5.30 pm GMT - Thursday January 26th 2011

I’m extremely pleased with the “American Butterfly” paper; it’s at a point where I can see no way for it to fail, as monumental and unbelievable as its objectives are.

Compared to the rest of the work so far it is in a league of its own, professional, realistic, and whist the science created it, it is mentioned only at the beginning, which is important as few would understand the science.

I’ve just finished the investment section and it’s on to the final chapter, “American Butterfly” or USA Profitability
I’ve decided to make 4 forecasts, “Reality Distortion Field” RDF to Worst case, I will use a combination of spreadsheets, Photoshop graphs and standard text. This will most likely take 2 days, which brings me to Saturday, where I will read through on the computer, without doubt making a number of amendments; Sunday will see a printed version and review of this section and the investment section. Monday will be final corrections and Mike will put it on the web. Tuesday will undoubtedly be the extra day that is always needed and Wednesday, is the 32nd day, and time to send to the world.

And so to it, I’m working in conjunction with a spread sheet called USA Profitability, before I start I need to reassess Tax and Oil dependence, as I wish tax cuts equal to the tax benefits and Oil dependence will need to only feature in the “RDF” presentation.

First we have tax, and time to find the Wikipedia stat for the $350B in unclaimed tax

NOTE: USA citizens are starting to regain confidence; this is a short term state of calm as it is only a matter of time before they lose their AAA rating.

Before we start we will look at the USA Economy page on Wikipedia.

http://en.wikipedia.org/wiki/Economy_of_the_United_States

The White House estimates that the government’s tab for servicing the debt will exceed $700 billion a year in 2019,[47] up from $202 billion in 2009.[48]

Today, the United States is home to 29.6 million small businesses, 30% of the world's millionaires, 40% of the world's billionaires, as well as 139 of the world's 500 largest companies.[53][16][54][55]

There are 4,352 colleges, universities, and junior colleges in the United States.

In a 2006 news story, USA Today reported, "The analysis shows that 31% of adult immigrants have not completed high school. A third lack health insurance

There are approximately 154.4 million employed individuals in the US. Government is the largest employment sector with 22 million.[67] Small businesses are the largest employer in the country representing 53% of US workers.[54] The second largest share of employment belongs to large businesses, who employ a total of 38% of the US workforce.[54] A total of 91% of Americans are employed by the private sector.Government accounts for 8% of all US workers. Over 99% of all employing organizations in the US are small businesses.[54] The 30 million small businesses in the USA account for 64% of net new jobs (jobs created minus jobs lost).[54] 70% of jobs created in the last decade were by small business

Just over half of small businesses survive more than 5 years.

The median household income in the US as of 2008 is $52,029

In April 2010, the official unemployment rate was 9.9%, but the government’s broader U-6 unemployment rate was 17.1%.[77]

By the time they reach their retirement years, half of all working men in the United States probably have a period of self-employment of one or more years; one in four may have engaged in self-employment for six or more years.

OBAMA SAYS – FROM THE BOTTOM UP, THIS PLAN IS FROM SMALL BUSSINESS UP, HENCE THE DIFFERENT STATERGIES

Between June 2007 and November 2008 the global recession led to falling asset prices around the world. Assets owned by Americans lost about a quarter of their value.[89] Since peaking in the second quarter of 2007, household wealth is down $14 trillion.[90] The Fed also said that at the end of 2008, the debt owed by nonfinancial sectors was $33.5 trillion, including household debt valued at $13.8 trillion.[91]

NOTE: DEBT IS ALSO DOWN TO INDIVIDUALS, EEE GOOD BUSSINESS PRACTISES ADDRESSES THIS ISSUE

The overall financial position of the United States as of 2009 includes $50.7 trillion of debt owed by US households, businesses, and governments, representing more than 3.5 times the annual gross domestic product of the United States.[19] As of the first quarter of 2010, domestic financial assets A totaled $131 trillion and domestic financial liabilities $106 trillion.[22] Tangible assets in 2008 (such as real estate and equipment) for selected sectors B totaled an additional $56.3 trillion.[95]

Major retail firms in the United States include Walmart, Sears, Amazon.com, Target, Macy's, McDonalds, Burger King, Safeway, A & P, and The Home Depot.[citation needed] Some, such as Wal-Mart and KFC serve a global market.

