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[Phmcw]

Cutting the spending won't do any good if you don't raise taxe. And what kind of idiot pay his debt in the middle of a crises?

Right now you should restart one or two wide scale scientific program, restructure your infrastructure and get back in the space race, not cutting Medicare and federal spending.

Cruse standard and poor (I alway feel the name incredibly ironic by the way : I'm sure the people in that company may be anything, but probably neither standard nor poor). Right now you need to borrow, just keep in mind to riot and make them go through else next time they use budget surplus to give out tax cuts.

[DJ]

It's like quitting University half-way through to pay off your student debts.

[Phmcw]

And I insist, compare to other country : your deficit is big right now, but your debt is just average, maybe even bellow average.
There is no need to rush things.

[PTTG??]

I'm really tired of being the only person who takes even cursory glance at the actual spending numbers.

For 2011 (estimates):

43% of expenses are paid for with loans. We would need to cut spending by 43% to break even.

Defense: 25.2% (ALL military activity. Cutting would be extremely difficult and most likely entirely blocked by republicans)
Health Care: 23% (Political suicide to cut)
Pensions: 20% (MAY NOT be decreased, contractually required)
Welfare: 12.9% (Political suicide to cut)
Interest: 5.4% (Interest on debt. MAY NOT be cut, this represents the increase in debts due to interest. Cutting this would be defaulting)
Education: 3.3% (129b $)
"Protection": 1.5% (Fire, Police, and the justice system)
General Government: 0.86%

Other: 4.1% (including:)

Housing Development: 0.92%
Agriculture, Fishing, Forestry, Hunting, departments 0.85%
Basic Research: 0.48%!!! (All basic research...)
...Many, many other items in the <0.1%-0.8% range...

NASA accounts for 0.58% of total spending.

Everything that I have not mentioned accounts for spending so small and insignificant that they can be completely ignored in any rational debate. (Federal Payroll (outside of pensions), office decorations, art subsidies...)

Cut 43% from that without crippling the United states while still making a plan that both sides will agree on. And when you're done, spin this straw into gold and beat Chuck Norris in a beardfight.

The fact of the matter is, the only fiscally responsible thing to do is to pay more taxes. My advice is to delete defense spending. Take it down to 10%. Destroy healthcare and rebuild it responsibly, in a way that respects doctors and patients instead of HMOs, and cut spending on it significantly. Let's say a total decrease of 5%. Pension reform has been a long time coming. I really don't know if it's possible to decrease our current expenses there, but we need to renegotiate these contracts. Scott walker should drown in a bog of pig offal, no question, but real negotiations need to take place.

Increase spending on Education, NASA, Basic Research, and federal grants to nonprofit associations by a total of 3% of current spending and basically double visible public spending.

Making Pot legal would not have a significant effect on the 1.5% of the budget spent on civil protection. Taxing it might. Same goes for the TSA. Not a significant spending.

That's total cuts of 30%. Close corporate loopholes*, keep taxes the same for everyone netting less than $1,000,000 a year, Legalize and tax pot, if not vices in general, (the Dwarf's Penny tax), and finally, increase taxes on the +$1,000,000** (if needed) for the remainder.

I'd remind everyone that of all those expenses, the DoD probably puts the least back into the economy... even wages probably get spent elsewhere.

*Admittedly vague, but for a start, I'd require companies that do business here to pay US taxes on sales here even if incorporated elsewhere, on pain of death.

** Currently trust fund managers accrue huge tax-free incomes since they don't "earn money" they just "own things that appreciate in value". This is a irrelevant distinction both in practice and in accounting theory. Also, it is common enough for someone to make a large amount of money on paper and then lose it again within a year, leaving them unable to pay taxes on the income. While leniency here could lead to abuse, it may be reasonable to tax everyone based on how much their net worth increases in a year rather than how much money they receive; this is how corporate taxes would work (if corporations paid taxes).

