
Budget Puzzle: You Fix the US Budget - ojbyrne
http://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html
======
zaphar
Of course no truly creative solutions are allowed in the puzzle. It really
only serves to illustrate how impossible it is if you stay within the bounds
of the current political climate. Not to mention it's a rather limited view of
the problem not really taking into account the various feedback loops each
option has when it feeds back into the economy and thus back into taxes
collected.

Even with all of that said though I like seeing these kinds of exercises
brought to the public to raise their awareness of the issues. I really don't
envy our gov't leadership trying to solve this problem. The sheer number of
variables make it almost impossible to truly predict the result of any action.

~~~
Encosia
I agree that it's too simplistic to ignore the chain reaction of side-effects
those changes would have. I also agree regarding creative solutions, though
how would you even begin to put a user-friendly interface on that?

That said, it was not difficult to find an acceptable solution. As I started,
I thought the moral of the exercise was going to be how hard a problem this
is. As it turned out, I had a solution less than 2/3 of the way into the list.

~~~
jorgeortiz85
Yes, but given all the interests groups affected by the choices, could you get
2/3rds of the Senate to agree with your solution?

~~~
Encosia
Maybe not. At the same time, they eventually aren't going to have a choice,
and waiting only deepens the inevitable cuts. I don't subscribe to any of the
Beck-type fear and paranoia, but I do believe our legislators are going to
find their employer insolvent if they don't work together to get our finances
in order.

------
leelin
The best thing this widget does is clearly illustrate that there is no easy
and painless solution, and that almost all the hot debating in political
campaigns today is over the very small ticket items (earmarks, getting out of
Iraq, etc).

The truly big ticket items are extremely unpopular among most voters: cuts in
social security, Medicare, and huge tax increases on certain groups of people
(the most influential folks). Also, a huge simplification is that we ignore
the impact on the economy; one of the central arguments for keeping the tax
cuts is that it supposedly creates more jobs, as does government workers and
aid to states.

Very cool find, though. Maybe it should be a required exercise before each
election season, just to discourage politicians from focusing on the less
important topics.

One last eye-opener: this only helps plug up the year-to-year budget deficit.
The actual national debt is $13.5 trillion, and should another recession hit
us between now and 2030, we'll be in bigger trouble even if you managed to
balance the budget in this "simulation."

~~~
nkurz
I think that the best thing is that it shows it is possible! More
interestingly, it does not even seem to require all out austerity measures.
For example, if you choose "Cap Medicare growth" and "Reduce the number of
troops in Iraq and Afghanistan to 30,000 by 2013" you are halfway there for
2030 with only those two choices.

Go on to choose "Eliminate Loopholes but keep taxes slightly higher", "Reduce
Tax Break on Employer-provided Health Insurance", "Payroll tax: Subject some
incomes above $106,000 to tax" and the 3 largest cut-military-spending options
and you are done. Sure, these things aren't as side-effect-free as they sound,
but it almost sounds feasible and does not require flour sacks and cat food.

~~~
tomjen3
You don't even have to raise the taxes - all you have to do is more
eligibility for social security to 70 and that _alone_ will get you half way
there, combined with ending the waste in Iraq/Afghanistan and that is all that
is required.

~~~
cletus
I have some questions for you:

1\. What state decided the 2000 election?

2\. What state has a huge retiree population?

3\. What state, which was once a safe Republican state, was a swing state in
2004 and 2008 and will likely be a swing state in 2012?

Hint: the answer to all three is "Florida".

~~~
m_myers
Raising the minimum age wouldn't hurt people who are already retired. But that
wouldn't stop the AARP from mobilizing its entire membership against it, of
course.

------
gahahaha
Implicit in this "puzzle" is that the US budget should be balanced right now.
It should not! Interest rates are EXTREMELY low right now, and due to high
unemployment, investments by the government will give more bang for the buck
than in a VERY long time. So what the situation tells us is that this would be
a GREAT time for the government to start investing and spending money until
private demand rises. We should spend now, and tax a little bit more in the
future. That is what the markets are telling us.

Total spending in the economy = total savings in the economy. Consumers have
overextended themselves and now have to save, to avoid a depression (when
EVERYBODY saves at the same time and nothing gets done) the government (whom
the market is clamoring to give money to) must spend.

It's simple, really. Why people have such a hard time understanding it is
beyond me.

