Wednesday, February 8, 2012

United States of Purple Presidency - A Plan To Resolve Our National Debt Problem

The political class has driven the financial viability of the nation's economy, democracy, and future to the edge of collapse by running up over $15 TRILLION in Federal government debt. This is the equivalent of saddling every American household with over $130,000 of debt.

The Obama administration would like us to think that it can solve this atrocious debt situation by taxing the wealthy more. But how viable is that? Let's look at some different scenarios, using the IRS tax data we used yesterday to see if his idea of taxing the rich is even viable.

- Let's assume that Obama put a 10% surtax on every dollar any American earning over $1,000,000. Using the 2009 tax return data, this would generate about $727 billion over ten years, assuming that these Americans were still motivated enough to continue earning this much money every year. This tactic would result in paying off less than less than 5% of the $15 TRILLION national debt.

- Let's get really crazy and assume that Obama confiscated every dollar those million dollar earners earned in 2009. This would give the Federal government about $549 billion to pay down the national debt (assuming that they actually did use this windfall to pay down debt). This would pay off less than 4% of the national debt.

Unfortunately, you could not replicate this tactic for ten years because no sane person would continue to earn over a million dollars a year through hard work if the government was only going to confiscate all of it.

- Let's next assume that the whole country kicked in extra taxes to pay off the national debt. What if every American tax filer, regardless of earnings, paid an extra 3% in Federal income taxes? Over ten years this would generate about $2.5 TRILLION which would only pay off about 17% of the $15 TRILLION national debt.

- If we jumped that extra tax percentage up to 10%, it would come up with about $8.5 TRILLION and cover just over 50% of the national debt. However, it is doubtful the economy would stay healthy if a full 10% the nation's wealth was annually diverted to the Federal government to pay down debt. This would cause major problems elsewhere in the economy. 

And all this assumes the national debt stays at $15 TRILLION. Given the budget plans that have come out of the Obama administration over the past year or so, if nothing changes, the Federal government is likely to add more than $9 TRILLION to the $15 TRILLION current national debt in the next ten years. Thus, you cannot increase taxes fast enough, on any or all Americans, to keep with the excessive spending of the political class, regardless of what Obama says.

But what if we could take more than $9 TRILLION out of the national debt without confiscating any more of Americans' personal wealth? What if you could take out $9 TRILLION without significant adverse effects on most Americans' lives?

The data below comes from a wide range of government and non-government sources, representing some heavy analytical work and research into how to make our Federal government more efficient and effective without causing unnecessary harm or hardship on most American citizens.  Sources for the following government budget cuts include:
  • U.S. Public Interest Group
  • The National Taxpayer Union
  • General Accountability Office
  • Congressional Budget Office
  • Associated Press
  • Senate Reports
  • The Cato Institute
  • Housing And Urban Development
1) Annual taxpayer wealth lost to waste, inefficiencies, and criminal fraud in the following Federal programs:
  • Medicare: $60 - $90 billion
  • Medicaid: $30 - $40 billion
  • Social Security: $70 billion
  • One Federal Unemployment Program: $19 billion
  • One Federal Food Stamp Program: $2 - $3 billion
  • Total: $172 - $222 billion, midpoint = $197 billion
  • Savings over ten years if you just eliminated the waste, inefficiencies and fraud - $1,970,000,000,000 ($1.97 TRILLION)
2) Annual uncollected taxes due to the Federal government but not collected from tax evaders: $325 billion
  • Savings over ten years if you just reduce the illegal tax evasion by 50% - $1,625,000,000,000 ($1.625 TRILLION)
3) The U.S. has about 84,000 combat troops unnecessarily stationed in Europe, about 30,000 combat troops unnecessarily stationed in South Korea, and about 25,000 combat troops unnecessarily stationed in Japan, serving defense purposes that were obsoleted decades ago. The Obama administration is about to unnecessarily deploy about 2,500 troops in Australia. If 75% of these troops were brought home, the country would save about about $212,000,000,000 over ten years.

4) If we cancel the production of the V-22 Osprey aircraft because it is over budget, likely to under perform, and has been designated as not critical by the Sustainable Defense Task Force, we would save $6.2 billion over the next five years.

5) If we cancel the production of the F-35 jet fighter which, according to the Sustainable Defense Task Force, "may represent all that is wrong with our acquisition process" and "would provide a capability that is not warranted considering emerging threats," we would save $22.5 billion over the next five years.

6) If we cancel the military Space Tracking and Surveillance System, which can be replaced with lower cost and more reliable options, we would save the Pentagon $5 billion over the next five years.

7) If we cancel the outdated, unreliable, and unneeded Expeditionary Fighting Vehicle, because the General Accountability Office has cited the program's history of cost growth, schedule misses (14 years late), and performance failures as reasons for terminating the program, we would save $16.3 billion over the next five years.

