Monday, November 15, 2010

Simple Math: You Fix the Deficit

Raise your hand if you like the idea of a balanced federal budget.  Now keep your hand up if you actually have some idea of what it would take to achieve a balanced federal budget.  When nearly 15% of what the federal government spends is coming from borrowing it's very hard to actually figure out where one might come up with half a trillion dollars or so to close the gap.

The New York Times has come out with an online deficit-reduction form which allows you to pick and choose among dozens of measures designed to increase tax revenue or slash spending in order to get the federal government to stop spending more than it brings in.  I suggest playing with it to see just what it's going to take to get budget balanced.

The funny thing to me is that this is really extremely simple math (TAXES - SPENDING = 0) however it seems to be somewhat more complicated in practice than in theory.  This is one reason why I am a theorist.


  1. Way cool. I just solved all of our budget issues in 120 seconds.

  2. Nick,

    Thanks. It is easy to solve deficit at the NYT page. It is also glaringly obivious that most of the deficit is caused by the tax cuts and wars, and we know who did that.

  3. JohnE.
    As I said this is a really easy problem in theory. In practice a lot of people get really upset when you try to change their favorite programs.

  4. Ancient1,
    I'm not interested in getting into a political debate here - that's not really our thing - but if you select all of the military cuts the NY Times offers and restore taxes to pre-Bush levels, that's only 65% of the way to a balanced budget in 2015 and only 37% for the 2030 projection. This problem has been building for 30 years and at least 5 different presidencies.

  5. We should nibble from both solutions. Some spending cuts, some tax increases. I don't think a completely balanced budget is practical and from some circles, not entirely desirable. Whatever is done, if anything is done, will require strong political will and painful adjustments for all.

  6. I think this is a great post Nick since I think it puts issues into reality check, For example, things like earmarks that everyone bickers over effectively has no effect. Also, it appears solving our deficit without raising taxes at all, as some politicians claim they will, is nearly impossible. (Though as a test I found it is possible if you literally cut every other thing to the max levels you can cut them.)

    I think all Americans who complain about the deficit (as do I) should be aware of what it will take to fix it and how hard the problem is without offending haf the country over one issue or another.

  7. Nick,

    I am able to eliminate deficit without touching social security or medicare. I cam from bottom up, took all tax related items, and needed only three military items: reduce troops to 30,000; reduce noncombat compensation...; and, eliminate some of the weapons programs. That is it.

    If the economy expands with no deficit spending, I know we will go back to surplus and may be we might want to pay down the debt. It will only help you guys, not the ancient ones like me. We would be gone.

    A society without taxes is anarchy, we have been approaching that.

    Finally, why are you guys afraid to get into the politics? You or your profs would not have grants and none of you will be working on cool things, without politics. If the new Congress has its way, much of the sci-med fundings will be gone.

    So, to all young guys in sci-med-eng, get real, and get involved, take a serious course in finance and also know how the laws are created and applied. Have you seen a single judge who was a scientist? I have said enough. But I will add that you have now learned to walk on thin ice, just like JS has done.

  8. Ancient1,
    First, selecting all of the tax proposals in the NY Times worksheet would raise taxes well beyond the levels of the Bush or Clinton eras.

    Second, I don't think any of use are shy about our political views, we've just decided that this will not be a political blog. If you want what passes for political debate on the internet I suggest any number of other blogs. Even a respected media source like the New York Times has their political blog covered in less-than-civil comments. In my experience, if one wishes to have a civil discussion of politics it is impossible to do so via the internet.

  9. I for one can say that I have absolutely zero desire to get involved in politics as a profession. In science I can test my ideas and prove them right or wrong. In politics it seems like all one ever gets is more debate - much of it coming down to who is louder rather than who is right. I'd much rather work on solvable problems that don't subject me to yelling, name-calling, and endless debate.

  10. I'll bite (I don't really mean this to be political). If the U.S. reduced troops to 30,000, who would protect the world? That's a serious question. U.S. allies do not spend nearly as much on defense because the U.S. does. If we reduced our troops, there'd have to be some serious increases in defense spending by our allies to make up the slack. This isn't based on Cold War era politics or military movements; it is based on the reality that there will not be an end to war. We all wish there would be but it won't happen. Reducing U.S. troops would not end war in the least; it would probably result in more war.

    Anyway, there are a lot of things we need to do to reduce our deficit. Yes, we can reduce some defense spending but etitlement programs need to be trimmed. I do think we should increase scientific research funding though (and not just because it funds my research!).

  11. Nick,

    You are naive. We all live in political world. Your theoratical work is full of politics. You seem to have mushroom syndrome, figure that out.


    30,000 special ops people will clean out all the mess of last 10+ years in six months. And, don't give me crap (look up Thesaurus, many meanings) about our allies. Mostly it is their problem, they funded these nutcases, and now they want us to clean out. Your reality is distorted.

    Again, if the brightest minds of our society would not engage to the problems at hand, and hide behind computer screen, screaming what they will NOT do, shame! What a shame!

  12. Ancient1,

    Thanks for the pep-talk. I am keenly aware of the so-called "politics" involved in science/academia, but in practice it is a very small component of what I (or my adviser) have to deal with everyday.

    Since you seem to be a advocating we all go into politics, have you ever run for political office? If you ever have/do we'd love to hear about it.

  13. Nick,

    You wrote: First, selecting all of the tax proposals in the NY Times worksheet would raise taxes well beyond the levels of the Bush or Clinton eras.

    Correct. Will make up for all that was not paid for last 10 years. I will be the one who will pay more, but I would rather pay then live insecure future for the next generation. I am Ancient, but I still work and make money. Have no problem paying more. You may pay some more incrementally, but more than likely will not notice it. You are defending those who have systemitically looted the treasury of the USA.