Energy

Main article: Energy in the United States

The United States is the 2nd largest energy consumer in terms of total use.[99] The U.S. ranks seventh in energy consumption per-capita after Canada and a number of other countries.[100][101] The majority of this energy is derived from fossil fuels: in 2005, it was estimated that 40% of the nation's energy came from petroleum, 23% from coal, and 23% from natural gas. Nuclear power supplied 8.4% and renewable energy supplied 6.8%, which was mainly from hydroelectric dams although other renewables are included.[102]American dependence on oil imports grew from 24% in 1970 to 65% by the end of 2005. At that rate of unchecked import growth, the US would have been 70% to 75% reliant on foreign oil by about 2015.[103] Transportation has the highest consumption rates, accounting for approximately 68.9% of the oil used in the United States in 2006,[104] and 55% of oil use worldwide as documented in the Hirsch report.

While the U.S. is the largest importer of fuel, the Wall Street Journal reported in 2011 that the country was about to become a net fuel exporter for the first time in 62 years. The paper reported expectations that this would continue until 2020.[105] In fact, petroleum was the major export from the country in 2011.[106]

http://www.floridatoday.com/usatoday/article/52298812?odyssey=mod_sectionstories

Still, the U.S. is nowhere close to energy independence. America is still the world's largest importer of crude oil.
From January to October, the country imported 2.7 billion barrels of oil worth roughly $280 billion.

Fuel exports, worth an estimated $88 billion in 2011, have surged for two reasons:

Crude oil, the raw material from which gasoline and other refined products are made, is a lot more expensive. Oil prices averaged $95 a barrel in 2011, while gasoline averaged $3.52 a gallon — a record. A decade ago oil averaged $26 a barrel, while gasoline averaged $1.44 a gallon.)

The volume of fuel exports is rising. The U.S. is using less fuel because of a weak economy and more efficient cars and trucks. That allows refiners to sell more fuel to rapidly growing economies in Latin America,

Gasoline demand in the U.S. has been falling every year since 2007. It dropped by another 2.5 percent in 2011. With the economy struggling, motorists cut back. Also, cars and trucks have become more fuel-efficient and the government mandates the use of more corn-based ethanol fuel.

The last time the U.S. was a net exporter of fuels was 1949, when Harry Truman was president. That year, the U.S. exported 86 million barrels and imported 82 million barrels. In the first ten months of 2011, the nation exported 848 million barrels (worth $73.4 billion) and imported 750 million barrels.

Manufacturing

The United States is the world's largest manufacturer, with a 2009 industrial output of US$2.33 trillion. Its manufacturing output is greater than that of Germany, France, India, and Brazil combined.[108]

The US leads the world in airplane manufacturing,[109] which represents a large portion of US industrial output.

The U.S. produces approximately 18% of the world's manufacturing output, a number that has declined as other nations developed competitive manufacturing industries.[108]

Finance

Measured by value of its listed companies' securities, the New York Stock Exchange is more than three times larger than any other stock exchange in the world.[116] As of October 2008, the combined capitalization of all domestic NYSE listed companies was US$10.1 trillion.[117]

International trade
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In 2010, the total U.S. trade deficit was $634.9 billion, which is $1.3 trillion in exports minus $1.9 trillion in imports.[122] the deficit on petroleum products was $270 billion. The trade deficit with China was $273 billion, a new record and up from $304 million in 1983.[123] The United States had a $168 billion surplus on trade in services, and $803 billion deficit on trade in goods in 2010.[124][125]

Bank regulation in the United States is highly fragmented compared to other G10 countries where most countries have only one bank regulator. In the U.S., banking is regulated at both the federal and state level. The U.S also has one of the most highly regulated banking environments in the world; however, many of the regulations are not safety and soundness related, but are instead focused on privacy, disclosure, fraud prevention, anti-money laundering, anti-terrorism, anti-usury lending, and promoting lending to lower-income segments.[citation needed]

The National Bureau of Economic Research has concluded that the combined federal, state, and local government average marginal tax rate for most workers to be about 40% of income.[132][133] The Tax Foundation concluded that government at all levels will collect 30.8% of the nation's income for 2008.[134] Tax Day, the day by which tax returns are due, is usually April 15.

