U.S. Budget Proposal

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Budget Proposal

The 2014 budget proposal is online at Slideshare and will be embedded here once a mediawiki pdf embedding issue is resolved.

Features

Minimum Wage Based Trade Restrictions

Countries which have low or no minimum wages have unfair trade relationships with the U.S. China in particular exports (sells) hundreds of billions of dollars more to the U.S. than it imports (buys) each year, in large part because Chinese manufacturing workers make on average 50 cents an hour. A substantial trade deficit also exists with Mexico due to its similarly low minimum wage and consequent outsourcing.

Specifically, trade should be stopped with all countries which have less than a $4.00/hour national minimum wage and more than $8 billion in imports. This would most notably stop trade with China, Mexico, Russia, India, and Taiwan. Unlike a tariff, this would be an adjustable trade restriction, with trade to be resumed with any country each January who has passed a national minimum wage law of a $4.00/hour minimum wage equivalent or higher.

Simplification of Tax System, Tax Breaks to Companies that Hire U.S. Workers

My budget proposes a study of which tax questions best determine overall wealth for purposes of individual and corporate taxation, then whittling the tax code down to keep only the 5-10 questions which best determine wealth. Furthermore, the complex tax loopholes which currently exist should be thrown out entirely, with the only tax break given to companies who hire more U.S. workers in relation to company earnings. For specific calculations related to how such tax code restructuring could be accomplished, see the budget proposal.

Remove ObamaCare

ObamaCare's individual mandate, and eventually all of ObamaCare need to be removed. The mandate is harming small businesses by forcing them to cover employee healthcare expenses they can't afford. It is forcing a conversion to poorer-paying part-time temporary work as companies seek to avoid hiring employees which work over 30 hours a week to skirt the onerous healthcare requirements. It leads to outsourcing of jobs to foreign countries.

Return of Military Troops Overseas to Guard Borders

Only 22.08% of defense spending goes to military personnel and 10.69% to research and development. The much larger bulk of spending goes to operation and maintenance, 42.55%, and procurement, 18.39%. My budget would cut from this 61% of defense spending by recalling troops from their overseas stationing, particularly in the middle east, and provide them voluntary employment opportunities to guard the borders or act as police reserves. Most of our defense spending goes to billion dollar technological procurements like the Lockheed Martin F-35 Lightning II of which 2,000 have been purchased for $323 billion or the Nimitz-Class Aircraft Carrier of which 10 were purchased for $321 billion.

Research and development are necessary to maintain a world-class military force, and we should give our troops the option to remain federally employed since Gulf War Era II veterans are returning to 30% unemployment rates. However, we should cut spending on expensive jets, aircraft carriers, and tanks to focus on defending our own borders. What equipment we have can be put into storage. Such changes should result in $211 billion savings for the United States annually.

Category Expense (Billions) Budget % Section %
050 National Defense:
051 Department of Defense-Military:
Military Personnel $153.39 4.51% 22.08%
Operation and Maintenance $305.24 8.70% 42.55%
Procurement $131.90 3.76% 18.39%
Research, Development, Test, and Evaluation $76.69 2.18% 10.69%
Military Construction $15.99 0.46% 2.23%
Family Housing $1.83 0.05% 0.26%
051 Subtotal, Department of Defense-Military $691.47 19.70% 96.38%
053 Atomic Energy Defense Activities $18.53 0.53% 2.58%
054 Defense-Related Activities $7.41 0.21% 1.03%
Total, National Defense $717.42 20.44% 100.00%

Increase of Benefits Age for Social Security and Medicare

Because Americans are living on average 78.8 years as of April 2016, they are living 17.1 years longer than when Social Security was instituted in 1935 (life expectancy then was 61.7), and 8.6 years longer than when Medicare was instituted in 1965 (life expectancy then was 70.2). However, the limited benefits age has never been increased for Social Security and remains set to 62, while Medicare eligibility likewise remains unchanged at age 65.

In other words, Americans are paying for 17.1 more years of benefits under Social Security and 8.6 more years of benefits under Medicare than the two programs were designed for, which is why the programs are bankrupting the country. Social Security and Medicare alone account for over 41% of the budget, $1.36 trillion. While Americans have paid considerable taxes over their lifetimes for which they should be reimbursed, the benefit ages need to be increased to offset this increasing life expectancy for the U.S. Budget to remain sustainable.

Program Year Instituted Life Expectancy
Then Now Increase
Social Security 1935 61.7 78.8 17.1
Medicare 1965 70.2 78.8 8.6

My budget proposal would increase the Social Security and Medicare benefits ages to 70, and remove the limited benefits age entirely. Based on calculations using CDC data, this would result in annual savings in excess of $386 billion each year.