~~~
barmstrong
Imagine you were investing in a company (instead of a country) that was taking
this course of action: already in debt, stagnant sales, and had just doubled
down on their debt to try and get out of it. Would you invest in that company?

Same analogy applies to individual people. Imagine a friend of yours who has a
bunch of debt, is having trouble earning enough money, and just took on a
bunch more debt for some new ventures which he hopes will pay it all back.

Most people would tell their friend the prudent thing to do is spend less
money for a bit, pay down your debt until you get back on your feet. Not open
up some new credit cards.

This is probably why people have trouble understanding the "go into more debt
to get out of debt" approach.

~~~
gahahaha
That is probably correct. The thing is, no amount of experience meeting a
payroll helps you understand issues that are critically affected by the way
things add up at a macro level. Businesses are open systems; the world economy
is a closed system, with feedback effects that are crucial but play no role in
ordinary business experience. In particular, an individual businessman, no
matter how brilliant, never has to worry about the fact that total income
equals total spending, so that if some people spend less, either someone else
must spend more, or aggregate income must fall.

This is why we have a field called macroeconomics. Unfortunately, the hard-won
insights of macroeconomics are being rejected right now in favor of visceral
feelings. And we’ll all pay the price.

~~~
barmstrong
I read the first paragraph and don't really understand your point. There are
multiple countries competing in the world just as there are multiple
companies. I'm not sure how it being open/closed makes any difference.

In any event, it's not really fair to claim all of macroeconomics is on your
side here. Economists seem pretty divided on this one.

------
tibbon
That wasn't too hard: <http://t.co/Ex8OHv7>

In short, return taxes to Clinton era levels. Cut defense spending massively.
Cut some gov't contractors. Cap medicare growth. Eliminate tax loopholes.
National sales tax, carbon tax, bank tax.

Results? 56% savings from tax increase, 44% savings from spending cuts. Gives
us a pretty clear surplus that we could invest in education, _real_ healthcare
improvements, infrastructure (trains), etc. With this plan, we could actually
make the US #1 for many things in the world instead of just military spending.

It honestly wouldn't hurt me that much if my taxes overall went up by 10%. My
income is probably low/average for the HN crowd.

~~~
michael_dorfman
I didn't think it was hard either, and although my solution differed from
yours in a few particulars, the core remained the same, as you mention:
defense cuts, and returning taxes to pre-Clinton levels. If you have those two
things in place, the rest becomes a pretty simple Chinese menu to pick and
choose from.

~~~
tibbon
Right. From my perspective the Clinton-era 90's was pretty great economically.
It wasn't a terribly climate that hurt companies. Nor did it stop people from
investing heavily in companies or growing awesome companies.

Stock prices from 1992 to 2000 (approx numbers):

Microsoft: $2 to $58 Apple: $15 to $28 Cisco: $.50 to $50

Add in hundreds of companies going public, innovation moving faster than ever
up to that point, thousands of jobs created. _Small businesses (startups) were
not killed_ by higher taxes.

And I have no idea why our defense spending needs to be so high.

~~~
leif
Wasn't there some sort of bubbly thingamajig in tech that ended right about at
the end of Clinton? Those numbers sound bubbly.

 _disclaimer, I agree with you, Clinton was great, I'm just not sure the tech
market is what to focus on_

------
mbateman
So basically by withdrawing from Iraq and Afghanistan, cutting down on health
care massively, and tax reform (loophole-elimination) and a slight increase of
the tax rate for everyone, you can easily balance the budget.

I know each of these are controversial, but I find it interesting that there
are lot of perhaps equally controversial things that aren't necessary. No need
to cut government employees, salaries, contractors, etc. No need to reduce
military research or benefits. No need to have any special taxes on the very
wealthy. The only change needed to social security is to raise the age.

It's really almost all in health care.

~~~
tomjen3
You can do it with 0% tax increases too (the Laffer-curve suggest that you
don't get a linear benefit from increasing taxes, so I tried to do it
without).

You could properly do even better if you could withdraw all the troops from
Europe and the middle-east, instead of leaving 30k in Afghanistan.

------
wazoox
It forgot one thing : historically all large deficits and sovereign debts have
been solved by huge inflation.