AS TAX INCREASES, EEE COMPANIES HAVE TAX BREAKS

State governments, meanwhile, are responsible for the construction and maintenance of most highways. State, county, or city governments play the leading role in financing and operating public schools. Local governments are primarily responsible for police and fire protection.[citation needed]

As of January 20, 2009, the total U.S. federal debt was $10.627 trillion.[137] the borrowing cap debt ceiling as of 2005 stood at $8.18 trillion.[138] In March 2006, Congress raised that ceiling an additional $0.79 trillion to $8.97 trillion, which is approximately 68% of GDP.[139] Congress has used this method to deal with an encroaching debt ceiling in previous years, as the federal borrowing limit was raised in 2002 and 2003.[140] As of October 4, 2008, the "Emergency Economic Stabilization Act of 2008" raised the current debt ceiling to US$ 11.3 trillion.[141]

The federal government's debt rose by almost $1.4 trillion in 2009, and now stands at $12.1 trillion.[142] while the U.S. public debt is the world's largest in absolute size, another measure is its size relative to the nation's GDP. As of 2009 the debt was 83 percent of GDP. This debt, as a percent of GDP, is still less than the debt of Japan (192%) (The overwhelming number of owners of JGB’s are Japanese)[143] and is roughly equivalent to those of a few western European nations.[144]

Overall some very useful information, in particular the employment and failure rates of small businesses. Knowing this a dedicated section on small business and how both the software and business assistance will help companies stay in business.

A note on tax, resistance to the software for tax purposes, is bound to be strong, both democrats and republicans are looking to lower taxes to their traditional demographics, as such tax cuts are politically acceptable.

To suggest that when the system as a whole increases tax revenues, so long as the USA is on track to get into profit, companies using the system, receive tax cuts, will make the system more popular and as such more tax will be collected, and so on and so on.

The small struggling businesses are the ones that will be avoiding tax the most, as they simply cannot afford to pay the tax, plus they may have fallen into the accountants trap and be raped of all their cash flow.

Remember accountants are paid to make accounting something small business owners cannot understand, it is their primary job to create more billable hours, business owners often see accountants as financial and business advisors, this is not the case, the only advise they will give, is how to make the accounting process more, in 99% of cases, accountants will deliberately give poor advise, as often the best advise it to make things simpler.

Further accountants know nothing about business in the first place.

Where exactly I will put the small business section I am not sure, it may well be best placed, just before investments section 2:

Back to trying to find the tax evasion figures.

First some info on the budget

http://en.wikipedia.org/wiki/United_States_federal_budget

United States federal budget
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In the short-run, tax revenues have declined significantly due to a severe recession and tax policy choices, while expenditures have expanded for wars, unemployment insurance and other safety net spending.[1][2] In the long-run, expenditures related to healthcare programs such as Medicare and Medicaid are projected to grow faster than the economy overall as the population matures.[3][4]

Tax revenues declined from $2.5 trillion in 2008 to $2.1 trillion in 2009, and remained at that level in 2010. During 2009, individual income taxes declined 20%, while corporate taxes declined 50%. At 14.9% of GDP, the 2009 and 2010 collections were the lowest level of the past 50 years.[8][9]

Tax descriptions

The federal personal income tax is progressive, meaning a higher marginal tax rate is applied to higher ranges of income. For example, in 2010 the tax rate that applied to the first $17,000 in taxable income for a couple filing jointly was 10%, while the rate applied to income over $379,150 was 35%. The top marginal tax rate has declined considerably since 1980. For example, the top tax rate was lowered from 70% to 50% in 1980 and reached as low as 28% in 1988. The most recent changes were the Bush tax cuts of 2001 and 2003, extended by President Obama in 2010, which lowered the top rate from 39.6% to 35%.[10] There are numerous exemptions and deductions that typically result in a range of 35-40% of U.S. households owing no federal income tax. The recession and tax cut stimulus measures increased this to 51% for 2009, versus 38% in 2007.[11]

The federal payroll tax (FICA) is a flat tax used to fund Social Security and Medicare. For the Social Security portion, employers and employees each pay 6.2% of the workers gross pay, a total of 12.4%. The Social Security portion is capped at $106,800, meaning income above this amount is not subject to the tax. The Medicare portion is also paid by employer and employee each at 1.45% and is not capped.[12] The payroll tax is considered by some to be a form of social insurance rather than a tax, due to the benefits these programs pay to qualified recipients. For calendar year 2011, the employee's portion of the payroll tax was reduced to 4.2% as an economic stimulus measure.[13]

Tax expenditures

The term "tax expenditures" refers to income exemptions or deductions that reduce the tax collections that would be made applying a particular tax rate alone. In November 2009, Economist estimated the additional federal tax revenue generated from eliminating certain tax expenditures, for the 2013-2014 periods. These included: income exemptions for employer-provided health insurance ($215 billion); and various income deductions such as mortgage interest ($147B), state & local taxes ($65B), capital gains on homes ($60B), property taxes ($33B) and municipal bond interest ($37B). These total $557 billion. All of these steps together would reduce the projected deficit at that time by nearly half.[14]