    Bill Gates, Gates Sr, and Buffett have no problem paying higher taxes; why do you?

  14. Ancient1,

    As I said, I'm not interested in getting into a debate here - I was merely making an observation that one cannot balance the budget simply by cutting military spending and restoring taxes to pre-Bush levels. I think it is absolutely reasonable and even vital to increase taxes in order to balance the budget, but personally I wouldn't go as far as choosing all of the NY Times's tax-raising options.

  15. Nick,

    The art of politics is to make observations without supporting rationale, while saying I am not interested in politics, and worse, making others believe such nonsense.

    People were happily paying taxes at pre-Bush levels and getting fairly comfortable. The NYT did not make up all the tax-raising options: they are there.

    You probably don't know that unemployment is 10% officially, when you count under-employed it is at least 15%, add those who gave up searching you reach to nearly 20%, and finally add those who have been abandoned after elimination of industries, and not trainable it is nearly 25%. We are a camel loaded to the full, one more straw and the camel's back is gone.

    If the rich like Gates' and Buffets would not mind paying higher taxes, and you have a problem with that? May be the real rich know that camel is fully loaded, and let us give some relief before the back is broken.

  16. Like Nick said, this is not a political blog. We discuss things like politics from time to time, but it is not the place to really advocate one political position or the other expecting anyone to follow you. We're happy (most of the time) to listen to any rants or opinions that relate to the subject (as long as they are civil and within reason), but this really isn't the place for seeking to gain converts to any particular ideology.

    Many of these debates on who can best stimulate the economy and where we can most effectively put the money to help create jobs are still open questions. We all want to decrease unemployment, which is currently at disturbingly high levels. However, not everyone agrees that increasing taxes is the best way to fund that, nor that the government is the best entity to carry it out. Furthermore, taking significantly more taxes from those who already have only minimal income due to a struggling economy presents itself as questionable at best.

    In general, let's try to keep things civil. This is a great place to express ideas. This is not a great place if you feel like everyone should accept your ideas simply from the crushing weight of your own indomitable arguments.

  17. Bill,

    Your blog is political whether you guys arm wave or not.

    Take your post on Physics teachers. You went on presenting stats that you claim not to fully understand (art of politics: hedge your bets!). Now if you would have posted what should be taught in high school Physics, it would be good. Or, if you were to review a physics book used at high school level, it would also be good.

    Finally, I hope you study up statistics before you embark on teaching. Our society runs on stats, including all sciences, even the Newtonian sciences (talk to the control engineer).

  18. "Your blog is political whether you guys arm wave or not."

    I would disagree with this assertion. It might, however, be a matter of definitions. How would you define whether or not a blog is "political"? If it is whether or not the subject matter has any relation to politics or is at all influenced by politics, then essentially everything is political. If that is the case, the label is uninformative and not useful. How do you define it?

    "You went on presenting stats that you claim not to fully understand (art of politics: hedge your bets!)." Compare: "The art of politics is to make observations without supporting rationale".

    I would say that this is precisely the reason my post was not political. I was being very open with the shortcomings in my experience. I was trying to avoid drawing conclusions. I was trying to let the data speak for itself. This seems to me very different than "[making] observations without supporting rationale."

    "if you would have posted what should be taught in high school Physics, it would be good."

    That was beyond the scope of my post. I freely admit that I do not have the expertise to make such judgments. That type of post could have easily been political (which, again, I am trying to avoid). If you are looking for that sort of post, I'm afraid you will have to look elsewhere, or at least to other authors.

    "I hope you study up statistics before you embark on teaching. Our society runs on stats, including all sciences, even the Newtonian sciences"

    Here, I completely agree with you. I also hope to learn more about statistics before I graduate. Unfortunately, I haven't yet had much time to do so. Also, my specific area of specialization doesn't require as much rigorous statistics as those of people like Nick and Joe, so it hasn't quite gotten to the top of the priority list yet. Nonetheless, I hope to remedy the situation before too long.

  19. Nick,

    Last item first: I am happy that you plan to study statistics. I appreciate your candor here. Let me add that it is probability and statistics, and I do not know how are you not exposed to these basic math. Of course, you may not need the esoteric of quantum ot astro guys, but the basic stats is a must. An graduate course by itself would be challenging in its own merit. Sooner the better.

    It is all politics, it is money, and it is persuasion. And the biggest hotbed of politics is at the universities. You guys probably evaluate poor professor who was teaching a new course he designed and wanted to experiment to advance the understanding of the subject. That is politics in real world. If he was able to excite enough of you, he would be a success, but the old time professors may think he was on the wrong track in teaching such an esoteric subject as a course, etc. The punch line is politics is not a bad word; any time, you are trying to influence others, or even share something with others, you are entering the political realms.

    I presume you are in a PhD program and has high academic standing. You got to be able to teach high school physics without much difficulty. Trust yourself, don’t hide behind unproven failures! Fail first, and you will advance faster!

    Finally, in a previous post you had asked if I had ran for an office: simple answer is no for myself; more complex answer is that I have supported and worked in public and private politics. It is again the art achieving incrementally. You do this in your theoretical work! Of course, you would like an breakthrough everyday, you make progress incrementally.

    Again for all the sci-med-eng guys: get involved in life, in politic, and learn about the money. We can not make a learned and reasoned decision without this. And, if you ever meet a true politician, you will find he has no belief, but he is pounding the pavement with beliefs for others to follow.

  20. Nick,

    sorry, the last post should have been addressed to Bill. But, learning stats is good for all of us. I learn a nuance of it all the time. It is fascinating that we can take numbers and make some sense out of them; and, nonsense out of them at the same time.

  21. I fixed the 2030 deficit easily. Now I'm starting to wonder why it's so hard. :)


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