However returning taxes rate to Clinton era levels + some more taxes (not much
really) + a severe miltary spending cut would solve the deficit according to
this game. That's the way I'd go, but I don't hold my breath :)

------
greenlblue
I hate it when people buy into this 'government is a business' mentality and
that it should have a 'balanced budget'. Government is not a business and
people shouldn't expect to run it like one. The money spent on social services
circulates within the US economy but corporate tax cuts get funneled to off
shore accounts never to see the light of day within US borders. So what the
politicians should be fixing are corporate finance rules and not social
security, medicaid or some other social service.

------
dennisgorelik
I agree with all cutting suggestions in this article. \+ Much more:

1) Not just cut financial aid to the states by 5%, but cut it by 5% every year
for 15 years in a row.

2) Cutting number troops in Iraq and Afghanistan to 30000 by 2013? Of course,
but that's not enough. How about cutting the number to 20000 by the end of
this year, to 10000 by the end of 2011, and finally to 5000 by the end of
2012.

3) Cap Medicare spending growth? Of course. However not in 2013, but right
now. And not at budget growth + 1%, but at budget growth - 1%.

Etc.

------
nl
Sorry, I must be dumb.

Why exactly does the US want to cut the deficit when the unemployment rate is
9%, inflation is 1% and the federal interest rate is 0.25%?

(I do understand the problem that the cost of future health care may cause,
but it seems to me that problem is structural rather than just financial, and
it seems odd to try and tackle that problem when the economy is doing so
badly)

------
Estragon
They don't give you enough options for cutting the defense budget. There is
far more fat there which could be trimmed.

------
brown9-2
I wish there was an easy way to export the choices I've made. I just turned
2015 into a surplus year!

~~~
Encosia
Once you've "solved" it, click the Twitter sharing button (don't worry, it
doesn't share anything immediately) and extract your solution's URL from the
popup.

------
topherjaynes
I actually broke out a pencil and did this puzzle in the paper /BUT/ I can't
find which page has the answer? Is it in the same section? Haven't checked by
the crossword puzzle, yet

------
nitfol
Pretty cool, but it assumes that many options are independent when they may
not be...

If I "reduce military to pre-Iraq war size" and "reduce the number of troops
in Iraq and Afghanistan to 30,000," can I really save the sum of $49 billion
and $169 billion, or am I counting some reductions twice?

If I increase the medicare age to 70 and cap medicare growth, can I really
save the sum of $104 billion and $562 billion?

Even assuming the revenues from taxes takes into account reduced economic
activity / moving investments outside of the USA, etc., are there effects from
combining them that would further reduce revenue?

------
swankpot
The solution I came up with is 80 percent raising taxes, 20 percent cutting
costs. I guess I really am a lefty.

But, I didn't touch military budgets at all, except for cutting civilian
overhead.

[http://www.nytimes.com/interactive/2010/11/13/weekinreview/d...](http://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-
graphic.html?choices=600ln5y7)

The biggest shock for me was how little 'cutting earmarks' actually
accomplishes, at merely $14 billion. I'm shocked because of how much political
hot air is exhaled on it.

------
smokeyj
Law-makers aren't apt enough to invest resources of behalf of a "society". Law
makers invest in activities consumers don't want, such as the War on
Drugs/Terror/Reason, while Americans might rather have a War on Cancer. If
politicians really knew what "society" wanted then they should visit HN and
learn how to run a startup.

------
abraham
Ok. Fixed it. So does Obama contact me?...

------
stcredzero
If you look under the covers "fix" the US budget actually means "delay
bankruptcy for another 3 or 4 decades."

~~~
borism
I'm still waiting for Japan's default and that should have happened 20 years
ago...

------
Andrew_Quentin
I think my solution is fare and has only little pain. I think that the public
would support it:

<http://t.co/2Gkg0xP>

Maybe there should be some sort of public voting on issues such as this to see
what the majority thinks should be cut.

------
rdl
I (<http://t.co/xvLvAuk>) ended up with 15% through taxes, 85% through
spending cuts, but also cut more than was needed.

I wouldn't be opposed to letting the Bush tax cuts expire (maybe in 2012 for
>$250k, and in 2014 for everyone) if it were necessary, but it would impair
some economic activity. I also would go for a higher estate tax, except that
high estate taxes encourage crazy tax avoidance strategies; dynastic wealth is
a bad thing on its own, but maybe that could be addressed by encouraging
people to donate >50% of their estates to charity on death. (If there weren't
crazy tax avoidance strategies, a 95+% estate tax would be fine with me; there
should be no deadweight losses, only accelerated consumption by dying people.)