According to the Center for American Progress, annual tax expenditures have increased from $526 billion in 1982 to $1,025 billion in 2010,

U.S. taxes relative to foreign countries
Economist Simon Johnson wrote in 2010: "The U.S. government doesn’t take in much tax revenue -- at least 10 percentage points of GDP less than comparable developed economies -- and it also doesn’t spend much except on the military, Social Security and Medicare."[19]

. In 2010, the Federal government of the USA spent an average of $11,041 per citizen (per capita). This compares to the 2010 World average spending of $2376 per citizen and an average of $16,110 per citizen for the World's 20 largest economies (in terms of GDP). Of the 20 largest economies, only six spent less per citizen: South Korea ($4557), Brazil ($2813), Russia ($2458), China ($1010), and India ($$226). Of the 13 that spent more, Norway and Sweden top the list with per citizen spending of $40908 and $26760 respectively.[21]

Major expenditure categories
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The federal government's expenditures in FY2010 included Medicare & Medicaid ($793B or 23%), Social Security ($701B or 20%), Defense Department ($689B or 20%), non-defense discretionary ($660B or 19%), other ($416B or 12%) and interest ($197B or 6%). Expenditures are classified as mandatory, with payments required by specific laws, or discretionary, with payment amounts renewed annually as part of the budget process. During FY 2010, the federal government spent $3.46 trillion on a budget or cash basis, down 2% vs. FY 2009 but up 16% versus FY2008 spend of $2.97 trillion.

Social Security, Medicare, and Medicaid expenditures are funded by permanent appropriations and so are considered mandatory spending. Social Security and Medicare are sometimes called "entitlements," because people meeting relevant eligibility requirements are legally entitled to benefits, although most pay taxes into these programs throughout their working lives.

Mandatory spending is expected to increase as a share of GDP. This is due in part to demographic trends, as the number of workers continues declining relative to those receiving benefits. For example, the number of workers per retiree was 5.1 in 1960; this declined to 3.0 in 2010 and is projected to decline to 2.2 by 2030.[25][26] These programs are also affected by per-person costs, which are also expected to increase at a rate significantly higher than the economy. This unfavorable combination of demographics and per-capita rate increases is expected to drive both Social Security and Medicare into large deficits during the 21st century. Unless these long-term fiscal imbalances are addressed by reforms to these programs, raising taxes or drastic cuts in discretionary programs, the federal government will at some point be unable to pay its obligations without significant risk to the value of the dollar (inflation).[27][28]

Medicare was established in 1965 and expanded thereafter. In 2009, the program covered an estimated 45 million persons (38 million aged and 7 million disabled). It consists of four distinct parts which are funded differently: Hospital Insurance, mainly funded by a dedicated payroll tax of 2.9% of earnings, shared equally between employers and workers; Supplementary Medical Insurance, funded through beneficiary premiums (set at 25% of estimated program costs for the aged) and general revenues (the remaining amount, approximately 75%); Medicare Advantage, a private plan option for beneficiaries, funded through the Hospital Insurance and Supplementary Medical Insurance trust funds; and the "Part D" prescription drug benefits, for which funding is included in the Supplementary Medical Insurance trust fund and is financed through beneficiary premiums (about 25%) and general revenues (about 75%).[29] Spending on Medicare and Medicaid is projected to grow dramatically in coming decades. The number of persons enrolled in Medicare is expected to increase from 47 million in 2010 to 80 million by 2030.[30] While the same demographic trends that affect Social Security also affect Medicare, rapidly rising medical prices appear to be a more important cause of projected spending increases. CBO expects Medicare and Medicaid to continue growing, rising from 5.3% GDP in 2009 to 10.0% in 2035 and 19.0% by 2082. CBO has indicated healthcare spending per beneficiary is the primary long-term fiscal challenge.[31] Various reform strategies were proposed for healthcare,[32] and in March 2010, the Patient Protection and Affordable Care Act was enacted as a means of health care reform.

Social Security is a social insurance program officially called "Old-Age, Survivors, and Disability Insurance" (OASDI), in reference to its three components. It is primarily funded through a dedicated payroll tax of 12.4%. During 2009, total benefits of $686 billion were paid out versus income (taxes and interest) of $807 billion, a $121 billion annual surplus. An estimated 156 million people paid into the program and 53 million received benefits, roughly 2.94 workers per beneficiary

Social Security spending will increase sharply over the next decades, largely due to the retirement of the baby boom generation. The number of program recipients is expected to increase from 44 million in 2010 to 73 million in 2030.