8) The General Accountability Office found that the Army, Navy and Air Force are wasting billions of dollars a year by purchasing items that were either never used or were never required. The GAO identified purchasing reform processes that could save $36.9 billion a year or about $369 billion over ten years.

9) Terminating various unneeded corporate welfare programs would produce substantial savings. These programs include the Overseas Private Investment Corporation, the Market Access Program, trade association subsidies for foreign marketing, subsidies to large agriculture business and wealthy farmers, tax credits for the blending of ethanol, the ultra-deepwater natural gas and petroleum research program, public timber sales subsidies, and Southeastern Power Administration. Just ending these corporate welfare programs would save about $12 billion a year or about $120 billion over ten years.

10) The Federal government owns more than 55,500 buildings that are either not used or are underused. A detailed analysis suggests that if 50% of these buildings were eliminated over the next five years, not an unrealistic target, savings in the area of $48 billion would be realized.

11) According to government audits of Housing and Urban development, the Federal government wastes about $4.5 billion a year due to bad accounting and billing processes. Fix this problem and save about $45 billion over twelve years.

12) Using conservative estimates, annual earmarks, which are usually nothing more than thinly disguised ways for incumbent politicians to fund their re-election campaign with taxpayer money, cost the Federal government about $16 billion a year in unneeded expenses. Eliminating earmarks would save $160 billion over ten years.

13) According to the General Accountability Office:

  • The Federal government has 15 different agencies overseeing food safety laws.
  • It has more than 20 programs helping the homeless.
  • It has 80 programs to help economic development.
  • It has 82 agencies working on improving teacher quality, few of which are working if you see how poorly American kids are being educated vs. the rest of the world.
  • It has 47 agencies working on job training.
  • It has 18 programs working on food and nutrition assistance.
This type of redundancy results in tremendous waste and unneeded overhead, duplicate responsibilities, and inefficient service. A formal Senate report and analysis of the situation, estimates that between $100 billion and $200 billion a year could be saved by consolidating and downsizing these functions. If we take the midrange of the estimates, we end up with $1,500,000,000,000 ($1.5 TRILLION) in savings over ten years.

14) A Congressional Budget Office (CBO)  report identified savings in the area of government spending on Science, Space and Technology -  savings over ten years - $25.26 billion

15) The CBO found Agriculture savings over ten years - $3.87 billion. This does not include the termination of unneeded ethanol subsidies and other farm support programs that are no longer needed, given how well the American farming industry is dong today.

16)  CBO - Natural Resources and Environment savings over ten years - $32.23 billion. These savings are mostly concentrated in programs that support corporations, not endangering basic government environmental programs.

17)  CBO -Commerce and Housing savings over ten years - $5.42 billion. This does not include the savings that could be found by cutting back on the widespread fraud and mismanagement in government housing programs.

18) CBO - Transportation savings over ten years - $141.64 billion

19) CBO - Community and Regional Development savings over ten years - $21.94 billion

20) CBO - Education, Training, Employment, and Social Services savings over ten years - $45.42 billion

21) CBO - Income Security savings over ten years - $68.83 billion

22) CBO - Veterans Benefits and Services savings over ten years - $21.50 billion

23) CBO - Allowances savings over ten years - $2.54 billion

24) CBO - Administrative of Justice savings over ten years - $10.26 billion

25) CBO - Social Security savings over ten years - $388.52 billion. Part of these savings are compatible with the recommendation from "Love My Country, Loathe My Government" which was to raise the retirement age to 70.

Not included the $388 billion is another step from "Love My Country, Loathe My Government," which was to uncap the total amount of earnings subject to Social Security tax. The CBO estimates that raising the cap amount the way they want to would provide an additional revenue of $503.4 billion to the Social Security finances over ten years.

This estimate also does not include the final "Love My Country, Loathe My Government" Social Security recommendation which was to terminate Social Security payments to anyone whose net worth is over $3 million in assets, i.e. people like Donald Trump, Warren Buffet, John Kerry, Barack Obama, and Bill Gates who do not need the checks to live comfortably will not get them.

27) CBO - General Government expense savings over ten years - $5.21 billion

28) Since Obama came into office, the Federal payroll has grown by 231,000 civilian employees despite reduced tax receipts, the lingering impacts of the Great Recession, and the overall dire employment situation throughout the country. Since most of us would agree that we have not seen a corresponding rise in the quality of government service since these people have been hired. Getting rid of them, like most efficient businesses would do, would not result in a degradation in Federal government services.

If we conservatively estimate that the weighted taxpayer cost (wages, benefits, and retirement costs) for these newly hired employees is $80,000 a year, than letting them go would result in annual savings of about $18.48 billion a year or $184.8 billion over ten years.

29) In any measure of education attainment, U.S. kids usually fare very poorly when compared to the education received by kids in other countries. Usually the U.S. is bested by a dozen or more countries when it comes to comparing standardized test results. The Department of Education has been around for about thirty years and has done nothing to change this low performance.

