Spending Cuts – Confronting Our Inevitable Fiscal Challenge
By Kenneth D. Price
October 07, 2012
In a GraniteRG.com published paper, Rethinking Fiscal Policy, I argued that President Obama should have repealed the Bush Tax Cuts as he indicated he would during the 2008 presidential campaign. Then House Speaker Nancy Pelosi pushed for this action as early as February 2009, but the Obama Administration failed to take action at a time that preceded talks on unemployment insurance extension.
My basic premise for this and other fiscal actions centers around looming fiscal realities. Namely, that the at some point, revenue and/or spending measures must be taken. And that the Middle Class and lower-income households would more deeply feel the sting of necessary fiscal measures the longer our nation delays addressing its fiscal condition.
CHALLENGES WE CANNOT IGNORE
Budget cuts are unavoidable. Despite the Labor Department’s U3 unemployment rate at 7.8% for September 2012 — a figure that only surveys 50,000 households — the U6 more accurate measure of unemployment remains at 14.7%. Further, at 1.7% annualized growth as of 2012-Q2, Real GDP remains sluggish, with a number of economists fearful of a recession in 2013. And the Fed buying US debt, artificially props-up the economy temporarily, but cannot continue indefinitely. Indeed, at financial markets will feel a drastic correction at some point unless major economic and fiscal conditions improve.
The American people — whether Democratic, Republican, Green Party, Justice Party, or Independent — would be wise to begin thinking about the budget issues. Presidential campaigns are maneuvering to avoid the undesirable choices before us. However, cuts are coming irrespective of who wins in November 2012.
What federal spending cuts would you propose for policymakers? This requests your ideas. For each idea, include:
1. A spending category/line items e.g., Defense, Community Development Block Grant.
2. Amount of reductions, and if applicable, the schedule of percent reductions.
3. Rationale for this idea.
Note: This post is for brainstorming purposes. All ideas are welcome. We allow the policymakers and agencies (e.g., CBO) to do the details assessments.
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