Tuesday, July 12, 2011

If the Debt Ceiling is Not Raised, We Can Still Survive. We Can Even Keep Social Security and Medicare Untouched.

A great article from American Thinker that shows one possible way to balance the budget if the debt ceiling is not raised, without defaulting, and without cutting Social Security, Medicare, or military pay. And since we're talking about this year's spending, with revenues already in, any revenue increases would be irrelevant here.

A couple key numbers:

The Office of Management and Budget (OMB) estimates that FY2012 revenues (starting Oct. 1, 2011) will be $2.6 trillion. That is more than the federal government spent in any year prior to 2006.

Since 2006, federal spending has risen to $3.7 trillion, a mind-boggling 29.5% increase in spending.

How does this author balance the budget? For one thing, he cuts defense spending to 2005 levels, while leaving military pay untouched. He also eliminates foreign aid (why do we still give foreign aid?), cuts Medicaid back to 2005 levels, eliminates federal income security programs (welfare, food stamps, etc) except for disability and unemployment, and eliminates the Department of Education and the Department of Energy. He makes the point that neither department existed prior to 1980. Also, he points out that Department of Energy spending totaled only $429 million as recently as 2005, but has grown 50 times bigger in the past 5 years as a result of Obama's "green initiatives."

Do I like everything about this plan? No, I'd tweak the numbers a bit. I'd probably make modest cuts to Social Security and/or Medicare through means testing, preserve funding for federal financial aid to college students, and keep income security at 2005 levels instead of eliminating it completely. But the point remains: Even in a worst-case scenario where the debt limit is not raised, we can avoid Armageddon.

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