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  • Stossel Awards Heritage An "Emmy" for Best Budget Plan

    It’s not every day that a think tank wins an Emmy. But last week on John Stossel’s Fox Business program, The Heritage Foundation brought home the award for its “Saving the American Dream” plan to fix the debt, cut spending and reward prosperity.

    Heritage, along with five other public policy organizations, each provided long-term fiscal plans to solve America’s spending crisis as part of the Peter G. Peterson Foundation’s 2011 Fiscal Summit. Of all the plans, Heritage’s proposal reduces the national debt held by the public the most and keeps federal spending and taxes at the lowest levels.

    Stossel featured five of those plans on his show and declared Heritage’s plan the winner after an audience vote, awarding the think tank one of the Emmys he won for consumer reporting.

    Heritage’s plan drew praise for balancing the budget without relying on tax increases. Stossel remarked that tax hikes should be out of the question:

    Tonight, several think tanks said the way to avoid [a fiscal crisis] is to raise taxes. I disagree. Raising taxes kills good things, discourages people from producing and investing, not totally, but it does distort behavior. Past attempts to raise revenue with higher taxes haven’t brought in as much money as politicians thought it would. And anyway, government’s already spending $3.8 trillion. That’s enough.

    Heritage’s plan stands apart from those of the other five organizations by achieving the lowest debt level by 2035, lowers federal spending to 17.7 percent of GDP, (from expected spending of 28.3 percent by 2035) and rejecting tax increases as a solution to the nation’s spending problem, keeping federal tax levels at 18.5 percent of GDP—the lowest among the plans.

    By comparison, all the other plans reduced the federal debt and reduced spending, but none went as far as Heritage’s plan—and none of them did it without relying on tax increases or at the cost of our national defense. On the Stossel show, Heritage’s Stuart Butler explained why not putting defense in the cross hairs is so important:

    [T]he fact is, the core requirement of the federal government is to defend us. If we get invaded or bombed, it spoils your whole day. And, the fact is that we’ve got to say, how do we do this as efficiently as possible, to defend the country and our interest. And, what we do is say that’s not an issue for discussion in balancing the budget. If we fail to secure our country and our country’s interests, it doesn’t matter what you do in these other programs.

    Click here to read more about Heritage’s “Saving the American Dream” plan, and let us know what you think with a comment below.

    Posted in Economics [slideshow_deploy]

    4 Responses to Stossel Awards Heritage An "Emmy" for Best Budget Plan

    1. Richard Zuspan Hende says:

      I watch John Stossel and the Heritage presentation and was surprised that the Heritage Foundation doesn't research to the extent that as a member I expected.

      His denegrading the Fair Tax proposal in the way that he did shows that the Heritage Foundation looks only on the surface and does not do complete vetting.

      The proposal requires that the sixteenth amendment be repealed before the consumption tax be levied, a requirement of the bill precludes exceptions and alterations of the percentage except for payment of declared war and prebate for poverty level necessities. If the Heritage Foundation does not back the Fair Tax then I can not continue my membership. Richard Zuspan

    2. George Colgrove, VA says:

      It concerns me that Stossel would give this plan any recognition. Though it is only slightly better than Ryan’s plan, both plans will continue federal spending in the red for quite some time. I am a fan of Stossel and feels there is no better consumer advocate out there. We can and must do better to cut federal spending everywhere.

      Current GDP = $15.01 trillion (BEA – Q1 FY11)

      Current National Debt = $14.405 trillion

      Current National Debt = 14.405 / 15.01 = 96% of current GDP (NOT 70% as reported by HF)

      Current FY11 deficit = $1.371 trillion

      Take debt out of the GDP and just look at Production GDP = $13.639

      Making the National Debt 106% of the GDP based on real cash

      Heritage’s plan is entirely based on percentages of GDP. There is a lot more “HOPE” than “CHANGE” in the plan. Heritage pretty much accepts that we will continue on the dangerous path we are on today with FY11 spending, meaning they are banking on the fact we will raise the debt ceiling to at least over $15 trillion to cover current wasteful federal spending. Heritage also is relying on deficit spending for the next 5 to 10 years until we have reached a balanced budget ten years from now.

      Assuming no growth and a static GDP of $15 trillion Heritage is saying that next year we will go into debt by another $1.5 trillion, then $900 billion the year after that, then $520 billion; about an average of about $200 billion for each year for the next 6 years. Meaning that for Heritage’s plan to work we will see an increase of over $4 trillion to the $15 trillion we will have at the close of FY2011. Heritage is saying that by following its plan will result in a minimum National Debt of $19 trillion by 2020 – if all goes well!

      Heritage’s Chart 3 misleads people in thinking the defense spending is small and insignificant when compared to the egregious entitlement spending. The Entire DoD and military related spending is currently about $940 billion. This would represent a circle that has a diameter of 63% of the big red circle. In my printout, the red circle was 1.5 inches so the total defense spending would represent a circle of about an inch – or a circle that would encapsulate the white “Entitlement” text in the red circle.

      Heritage’s plan also ramps up interest payments. Currently we are not paying the full interest on the debt so the interest is also adding to the national debt. Heritage will be adding an average of about $150 billion a year to the national debt by not fully paying off the interest of the debt or in other words we will add about another trillion to $1.5 trillion to the national debt.