3-Year Temporary Public Works Program

To stimulate hiring and U.S. employment which has been largely stagnant after the recession, much of the $597 billion annual savings from entitlement/military spending cuts would be funneled into a temporary, 3-year public works program with an annual cost of $400 billion. Logically 15 million Americans can be put to work for jobs paying $20,000 each at a cost of $300 billion with the remaining $100 billion to cover expenses such as supervising, equipment, transportation, and utilities.

As observed by Pollin & Peltier, for government to create jobs effectively, job creation must be labor-intensive and spend primarily on employees and less on extraneous expenses.

“In addition, education is a relatively labor-intensive industry. This means that, compared with the other industries we are examining, for every $1 billion in new spending in education, proportionally more money is spent on hiring new people into the industry and relatively less is spent on supplies, equipment, buildings.”[1]

Examples of public works jobs that would spend primarily on labor to ensure efficient job creation per dollar spent include:

  • Conservation, cleaning up parks and forests, and reforestation.
  • Repairing/cleaning up public buildings such as schools, hospitals, etc.
  • Censuses of local areas via the U.S. Census Bureau.
  • Painting murals and creating works of art/music.
  • Sewing projects.
  • Public education courses held in public areas (libraries, parks, and other freely accessed areas).
  • Farming – physical, labor-intensive only, not technological.
  • Low-cost, labor-intensive construction/landscaping projects like digging ditches.

Mandatory Shareholder Voting on CEO Compensation

Given that shareholders own publicly traded companies, there is no good justification for allowing CEOs or a CEO-nominated Board of Directors to determine what a CEO’s salary should be. Shareholders should be able to determine a CEO’s pay in proportion to the shares they hold in the company as it is their money being spent.

A CEO has a vested interest in firing workers so long as they can determine their own pay, since doing so is the easiest way to free up company payroll for CEO bonuses. A company’s primary expense is typically payroll, and thus paying workers less is the easiest way to increase company profits. A CEO can easily profit a company and justify their own increased salary by reducing the company’s workforce through outsourcing, automation, and conversion to parttime/temporary workers so as to avoid the overtime and benefits of full-time workers.

America’s top 500 companies, the S&P 500, have been recording record profits year after year even as they reduce their U.S. workforces. Furthermore, CEO compensation has increased from 59:1 in 1989 to 273:1 in 2012.13 The CEOs who fired the most workers in 2009 received on average 42% more pay than their S&P 500 peers.14 The 20 companies which received the most bailout money laid off 160,599 workers while giving their CEOs $275.6 million of compensation in 2008 alone, and some like Citigroup, Chase, Wells Fargo, Suntrust Banks, American Express, and State Street Corporation even increased their CEO pay dramatically after receiving bailout money.15

For all of these reasons, this budget mandates shareholder voting of CEO compensation at all publicly-traded companies to remove the incentive of CEOs to fire U.S. workers.

Existing Budget Summary

The four largest expenses, Health, Military, Social Security, and Income Security, account for 82.48% of the total budget; $2.89 Trillion. All other budgetary expenses combined account for 19.99% of the total budget; $702 Billion. Undistributed offsetting receipts make for -2.46% of the budget; -$86 Billion. Total Budget Authority was $3.51 Trillion.

Budget Summary

The following is a summary of the U.S. Budget, 2011 (last year for certain data, as opposed to estimates - uses 2013 budgetary data)[2].


Category Sections Expense (Billions) Budget %
Health 550, 570 $862.10 24.56%
Social Security 650 $731.73 20.85%
Military 050 $717.42 20.44%
Income Security 600 $583.67 16.63%
Major Expenses $2,894.92 82.48%
Interest on Debt 900 $230.47 6.57%
Veterans Benefits & Services 700 $123.12 3.51%
Transportation 400 $86.51 2.46%
Education, Training, Employment, & Social Services 500 $76.54 2.18%
International Affairs 150 $53.59 1.53%
Administration of Justice 750 $53.58 1.53%
Natural Resources & Environment 300 $35.35 1.01%
General Science, Space, & Technology 250 $29.65 0.84%
General Government 800 $23.86 0.68%
Agriculture 350 $21.51 0.61%
Community & Regional Development 450 $14.88 0.42%
Energy 270 $6.69 0.19%
Allowances 920 $0.0 0.00%
Commerce & Housing Credit 370 -$54.21 -1.54%
Lesser Expenses $701.54 19.99%
Undistributed Offsetting Receipts 950 -$86.49 -2.46%
Total Budget Authority $3,509.97 100.00%

