it wouldn't be running budget deficits -- using the figures you provided.

How this is related to my calculations (all of them are based on official documents contrary to your unbacked words)? My calculations clearly shows that you can't even remotely solve deficit even cutting ALL medicine spending.

@jrd

I can even tell you US goverment plans (in many parts it is same as global rulers plan).

1. Fight for resources and try to control as much as you can.
2. Actual military spending increases fast, but is being transferred to private armies who get their income from controller resources.
3. Use all power to force partners and big bank clans to buy treasures. Media is used now only to cover this.
4. Repeat steps 1-3 until some really big problems (preferable one with nuclear weapon usage) occure. Use this problem to drop life level to reasonable amounts. But still control big amount of resources that you got on early stages.
5. Global clans will use problem to throw out local goverments. I expect about 30-50% of countries will be completely eliminated and teir goverments will lost all military and financial soverinity.

@ghkqn

Since social security is a "pay as you go" system -- current workers pay for the benefits going to retirees --and is not funded from general revenue or other taxes, how exactly does it contribute to the deficit?

It's true that the social security trust fund will be exhausted in 2037, and that the system will only be able to pay around 75% of scheduled benefits thereafter, if nothing is done to shore up the finances in the next 25 years, as has been previously done several times before.

But to listen to politicians, the only way to avert this terrible potential result (75% benefits) is to cut benefits now! In other words, to avoid potential benefit cuts in 2038, we need to cut benefits now.... Make sense? Didn't think so.

Finally, I'm sure you're not going to say that the trust fund is an "accounting fiction", unless you believe that American treasury bonds are worthless, in which case, it won't much matter what we do about any spending....

@Vitaliy_Kiselev

Your chart indicates that health care accounts for 25% of the budget -- nearly $1 trillion dollars annually, and it goes up very steeply every year, thanks to the high rate of medical inflation and an aging population. In addition, there are substantial hidden medical costs in the 32% which goes to "Welfare" and "Defense". And we haven't even begun calculating the effect on the private sector -- businesses and individuals would see their health insurance premiums, and/or their medical bills, cut in half, or more, under a socialized medical care system.

Currently, about 17% of the US GDP goes to medical costs -- this is a HUGE drag on American productivity and its competitive position world-wide. The country would be far more competitive and prosperous if it reverted to the 9% norm in the rest of the industrialized world.

So let the Bush tax cuts expire as they're scheduled to do (about $400 billion a year), and add up these cost savings, and the budget deficit goes to zero or surplus within the next 5 years.

It's true that the medical care industry would see recessionary effects. But the overall gain in national wealth, diverting money wasted on health care (government economists estimate that about 30% of this money is wasted) to more productive uses, will more than compensate.

V.K.: as a matter of social policy , I'd tax the hell out of the rich, eliminate all wasteful tax breaks for corporations and drastically cut military spending, whether or not any of that was necessary to reduce the current deficit. But, unfortunately, the U.S. government doesn't consult me on these questions!

However, the U.S. budget deficit could be eliminated entirely without doing these socially useful things. The U.S. currently spends about $8000 per person on medical care. And even this high level of spending still leaves tens of millions of American uninsured, with no access to medical care outside hospital emergency rooms.

By contrast, Japan spends a little over $3000 per person -- despite the fact that the Japanese system covers every Japanese citizen, and also despite the fact that the Japanese make heavier use of the health care system than do Americans.

If the U.S. spent what the Japanese do, starting next month, the U.S. budget deficit would disappear. This is thanks to high costs associated with Medicare, Medicaid, the Veterans Administration and other government funded health-care programs.

Of course, in order to pay what the Japanese do, we'd need a socialized system of medical care which earns much lower profits for hospitals, drug companies and doctors. And given the choice between restricting the profits of big business and accepting the kind of socialized medicine which has been adopted in every other industrial democracy, with great success, most American politicians would prefer to drive the American economy into bankruptcy.

Believe it or not, the U.S. budget deficit would come into immediate balance if the U.S. spent the same amount on medical care, per capita, as the rest of the industrialized world -- countries which cover all their citizens, rich and poor, and get better medical outcomes than we see in the U.S. However, corporate America opposes socialized medicine (which, you may have noticed, isn't killing people in Canada, France Germany, Japan, etc.) , so Americans can't have it.

Much as some "conservatives" don't like to hear this, Social Security is an income transfer program with no effect -- zero -- on the deficit. And the mortgage income deduction is a drop in the bucket -- not even worth discussing, given the larger issues.

And despite the fact that American "defense" spending is bloated to the point of obscenity, and the rich in America are preposterously undertaxed compared to other countries, and some of our most profitable corporations (such as General Electric) pay "negative" taxes (the government actually pays them), the main cause of deficits in the U.S. today is the price of medical care. Even if the government eliminated Medicare entirely, medical costs will eventually bankrupt the country at their current rate of inflation.

The cart below demonstrates what happens to U.S. deficits, if U.S. spending on medical care were at the same levels as the other indicated countries. You'll see that the U.S. would actually be running budget surpluses, if in future years we spent the same per capita amount that they do in (for example) Canada or Germany . If we spent what they do in Britain, our budget surpluses would be even higher -- nearly 10% of GDP.

For the home interest, 100 billion a year in new revenue seems to be the agreed upon figure.

First, if you remove tax cuts in about 8blb month it'll mean that spending will drop by same amount and you'll loose other taxes in at least 50% of this. Next will come house selling problems and house building companies problems. So, in few month you can be back to 0, or, most probably in even more deficit.

Medicare is the giant elephant though.

Yep, but any attempt to cut in this areas will mean more problems.

About "100 billion here, a 100 billioin there". Deficit is about 200 bln / month, normal payments to start debt return are about 100-150 bln month minimum. Total expanses are about 370 bln. Generally, with proper cuts, we are talking at huge life level drop, closure of 80% of small businesses and return of wild capitalism without ANY goverment support, even police or schools.

@brianluce

How about provide some numbers? Interesting to see how big will be your proposed cuts.

There are painless ways, raising eligibility age for medicaid benefits

I think many people who will be excluded by this proposal won't think of it as "painless".

@brianluce

I'll tell you big secret.
Any serious attempt to cut spending will result in huge problems.
Most probably economics won't hold such impact.