Where to cut ??

The rioting in the streets of Greece today reminds us that bringing our own government's budget into line with its revenues isn't going to be easy. Most of us are going to take a hit one way or another, in higher taxes and/or reduced benefits from the Federal government.

In fact, as several economists have pointed out recently, higher taxes alone still won't be enough to reduce our deficit. And the perennial political chestnut about taxing the rich more is nothing more than a fantasy and a convenient political sound bite - if you took away EVERYTHING the rich owned, it still wouldn't be enough to cancel the deficit, let alone the accumulated Federal debt.

So in fact besides raising taxes we need to cut the Federal budget, and cut it a lot, probably something like 25-30% or more. So where do we cut? Here is how the Federal budget is divided now:


Defense, Social Security, and Medicare/Medicaid make up the largest portion of the budget, and Social Security and especially Medicare/Medicaid are on track to consume almost all the budget within a few decades, so clearly the largest cuts need to come in these areas. Of course the present administration has not only failed to address this problem, they have made it significantly worse with the recent health care bill.

Will people take to the streets in America and burn banks and government offices when these cuts come? Or will politicians simply keep avoiding the hard choices until we get a Greek-style debt crisis, with no one in the world big enough to bail us out, and fall into a depression that makes the current financial troubles look minor?