February 23, 2024
Uncle Sam sitting at a desk, working on reducing the federal debt.
The CFRB has a tool that lets you try out some budget cuts and see their effect on our debt-to-GDP ratio. How would you stack up against Jared Golden's ideas?

Jared Golden launched a new blog to communicate with constituents. In his first post he talked about the United States’ debt ceiling and the need to make some serious cuts to get spending under control. He also proposed some cuts, citing data from the Committee for a Responsible Federal Budget. Here are the ideas Jared Golden floated:

  • Revert discretionary spending back to FY22 levels, adjusted for inflation in FY24, and freeze that level for FY25. ($150 billion)
  • Rescind, discontinue, and recover unspent and fraudulent COVID-19 funds. ($50 billion)
  • Reverse President Biden’s $400 billion student debt cancellation plan, which CRFB estimates would reduce federal debt by roughly $50 billion through FY25. ($50 billion)
  • Set the top corporate tax rate at 25% for businesses profiting in excess of $10 million. ($100 billion)
  • Restore the top marginal income tax rate on individuals and households making more than $400k. ($85 billion)
  • Expand the surtax on corporate stock buybacks and close various loopholes. ($65 billion)

Squeezing Rocks instead of Oranges

I found it interesting that Jared Golden would target student debt cancellation for a mere $50 billion in savings when there are better choices out there that affect people and institutions who can better afford it. Same with reverting discretionary spending. I would rather take a harder look at the spending on a project-by-project basis. Housing, substance use disorder, and mental health crises are on the rise across this country, and it will likely take a significant additional investment by this nation to fully address these issues.

Taking back unspent COVID-19 would be a direct blow to the city of Bangor, who is currently sitting on the entire $20.48 million awarded to it through ARPA, as none of the funds already allocated have been dispersed as of April 14, 2023.

Budget Changes: Investments, Savings, More Revenue

In his post, Jared Golden used a goal of keeping the debt from exceeding 100% of GDP over the next 10 years. I went to the CRFB’s website and gave their debt reduction scenario calculator a whirl. I came up with enough reductions and revenue increases to reach an 86% debt-to-GDP ratio. Per the CRFB we could keep the program to cancel student debt that Jared Golden suggests cutting AND includes some additional investments. $100B for free community college and $190B for affordable housing. You can try the tool out yourself.

  • Education, Infrastructure, and Research
    • Offer Free Community College $100B added to deficit
  • Defense
    • Return Defense Spending to 2017 Levels $1270B
    • Provide a Pathway to Citizenship for Undocumented Immigrants $210B
    • Reduce The Number of Military Personnel $80B
  • Social Security
    • Eliminate the Payroll Tax Cap to Cover All Earnings $840B
    • Raise Payroll Tax Rate by 1% $550B
  • Health Care
    • Modernize Medicare Cost-Sharing $170B
    • Increase Medicare Premiums for High-Income Beneficiaries $200B
    • Reduce Prescription Drug Costs $400B
    • Reform Medicare Provider Payments $330B
  • Other Domestic Spending
    • Build and Support Affordable Housing $190B added to deficit
  • Individual Income Tax
    • Increase Taxes on Capital Gains and Dividends $410B
    • Impose Surtax on Income Above $10 Million $290B
  • Other Taxes
    • Increase the Corporate Tax Rate to 28% $850B
    • Eliminate Business State and Local Tax Deduction $260B
    • Repeal Targeted Corporate Tax Breaks $130B
    • Move to Economic Depreciation $290B
    • Impose Stock Buyback Tax $150B
    • Enact a Financial Transactions Tax $930B
    • Enact a Carbon Tax $1270B
    • Enact a Wealth Tax $2750B
    • Restore Estate Tax to 2009 Levels $310B
    • Increase Taxes on Foreign-Earned Business Income $380B
    • Increase Cigarette and Alcohol Taxes $200B
    • Cap the Pass-Through Business Deduction for High Earners $280B

DEBT AS PERCENTAGE OF GDP

  • 86% by 2033
  • 81% by 2050

Savings relative to current law (billions) $9810

  • Defense $1340B
  • Investments $-70B
  • Social Security $1110B
  • Health Care $910B
  • Domestic $-180B
  • Income Tax $600B
  • Other Taxes $6100B

Conclusion

What’s right? What’s wrong? There’s an argument to be made for every cut, every change. When I look at our federal budget, we must invest in people. That means education, housing, health, and more. Look past the stigma and stereotypes and realize the more opportunities you create for people to live a better life, the better the country does overall. Give the debt reduction tool a try. It demonstrates that a budget can be progressive while simultaneously reducing the debt.