Detailed Budget

Category Expense (Billions) Budget % Section %
050 National Defense:
051 Department of Defense-Military:
Military Personnel $153.39 4.51% 22.08%
Operation and Maintenance $305.24 8.70% 42.55%
Procurement $131.90 3.76% 18.39%
Research, Development, Test, and Evaluation $76.69 2.18% 10.69%
Military Construction $15.99 0.46% 2.23%
Family Housing $1.83 0.05% 0.26%
051 Subtotal, Department of Defense-Military $691.47 19.70% 96.38%
053 Atomic Energy Defense Activities $18.53 0.53% 2.58%
054 Defense-Related Activities $7.41 0.21% 1.03%
Total, National Defense $717.42 20.44% 100.00%
150 International Affairs:
151 International Development and Humanitarian Assistance $21.66 0.62% 40.42%
152 International Security Assistance $12.47 0.36% 23.26%
153 Conduct of Foreign Affairs $14.03 0.40% 26.18%
154 Foreign Information and Exchange Activities $1.55 0.04% 2.90%
155 International Financial Programs $3.88 0.11% 7.25%
Total, International Affairs $53.59 1.53% 100.00%
250 General Science, Space, and Technology:
251 General Science and Basic Research: $11.74 0.33% 39.59%
252 Space Flight, Research, and Supporting Activities $17.91 0.51% 60.41%
Total, General Science, Space, and Technology $29.65 0.84% 100.00%
270 Energy:
271 Energy Supply $5.90 0.17% 88.24%
272 Energy Conservation $0.23 0.01% 3.47%
274 Emergency Energy Preparedness $0.14 0.00% 2.02%
276 Energy Information, Policy, and Regulation $0.42 0.01% 6.28%
Total, Energy $6.69 0.19% 100.00%
300 Natural Resources and Environment:
301 Water Resources $6.14 0.17% 17.37%
302 Conservation and Land Management $10.93 0.31% 30.91%
303 Recreational Resources $3.55 0.10% 10.04%
304 Pollution Control and Abatement $8.55 0.24% 6.28%
306 Other Natural Resources $6.19 0.18% 17.50%
Total, Natural Resources and Environment $35.35 1.01% 100.00%
350 Agriculture:
351 Farm Income Stabilization $17.06 0.49% 79.31%
352 Agricultural Research and Services $4.45 0.13% 20.69%
Total, Agriculture $21.51 0.61% 100.00%
370 Commerce and Housing Credit:
371 Mortgage Credit -$5.04 0.14% 9.30%
372 Postal Service $1.01 0.03% -2.02%
373 Deposit Insurance -$6.6 -0.19% 12.17%
376 Other Advancement of Commerce -$43.66 -1.24% 80.55%
Total, Commerce and Housing Credit -$54.21 1.54% 100.00%
400 Transportation:
401 Ground Transportation -$53.69 1.53% 62.06%
402 Air Transportation $21.90 0.62% 25.32%
403 Water Transportation $10.53 0.30% 12.17%
407 Other Transportation $0.39 0.01% 0.45%
Total, Transportation $86.51 2.46% 100.00%
450 Community and Regional Development:
451 Community Development $5.88 0.17% 39.57%
452 Area and Regional Development $2.76 0.08% 18.55%
453 Disaster Relief and Insurance $6.23 0.18% 41.88%
Total, Community and Regional Development $14.88 0.42% 100.00%
500 Education, Training, Employment, and Social Services:
501 Elementary, Secondary, and Vocational Education $39.89 1.14% 52.12%
502 Higher Education $5.94 0.17% 7.76%
503 Research and General Education Aids $3.57 0.10% 4.66%
504 Training and Employment $7.31 0.21% 9.55%
505 Other Labor Services $1.90 0.05% 2.48%
506 Social Services $17.94 0.51% 23.44%
Total, Education, Training, Employment, and Social Services $76.54 2.18% 100.00%
550 Health:
551 Health Care Services $322.46 9.19% 89.64%
552 Health Research and Training $32.80 0.93% 9.12%
554 Consumer and Occupational Health and Safety $4.47 0.13% 1.24%
Total, Health $359.72 10.25% 100.00%
570 Community and Regional Development:
571 Medicare $502.38 14.31% 100.0%
Total, Community and Regional Development: $502.38 14.31% 100.0%
600 Income Security:
601 General Retirement and Disability Insurance (Excluding Social Security) $7.99 0.23% 1.37%
602 Federal Employee Retirement and Disability $122.87 3.50% 21.05%
603 Unemployment Compensation $119.28 3.40% 20.44%
604 Housing Assistance $44.17 1.26% 7.57%
605 Food and Nutrition Assistance $105.05 2.99% 18.00%
609 Other Income Security $184.32 5.25% 31.58%
Total, Income Security $583.67 16.63% 100.00%
650 Social Security:
651 Social Security $731.73 20.85% 100.00%
Total, Social Security $731.73 20.85% 100.00%
700 Veterans Benefits and Services:
701 Income Security for Veterans $55.02 1.57% 44.69%
702 Veterans Education, Training, and Rehabilitation $10.40 0.30% 8.44%
703 Hospital and Medical Care for Veterans $50.34 1.43% 40.89%
704 Veterans Housing $1.29 0.04% 1.04%
705 Other Veterans Benefits and Services $6.08 0.17% 4.94%
Total, Veterans Benefits and Services $123.12 3.51% 100.00%
750 Administration of Justice:
751 Federal Law Enforcement Activities $28.38 0.81% 52.97%
752 Federal Litigative and Judicial Activities $13.55 0.39% 25.29%
753 Federal Correctional Activities $7.90 0.22% 14.74%
754 Criminal Justice Assistance $3.75 0.11% 7.00%
Total, Administration of Justice $53.58 1.53% 100.00%
800 General Government:
801 Legislative Functions $1.10 0.12% 17.20%
802 Executive Direction and Management $0.53 0.02% 2.22%
803 Central Fiscal Operations $12.58 0.36% 52.75%
804 General Property and Records Management -$0.61 0.02% 2.57%
805 Central Personnel Management $0.20 0.01% 0.83%
806 General Purposes Fiscal Assistance $7.77 0.22% 32.10%
808 Other General Government $2.85 0.08% 11.93%
809 Deductions for Offsetting Receipts -$3.45 -0.10% -14.45%
Total, General Government $23.86 0.68% 100.00%
900 Net Interest:
901 Interest on Treasury Debt Securities (Gross) $453.99 12.93% 196.98%
902 Interest Received by On-Budget Trust Funds -$72.03 -2.05% -31.25%
903 Interest Received by Off-Budget Trust Funds -$115.98 -3.30% -50.32%
908 Other Interest -$35.36 -1.01% -15.34%
909 Other Investment Income $0.14 0.00% 0.06%
Total, Net Interest $230.47 6.57% 100.00%
920 Allowances:
Total, Allowances $0.00 0.00% 100.00%
950 Undistributed Offsetting Receipts:
951 Employer Share, Employee Retirement (On-Budget) -$64.58 1.84% 74.67%
952 Employer Share, Employee Retirement (Off-Budget) -$15.10 0.43% 17.46%
953 Rents and Royalties on the Outer Continental Shelf -$6.38 -0.18% 7.38%
954 Sale of Major Assets -$0.43 -.01% -0.50%
959 Other Undistributed Offsetting Receipts $0.00 0.00% 0.00%
Total, Undistributed Offsetting Receipts -$86.49 -2.46% 100.00%
Total Budget Authority $3,509.97 100.00%
On-Budget $3,010.23 85.76%
Off-Budget $499.74 14.24%

