This fiscal year, the United States Federal budget is expected to have a deficit of $1.8 trillion.
Deficit: -$1,800,000,000,000
Taxing capital gains as regular income would raise an additional $1.4 trillion, bringing the budget deficit down to $400 billion.
Deficit: -$400,000,000,000
This could then be closed by ending the home mortgage interest deduction, which increases the cost of housing. This would raise $800 billion, closing our deficit and creating a surplus.
Surplus: $400,000,000,000
If we did Medicare for all or some other universal healthcare system we could bring the annual per capita cost of health care to around $6000 per year per capita. Medicare For All would cost $1.8 trillion. Instead, the government loses $3 trillion by excluding employer contributions for medical insurance and medical care. This means the Federal government loses a net $1.2 trillion to our current health care system. Implementing universal health care and having the government cover health care costs through universal health care increases our surplus to $1.6 trillion.
Add 3 trillion of revenue, Add $1.8 trillion of spending.
Surplus: $1,600,000,000,000
This change means we will remove the $1.2 trillion spent on Medicare and Medicaid from the Federal budget.
Surplus: $2,800,000,000,000
We need to subtract the $350 billion in Medicare payroll taxes, which will no longer be levied because we can cover this from the general fund.
Surplus $2,450,000,000,000
We should keep HSA plans because there will always be some out-of-pocket costs for health care, both for copays and certain medical expenses Medicare might not cover. HSA plans are good. The only change here is likely removing the High Deductible Health Plan requirement. If we didn’t remove the HDHP requirement, people with HSAs would have higher deductibles from Medicare than those without HSAs; this would also reduce government spending.
I have turned a $1.8 trillion deficit into a $2.45 trillion surplus through these three changes.
We need to deal with Social Security OASI to prevent future deficits. OASI is expected to increase its costs by $1 trillion over the next decade. It is out of control. Allowing people to use superannuation, like in Australia and Singapore, will provide better retirements and reduce taxes and spending. More for less sounds good to me. This will be optional and gradually reduce the program’s cost over the long term. There will be fewer OASI tax receipts, but expenditure will decline more than revenue drops, especially in the long run. This is good for everyone.
Social Security Trust Fund has $2.6 trillion right now and is very poorly invested. It lost money over the last three years. This is absurd. We need to invest it in better investments like municipal bonds. A 6% interest rate on this money would raise $156 billion this year for OASI, closing the OASI deficit. DO IT NOW.
Surplus: $2,600,000,000,000
How should we spend this money? Personally, I would look at long-term investments, the best possible investment being education. Create guaranteed childcare subsidies that scale down gradually as people make more money. Reduce the cost of college and put government subsidies for higher education back to where they used to be while also ensuring that college expenses are within reason so the money can be used to increase access. We could eliminate customs duties. We could pay down the debt, but the interest rate is so low that it doesn’t make sense. We will want to have solid programs to cover the basic cost of living for seniors whose retirement accounts are not large enough to cover their cost of living. This will save us a significant amount of money in the long term.
That is how we can quickly close the federal budget deficit by cutting down on a few tax breaks and implementing Medicare for All.
Sources:
https://www.whitehouse.gov/wp-content/uploads/2023/03/budget_fy2024.pdf
https://www.ssa.gov/OACT/STATS/table4a1.html