Defense should be cut by 50-75% over the next 10 years, however, which would
also go a long way to paying off the debt as well.

------
ckinnan
This exercise shows a _projected_ budget deficit in 2015 of $418 billion.

Seems optimistic. The fiscal year 2010 budget deficit was $1.3 trillion, and
the consensus estimate for the hole in fiscal 2011 is another $1.3 trillion...

------
johngalt
The only thing surprising is how easy a balanced budget would be. There are
very few things on that list I'd object to.

Lets balance the budget and keep it that way, then we can let the national
debt die a slow inflationary death.

------
ja30278
Weirdly omitted from the cut options:

Medicaid: $290 billion HUD Programs: $47.5 billion Unemployment: $106 billion
Any part of the giant 'Other mandatory' block (~$600 billion) which makes up
Food Stamps, WIC, Welfare, etc.

~~~
philwelch
It's only allowing plausible options. Obviously you could go full-tilt
libertarian and run the whole federal government on $100 billion a year, and
you could even pay off the national debt by selling federal property (who
wants to buy a stealth bomber? China? Larry Ellison?), but that will never
happen. Most of the items on the list of options are at least conceivable.

------
dustintownsend
The problem with the Taxes section is it doesn't account for the unintended
consequences of raising taxes.

Historically when taxes are raised, revenues tend to never get close to
projections. Why you might ask? Well, because an increase in taxes usually
leads to less investment (startups, expanding existing business, etc). In the
extreme case an increase an taxes could even lead to companies moving to other
locations to shelter themselves from the added tax burden. Something we are
seeing happen in the US now, because of fear of increased taxes. Many large
corporations are making structural changes and moving assets out of the
country.

We need to cut spending and cut taxes. Reduce, simplify, eliminate.

~~~
kenjackson
_Historically when taxes are raised, revenues tend to never get close to
projections._

That needs a citation (projections vs reality). I've never heard the claim
you've made before. I suspect it is no different than the inaccuracy of
projections on tax revenue from conservatives that cutting taxes to the
wealthy will provide.

~~~
gsmaverick
Laffer Curve is the more general concept.
<http://en.wikipedia.org/wiki/Laffer_Curve>

~~~
kenjackson
The Laffer Curve also says that there is an optimal tax rate for which tax
revenue will be maximized. It doesn't say that reducing taxes increases
revenue, as this requires the tax rate to be sufficiently high that it is
higher than the optimal tax rate.

------
Jach
Why do they project it out to 2030? 2015 is somewhat reasonable, but 20 years
from now is a _long_ time at the rate of progress the species is making.

------
Dilpil
Wow, this has an utterly horrible interface. The way it bobs up and down as a
I scroll is quite appalling. I'd rather have frames than this.

~~~
Benjo
It doesn't "bob" for me in Chrome.

~~~
kmfrk
Nor here. Maybe a developer version of Chrome is responsible?

~~~
Groxx
It's just because NYT is positioning the chart stupidly (but probably most-
reliably, knowing browsers...).

It's absolute-positioned, and they're updating its 'top' when you scroll.
WebKit has a fast enough JS engine that this sort of thing is seamless, but
not every browser does / not on every computer.

edit: tried Firefox (4 beta), it's a handful of pixels off the top, and bobs.
You'd think people would know about position: fixed by now.

~~~
kmfrk
I see - I incorrectly inferred from the parent that the browser used was
Chrome.

------
asnyder
My solution: <http://t.co/g3D9scr>

------
DannoHung
Why can't I choose to eliminate the Bush tax cuts for both those earning less
than $250k and those earning more than $250k? And then, why can't I eliminate
the Bush tax cuts and then choose the eliminate loopholes but keep taxes
slightly higher option along with the eliminate Bush tax cuts option?

~~~
rdl
Eliminating cuts on those making less than 250k includes those above 250k as
well, it is just badly presented. I don't think anyone has suggested
eliminating cuts only for over 250k.

------
klbarry
I have to congratulate the New York Times on doing a relevant useful web app
really well, with excellent implementation (allow people to save their
choices, share it, etc.)

