Balancing the US Budget

Barack Obama established a National Commission on Fiscal Responsibility and Reform to come up with ways to reduce the huge fiscal deficit. They have 18 members – 10 Democrats and 8 Republicans on it.

So what has this bipartisan group recommended:

• $200 billion of domestic and defence savings by 2015
• Tax reform that reduces rates, simplifies the code and broadens the base to reduce the deficit
• Measures to control long-term health cost growth
• Mandatory savings from farm subsidies, military and civil service retirement
• Ensure social security solvency for next 75 years

This would achieve $4 trillion in deficit reduction by 2020, reduce the deficit to 2.2% of GDP by 2015 and caps revenue at 21% of GDP (note NZ is well over 30%).

Obama, to his credit, has not rejected it. Sadly Congressional Democrats look likely to – which will impose future generations with horrific levels of debt and interest on the debt.

The situation in NZ is not so dire, but we still need bold measures to stop borrowing $250 million a week.