A Balanced Budget for a New Era: The Powell Plan

As the federal budget debate reaches a critical point, two plans from the Republican and Administration sides have emerged, yet both fall short of true reform. The proposed cuts in nonmilitary science research spending and federal student loan programs, aside from being shortsighted, reveal the lack of a comprehensive approach to fiscal conservatism and social liberalism. Meanwhile, the avoidance of necessary cuts in Social Security and the prioritization of military spending and welfare for the wealthy demonstrate a failure to confront the real challenges in the budget. A fresh perspective is needed, one that balances the books while investing in the foundations of growth - education, research, and basic needs.

Key Takeaways:

• The Republican and Administration budget plans prioritize tax cuts and shortchange essential public investments, despite both being fiscally conservative and socially liberal.
• The plans avoid necessary cuts in Social Security, instead opting to phase in a higher retirement age and apply an affluence test to entitlements for those making more than the median income.
• The proposed cuts in nonmilitary science research spending and federal student loan programs are shortsighted and detrimental to long-term growth.
• A fairer budget would scale back questionable tax subsidies and entitlements, such as itemized tax deductions benefiting the wealthy, and implement a more progressive system.
• The baby boomer retirement will lead to a significant increase in entitlement spending, which must be addressed through changes to the system.
• A retiree making above the median income would see a portion of their benefits withheld on a steeply progressive basis, up to 85% for those earning $180,000.

Statistics:

• $300 billion in savings from requiring everyone to take itemized deductions at the 15% rate over five years.
• $200 billion in savings from phasing in a higher retirement age and applying an affluence test to entitlements for those making more than the median income over five years.
• $140 billion from raising the gas tax 10 cents a year for five years.
• 60% of workers earning less than $40,000 would not be affected by the proposed changes to entitlements.
• The federal budget plans put off balancing the budget for years, with some projecting 2002 or 2005.
• $200 billion in benefits and subsidies go to families making more than $50,000 per year.
• $10 billion in gold deposits were sold under the 1872 mining law for just $10,000.

Sources:

• "The Powell Plan"
• "House Speaker's Medicare Reform Plan Fails to Meet Goal of $270 Billion in Savings"
• "President's Budget Plan Vague on Essential Cuts in Social Security"
• "Colin Powell: The Independent Voice We Need in Budget Debate"