teach a freshman seminar called "Balancing the Federal Budget In Fifteen Weeks." This year I had fifteen students, all in their first semester in college, representing a wide range of majors. The students learned about the sources of federal government revenue and where all the money went as Congress spent it. They researched proposals from both liberals and conservatives to raise taxes, cut spending, and reform entitlements. They made presentations in class on these various ideas. At our final meeting, they voted on a large set of such proposals until reaching a consensus on enough new taxes and spending cuts to balance the budget.
Please note that the students did not produce a plan to balance the budget in some future out-year. This was right now, FY2015, the fiscal budget year that started on October 1. Based on the latest CBO projections of the deficit, I set the students a target for $500 in new revenue or reduced spending. Unlike our politicians, my students got the job done, and with very little rancor or even difficulty.
On the tax side of the ledger, the students voted to raise alcohol and cigarette taxes to bring in $13 billion in new annual revenue, plus they decriminalized and taxed marijuana to raise another $20 billion in a combination of new taxes and spending cuts.
The big spending cuts that the class passed included repealing unspent stimulus funds ($80 billion) and other unspent balances more than three years old ($20 billion), and a 12 percent cut in defense spending ($78 billion).
Smaller savings were found in eliminating half the vacant federal buildings ($12.5 billion), a $10 billion cut in federal employee travel, repeal of the Bacon-Davis Act which forces the federal government to pay prevailing union wages on projects it funds ($6 billion), using a less generous inflation measure for inflation-indexed payment increases ($8 billion), cutting direct payments to farmers and reducing federal subsidies on crop insurance ($8 billion combined), privatizing Amtrak ($2 billion), and a few other minor cuts.
In terms of entitlement reform, the students cut welfare programs by 15 percent, saving $58 billion, and cut federal healthcare spending by 10 percent ($104 billion). They also gained some savings from making government run better: cutting federal program payment errors in half saves $44 billion while better food stamp eligibility enforcement saves $5 billion per year. They also voted for federal employees to increase their pension contributions ($1 billion per year) and for Social Security benefits to be adjusted for increased life expectancy (saving $10 billion per year).
This combination of taxes, spending cuts, and entitlement reform is estimated to cut the deficit by $502 billion per year, meaning that we could have a small surplus this fiscal year.
The students only raised taxes a little (about 7 percent of their total), with the rest split fairly evenly between entitlement reform (44 percent) and spending cuts (49 percent). Democrats and Republicans will both find some things on this list that they support and some things on this list that they oppose. Entitlements and defense spending take hits; thus, the students were pragmatic more than dogmatic and produced a generally bipartisan balanced budget.
I will admit that $100 billion in savings comes from the one-time "trick" of cancelling appropriated but unspent funds. While this could not be easily repeated, annual revenue growth is sufficient that if a reasonable damper is kept on spending growth, this budget plan could get us to balance and then keep us in that neighborhood.
I have permission to name Brett Black, Rachel Cole, Mickey Dao, York Delloyd, Thomas Gotilla, Logan Kirkes, Madeline Morgan, Michael Pope, John Hunter Sainsbury, and Benjamin Weinhardt as some of the students who managed a task that has eluded American political leaders for most of the past thirty-plus years.
While the students deserve credit for applying themselves, finding solutions, and choosing a pretty middle-of-the-road path to a balanced budget, the message of their success should be harsh condemnation of the politicians' failure. If a class of college freshmen can get the job done in one semester, how can the politicians keep telling us how hard the task is?
Balancing the budget is easy. If Congress and the President don't do it, the reason is that they simply don't want to, not that they cannot. Not surprisingly, politicians like big government and deficits mean politicians are getting to spend more than they tax, a likely way to be more popular (everyone likes free money). Many easy paths to a balanced budget exist; what is lacking is the political will.