US Panel Urges Governmental Savings

By: Dr. Mike Campbell
A Presidential panel comprising democrats, republicans and business people, amongst others, set up to advise on how best to trim the enormous budget deficit has deep spending cuts and increased taxes.

The US budget deficit for the year to September is running at $1.3 trillion. To put this enormous number into perspective, it equates to every American (man, woman and child) owing $6500, there being approximately 200 million American citizens. The US total debt is said to be nearly $14 trillion, so the interest on the debt itself is also an enormous sum.

By comparison, the current bailouts (which are being made over several years) for Greece and Ireland, pale in comparison with the US debt situation. The EU has made provision for a total of €195 billion to underwrite sovereign debt problems in the two nations – this is roughly 3% of the US budget deficit for the year in progress.

The panel recommended that $4.1 trillion should be saved from the budget deficit between now and 2020. Social security and defence spending were singled out as budgets where cuts would need to be made – this would be politically divisive. However, the panel unanimously concluded that failure to tackle the problem would threaten America’s prosperity and its central role in global affairs in the longer term.

The panel recommendations included the following proposals:
• Reduce social security retirement payments to wealthier Americans, while gradually increasing the retirement age and the amount of wage income subject to the social security tax
• Reduce the budgets of the White House and Congress by 15%
• Increase the petrol tax by 15 cents a gallon, dedicating the new revenue to spending on transport
• Limit annual cost increases for Medicare and Medicaid, the federal healthcare programmes, to 1% of economic growth rate
• Trim government payrolls by replacing fewer who leave
• Eliminate corporate subsidies in the US tax system
• Limit medical malpractice lawsuits.