A friend of mine sent me this link – and I was having a great time playing with it. I can’t embed this deficit calculator on this blog, but here is a link to the Center for Economic and Policy Research’s Deficit Calculator.
With the 2010 House of Representatives elections as well as the 2010 Senate races coming up and the majority in both houses up for grabs – the budget is going to be a huge bone of contention.
Although I can’t embed the calculator – I did play with it – here is what I came up with – There I just solved one of the nation’s most pressing problems!
1. Meet the Deficit Calculator:
The blue bar indicates where the deficit will be by 2020 if things are unchanged. The deficit will be approaching the 90% mark which is a tipping point according to Ragoff & Reinhardt where growth performance in economics starts to deteriorate. (When the debt/GDP ratio = 90%) By clicking the options on the left side – you can select “Policies” that will either reduce or increase the deficit.
2. Change the World! Decide how to reduce the debt to GDP ration!
Some surprising results:
The two most effective methods of reducing the deficit were:
A. Being allowed to negotiate medicare drug prices. This whacked 10% off the deficit by taking $2.1 trillion out of the budget. That put the debt to GDP down to 75% in one shot.
B. Another 2.1 trillion would be whacked off if our government would impose a financial speculation tax. This is a tax that would barely touch long-term investors. It would impose a 0.25% transaction tax on equities. First of all, I find that number staggering because it implies how much trading is going on. People who are trading by the hour or by the minute – large hedge funds and the investor class are largely responsible for the massive amount of trading that this figure indicates.
So, how does that blue bar look after implementing these two actions?
In this scenario the debt to GDP ratio is down to 66% or just 6% shy of the Maastrict Treaty – which was the debt target set for membership in the Euro Zone – a largely ignored number – but a goal that would put our country into safe financial waters.
C. A quick end to the wars in the Middle east would take another 5% out of the debt to GDP ratio – putting the ratio just 1% above the Maastrict Treaty.
But those are my ideas – What are yours? Have fun with the link.
© 2010 – Ruthmarie G. Hicks http://AmericasBrokenbraintrust.com All rights reserved.
Pretend you are POTUS: Solve our deficit problems using the CEPR deficit calculator