      In my analysis of the plan (in %of GDP) Social security will see a slow and gradual 30% decrease in 25 years. The “medic’s” will see a 4% increase after a period of a dip. Pensions and the like will see a 57% decrease. Defense will be ramped up then see an overall decrease of 15% to a flat line in 6 years of 4% or an annual budget of roughly $600 billion (GDP=$15 trillion). The rest of government sees a decrease of 65%.

      Heritage will derive most of its savings from social security – which is OK. Heritage also maintains the socialist’s concepts of government supplied healthcare rather than let the private sector use its expertise in finding cost effective solutions to provide healthcare to the poor as they have done in the past. Therefore, the biggest drain on the federal budget stays essentially the same. The largest percentage drops are from programs that do not cost much in the grand scope of things. The plan is not bold; it represents more of the same. We as a nation will result in having a larger looming debt.

      One thing that is absent of the plan is a table showing anticipated GDP. I skimmed the plan in places so I might have missed it. Federal expectations for next year are an $800 billion addition to the GDP. For 2013, the feds are hoping for an additional increase of $900 billion to the GDP. After that, the federal projections are a trillion dollar growth each year to 2016 with an overall growth of $4.8 trillion in 5 years! The GDP only grew by $1.6 trillion in the last 5 years and that was all deficit spending with a massive decrease to private sector contributions.

      If Heritage is relying on federal habitually incorrect GDP projections then the Foundation is saying by 2016 the federal budget will be $3.68 trillion – or virtually no cuts to the current budget. All Heritage is doing is playing the same game the federal workforce plays. They are using imaginary numbers to justify massive federal spending. When we finally get to that time, we find the dollars are not there. Heritage has only provided another way of kicking the can down the road.

      My plan is simple. Cut spending to do two things: (1) pay the rest of the interest payable for this year. (2) Immediately cut spending by what is currently unfunded to prevent going deeper into debt this year. These savings will then translate over to FY12. In FY2012 cut any additonal spending that is unfunded. Let there be no sacred cows.

      The federal workforce has to do these things and more prior to any consideration of going deeper into debt:

      There can only be one payroll department and one HR department for all federal workers.

      There can only be one fleet management service

      There can only be one Open Government Initiative program

      There can only be one place where all federal oversight is done

      There can only be one Parking management service

      There can only be one FOIA service

      There can only be one early education program

      There can only be one media and public relations service

      All of the above must be privatized

      Reduce the 16 redundant intelligence agencies into one and we must tighten up and limit access to classified information as this is costing the country 10’s of billions of dollars managing each year and is overly ineffective. There are far too many dangerous leaks for what we are spending.

      Privatize the administration of entitlement programs as we ramp out of federally provided benefits. The goal should be a fully privatized benefits industry.

      Finally, Federal pay and benefits must be in line with the private sector.

      “Inherently governmental positions” are those defined in the constitution. All positions not defined in the constitution and that are not in the direct assistance of those positions should be privatized to the greatest possible extent.

      Get these done and I will feel much better that we are doing all that is possible to reduce the wasteful spending. These can be done in this fiscal year if we mobilize the federal workforce to get it done.

      Basing our future on artificial projections is what got us into this mess to begin with. The $1.6 trillion deficit we have today was a result of poor projections that were used to create the FY09 to FY11 budgets. The GDP in the real world dropped while federal spending skyrocketed. Tax revenue that was expected was not there. Rather than cut spending the federal workforce barreled ahead and used a lot of debt. We need to stop this practice. I think we need to consider only today and plan for what we have right now. This plan like Ryan’s plan all sounds good on paper. But this is ten years of HOPING all goes well. This year we saw terrifying tornados rip through towns and cities. This last weekend we say massive riots on beaches in this country. We are in three wars – what about a fourth? This plan does not provide for contingencies. How will we pay for these events? If we are hit with an emergency, it will throw it all into a tailspin.

      This plan also does not account for when our debt reaches junk status and we will enter a point where we will only pay interest. At 4% (which is the average securities interest rate over time) the interest payments alone on $20 trillion dollars is over $700 billion! Think about it!

    3. Bobbie says:

      the point of these proposals is to balance the budget. Once again Heritage is on focus! Although, our troops that can, should come home.

      But the consumer tax. A panel member stated he "didn't' want the government to know what he spent his money on?" Why would government know? Consumer tax needs no identification when the taxes are taken at time of purchase. Right? Think of the government efficiency, massive reduction in paper and paperwork and government jobs and taxes! The economy would more reflect the government's involvement if the only money government can spend is brought in by what we are able to buy. Great way to grow the private sector and restore freedoms.

    4. W, WI says:

      If Medicare is an insurance program, then why not let it be run like one outside of the government? Same goes for Social Security. If they are run outside of the government, the government can't borrow from it and it stays at least more solvent. Privately run, they would need to provide some benefit in order to keep members and attract new members. Essentially, all the things that are currently misguided must be fixed or the plan goes away. This philosophy could be applied to every other social program out there. The programs that don't make money themselves can rely on donations and fundraisers to support itself. I assume all the liberals who cry about programs being dismantled would pony up the cash. This way the government gets out of business that is none of their business. Then a straight consumption tax (with no other taxes) would be sufficient to fund the the actual business of government. Just because a program is popular doesn't make it the right thing to do. I could create a program that gives everyone in the US $1,000 a week, and it would undoubtedly be popular, but stupid and unsustainable. Why can't America get it through its head that most social programs are not so different.

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