[Nadaka]

DoD wages and contracts not directly related to the foreign war effort in nearly all cases must go to domestic workers/companies. With the exception of our foreign wars and the money spent by soldiers on leave who are deployed overseas, practically 100% of the DoD budget is reinvested in the US economy. Its a pretty big deal, it is illegal to outsource work for the DoD for security and accountability reasons. I should know, its part of my job.

Other than that I don't see that much wrong with your assessment. Though I would generally go for a larger increase in taxes and smaller cut in defense spending.

[counting]

So. A new Wealth Tax policy.

[Nadaka]

So. A new Wealth Tax policy.

Income from investments is taxed at a far lower rate than earned income. IIRC 18% vs 35%. Add to that the 30 million different loopholes that a tax attorney can find for a wealthy client and the real percentage of income they pay in taxes vs a middle class worker is much smaller.

It is much less of a wealth tax policy, as it is a fair tax policy.

[counting]

So modified Capital Gain Tax rate? (IIRC already a major tax issue since 2001, and it extended recently)

[Nadaka]

An increased capital gains tax would be part of it, yes.

[counting]

But what PTTG described in the last paragraph

...
** Currently trust fund managers accrue huge tax-free incomes since they don't "earn money" they just "own things that appreciate in value". This is a irrelevant distinction both in practice and in accounting theory. Also, it is common enough for someone to make a large amount of money on paper and then lose it again within a year, leaving them unable to pay taxes on the income. While leniency here could lead to abuse, it may be reasonable to tax everyone based on how much their net worth increases in a year rather than how much money they receive; this is how corporate taxes would work (if corporations paid taxes).

It's basically to tax "unrealized capital gain" and that will fall into the category of wealth tax.

[Nadaka]

No... But it is probably because we are using different definitions of the term "wealth tax".

A wealth tax is a tax on the amount of wealth you have, the most common example of that is property and vehicle taxes used by many state and local governments in the US.

Capital Gains is a form of income tax based on the increase in value of a property at the time it is sold, rather than its absolute value while held.

[counting]

"unrealized capital gain". Assuming you buy a trust fund with 1 million, and its worth increase to 1.2 million over the year, than you swap it with another fund worth 1.2 million. But the value added is not taxed since it's always just property, not "realized" into cash. (Or just briefly, and immediate invest into next property). At the end of the fiscal period, it remain "unrealized". What PTTG said is to tax this addon value, right? It will have to be a form of wealth tax. (technically, since they are now in the form of property when taxed).

Capital gain tax is sometimes just integrated into income tax in many countries, And the increase of capital gain tax rate will lead to the increase of capital investment, if you tax them both, depending on the tax rate different for people to prefer which form, then the effective tax rate will increase. (which isn't a bad thing if you want to increase over all revenue), the trouble about wealth tax is that it's difficult to estimate the real value of it (the market value fluctuated constantly), lead to some believe it will result in unfairness and even tax evasion effect in the long run. 

[PTTG??]

What PTTG said is to tax this addon value, right?

...the trouble about wealth tax is that it's difficult to estimate the real value of it (the market value fluctuated constantly), lead to some believe it will result in unfairness and even tax evasion effect in the long run. 

Agreed on both points. It is frustrating to see someone who gets $20k doing absolutely nothing pays no taxes, while a working student earning the same amount of money and nothing else pays full income taxes. That is an emotionally charged example, I'll admit.

It is also true that calculating net worth is a difficult thing, since values vary so much, and it is so easy to execute control of some resource without being the literal owner of it. I am not sure the magnitude of this difficulty, but I worry that it may open so many new loopholes that it might create more new loopholes than it closes.

[Nadaka]

In the US, I believe capital gains tax is on "realized" gains rather than "unrealized".

[Phmcw]

I don't see the point in taxing unrealized capital gain. It's not a gain until you actually sell the shares.
Tax the companies and the income. Tax the bank as well if you must and tax the transactions.
Taxing unrealized capital seems weird, as there is not actual gain there.

And I tell that as someone who actually have some shares. Until you sell them, you only get the dividends (and they are taxed), and wind. You never know if the value will drop next month, and if they do, all the gain before are for naught.