Some research notes on the Federal Deficit

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New Revenue: The plan, which relies on roughly equal parts revenue increases and spending cuts, proposes removing the cap on the employer side of the payroll tax, which raises about $76 billion in 2015; imposing a new fee of $5 per barrel on foreign oil imports, to raise about $22 billion; and applying a new surtax of 2 percent to adjusted gross income above $1 million, and an additional 3 percent to adjusted gross income above $10 million, to raise about $29 billion. These increases would raise federal revenue to about 19.8 percent of GDP, which is higher than it was under the Bush administration, but lower than when President Clinton brought the budget into surplus.

Spending Cuts: The plan also lays out about $128 billion in total spending cuts in 2015, including about $60 billion in defense spending cuts, $35 billion in tax expenditures (which are essentially spending programs that are administered through the tax code), and $12 billion in non-defense discretionary cuts. The plan would also cut $3.8 billion from in agricultural subsidies and index all relevant federal programs to the chained Consumer Price Index for all Urban Consumers, which would result in “slower increases to those aspects of the code that are indexed.”

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  • From the Congressional Budget Office is this report with the following chart showing how Medicare costs are going to drive future budget problems:

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  • The NY Times has an interactive application to let you play with federal budget numbers (check the boxes to enact it). I don’t quite agree with the it. For example, eliminating ear marks would not reduce the deficit. Also, the consequences are not identified such as how many people people would be affected. Heather Thorn explains why it’s not so easy (e.g. “yes, balancing the budget is easy. Provided you never need to run for election yourself.”)

  • Here is an older calculator that lets you fix the budget entirely by assuming our per capita health care costs match other industrialized countries.