Off-Budget

The U.S. Budget marks certain expenses as "Off-Budget". The above calculations include all expenses, including those considered "Off-Budget". A total of $499.74 Billion is considered "Off-Budget". Off-Budget expenses include the following:

Category Sections Expense (Billions) Budget %
Social Security 651 $629.82 17.94%
Postal Service 372 $0.99 0.03%
Interest received by off-budget trust funds 903 -$115.98 -3.30%

Largest Expenses

The largest single expenses in the U.S. Budget, those exceeding $100 Billion, are as follows:

Category Expense (Billions) Budget %
651 Social Security $731.73 20.85%
571 Medicare $502.38 14.31%
901 Interest on Treasury Debt Securities (Gross) $453.99 12.93%
551 Health Care Services $322.46 9.19%
051 Department of Defense: Operation and Maintenance $305.24 8.70%
609 Other Income Security $184.32 5.25%
051 Department of Defense: Military Personnel $158.39 4.51%
051 Department of Defense: Procurement $131.90 3.76%
602 Federal Employee Retirement and Disability $122.87 3.50%
603 Unemployment Compensation $119.28 3.40%
605 Food and Nutrition Assistance $105.05 2.99%

References

  1. Pollin & Garrett-Peltier (2007). "The U.S. Employment Effects of Military and Domestic Spending Priorities." pg. 10. Institute for Policy Studies.
  2. Federal Government Outlays by Function, Table 5.1 - Budget Authority by Function and Superfunction: 1976–2017. U.S. Government Printing Office. Accessed July 24, 2012.