Thus, given its nonperformance, the entire department should be eliminated. Cato suggests that this ill performing government entity be terminated at once, its responsibilities becoming the responsibility of the states to educate their own kids and the American taxpayer can save the annual $107 billion cost of the department. I would put a twist to this termination recommendation.

I would phase out the department over a four year period but would send the department's budget as block grants to the states during that four year phase out. The states could use the block grants to improve the teaching ability of their own state's teachers, improve their technology infrastructure, improve their curriculums, and improve their universities' teacher education curriculum.

At the end of four years, the states would be in a much better position to educate our kids, heaven knows the Federal Department of Education has not done anything worthwhile. 10 year savings - $909.5 billion.

30) Much like the Department of Education, the Federal government's Department of Energy has done nothing to get us to a coherent national energy strategy and policy and has not funded any breakthrough energy technologies. Terminate the entity and let the private market research and development new energy technologies. 10 year savings according to Cato - $382.8 billion.

31) Cato has done similar analyses on just about every other Federal organization, some of which we have already touched on. In order to avoid double counting, I will not go into their agriculture subsidy reductions and military spending reductions, given what we have already identified some of them above.

However, they have identified 10 year savings of $21.2 billion from the Commerce Department and if you conservatively accept only half of their Department of Transportation cuts, you get another 10 year savings of $424.4 billion.

These cuts alone would save the Federal government over $9 TRILLION in expenses and costs over the next ten years with minimal impacts on needy Americans and ordinary American citizens. The $9 TRILLION+ does not include additional savings that would come from the following areas:
  • More military cuts not listed above.
  • Reining in Medicare and Medicaid costs beyond the fraud and waste savings listed above.
  • Deny Social Security payments in retirement to any American who had a net wealth of over $3 million.
  • Savings from interest payments not paid because the Federal government took $9 TRILLION of debt out of play.
  • The repeal of Obama Care which would save the country from expending an additional $300 billion over the next ten years, if you believe the recent analysis from the head actuary of the Medicare and Medicaid programs.
  • The termination of the Federal Housing Authority, Fannie Mae and Freddie Mac government agencies and the associated hundreds of billions of dollars in taxpayer subsidies they are likely to consume in the next ten years.
  • Elegantly privatize some government functions such as what Canada and other European countries have successfully done with their national air traffic control processes and postal systems and allow private contractors do the TSA screening function at all U.S. airports since we know from experience that they can do a far better job for less budget money than government employed TSA screeners.
People far smarter than me can determine the value of these additional efficiencies in government operations. In fact, Cato has already done all of this work and summarized it at their fabulous website, Their comprehensive analysis found a way to reduce annual Federal government spending over time by about $1.16 TRILLION a year, creating a ten year debt reduction of $11.6 TRILLION.

This is in the same ball park of our $9 TRILLION in identified savings and the additional unquantified savings in the list above. Two separate analyses, about the same results, indicating that this is doable without raising taxes on any American, rich or poor

The above cuts are a great start. However, one of the first acts as President in the United States of Purple would be to convene a commission of smart Americans that have already analyzed the need for drastically reduced government spending, put them in a room, and have them work together to overlay their plans together to come out with one overall plan, based on their expertise and past experiences in this area.

Members of this commission would be drawn from at least the following organizations:
  1. President Obama's defunct and severely underutilized Deficit Reduction Commission
  2. The Cato Institute
  3. The Concord Coalition
  4. The General Accountability Office
  5. The Congressional Budget Office
  6. The Urban Institute
  7. The National Taxpayer Union
  8. The U.S. Public Interest Group
  9. Bipartisan Policy Center
  10. Others TBD
Most of these cost cuts would have minimal impact on the average American. More importantly, it would reduce government expenses, allowing more Americans to keep more of their personal wealth, it would increase our personal freedom, it would unmuddy the uncertainty that the Obama administration has injected into the economy, and it would keep the social programs that many Americans rely on (e.g. Social Security, Medicare, etc.) viable and fiscally solvent.

That is how life would be in a Purple Presidency. Given the history of the Obama administration and the rest of the political class, this solution is beyond their capabilities and comprehension. Otherwise, they would have done these things already.

“We cannot solve our problems with the same thinking we used when we created them.” Albert Einstein

We invite all readers of this blog to visit our new website, "The United States Of Purple," at

The United States of Purple is a new grass roots approach to filling the office of President of The United States by focusing on the restoration of freedom in the United States, focusing on problem solving skills and results vs. personal political enrichment, and imposing term limits on all future Federal politicians. No more red states, no more blue states, just one United States Of America under the banner of Purple.

The United States Of Purple's website also provides you the formal opportunity to sign a petition to begin the process of implementing a Constitutional amendment to impose fixed term limits on all Federally elected politicians. Only by turning out the existing political class can we have a chance of addressing and finally resolving the major issues of or times.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

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