Other Spending
Military spending: The military budget of the United States during FY 2011 was approximately $740 billion in expenses for the Department of Defense (DoD), $141 billion for veteran expenses, and $48 billion in expenses for the Department of Homeland Security, for a total of $929 billion.[39]

Non-defense discretionary spending is used to fund the executive departments (e.g., the Department of Education) and independent agencies (e.g., the Environmental Protection Agency)

The federal government spent approximately $660 billion during 2010 on the Cabinet Departments and Agencies, excluding the Department of Defense, representing 19% of budgeted expenditures [8]

Interest expense: Budgeted net interest on the public debt was approximately $189 billion in FY2009 (5% of spending). During FY2009, the government also accrued a non-cash interest expense of $192 billion for intra-governmental debt, primarily the Social Security Trust Fund, for a total interest expense of $381 billion.[44] Net interest costs paid on the public debt declined from $242 billion in 2008 to $189 billion in 2009 because of lower interest rates.[45] Should these rates return to historical averages, the interest cost would increase dramatically.

12.05 pm GMT - Friday January 27th 2011

I had interesting chats with Mum and Dad last night, the relevant points

1. Large parts on North Africa and the Middle East were fertile land, that was farmed and blown away during the Roman Empire
2. The same applied in Australia, all be it the Aborigines burnt it to get the animals to escape, then kill them.
3. Solar panels in the UK cost $11,000 and provide half the power for a house
4. Bore holes gather heat and energy
5. Iran, Pakistan and Afghanistan speak a common language (nearly) that is not Arabic
6. Iranians feel they should be a world power, and could be

Back to: http://en.wikipedia.org/wiki/United_States_federal_budget

Understanding deficits and debt
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The annual budget deficit is the difference between actual cash collections and budgeted spending (a partial measure of total spending) during a given fiscal year, which runs from October 1 to September 30. Since 1970, the U.S. federal government has run deficits for all but four years (1998–2001)[48] contributing to a total debt of $14.0 trillion as of December 2010.[49] The fiscal year 2010 "total budget" deficit was $1.29 trillion or 8.9% GDP, down from $1.41 trillion or 10.0% GDP in 2009. These deficits are considerably higher than pre-crisis levels, which ranged from a $236 billion (2.4% GDP) surplus in 2000 to a $459 billion (3.2% GDP) deficit in 2008.[8]

NOTE: EXSTREEMLY INTERESTING PARAGRAPH

The national debt increase during a given year is not the same as the "total budget" deficit commonly reported, due to a variety of accounting complexities involved. These differences can make it more challenging to determine how much the government actually spends relative to tax revenues. The increase in the national debt during a given year is a helpful measure to determine this amount.

This is interesting as it validates, my basic principal of the financial software, which is the desire for it not to simply calculate monthly in’s and outs but also to calculate the total company debt/profit balance

From FY 2003-2007, the national debt increased approximately $550 billion per year on average. For the first time in FY 2008, the U.S. added $1 trillion to the national debt as the effects of a severe global financial crisis became apparent. Debt increases rose to $1.88 trillion in 2009 and $1.65 trillion in 2010 as the crisis continued.[50] In relative terms, from 2003-2007 the government spent roughly $1.20 for each $1.00 it collected in taxes. This increased to $1.40 in FY2008 and $1.90 in FY2009.

The total federal debt is divided into "debt held by the public" and "intra-governmental debt." The debt held by the public refers to U.S. government securities or other obligations held by investors (e.g., bonds, bills and notes), while Social Security and other federal trust funds are part of the intra-governmental debt. As of August 31, 2011 the total debt was $14.7 trillion, with debt held by the public of $10.0 trillion and intragovernmental debt of $4.7 trillion.[51] Debt held by the public as a percentage of GDP rose from 34.7% in 2000 to 40.3% in 2008 and 62.1% in 2010.[52] U.S. GDP was approximately $14.5 trillion during 2010 and an estimated $15 trillion for 2011 based on activity during the first two quarters.[53] This means the total debt is roughly the size of GDP. Economists debate the level of debt relative to GDP that signals a "red line" or dangerous level, or if any such level exists.[54] By comparison, China's budget deficit was 1.6% of its $10 trillion GDP in 2010, with a debt to GDP ratio of 16%.[55]

The CBO reported several types of risk factors related to rising debt levels in a July 2010 publication:

- A growing portion of savings would go towards purchases of government debt, rather than investments in productive capital goods such as factories and computers, leading to lower output and incomes than would otherwise occur;
- If higher marginal tax rates were used to pay rising interest costs, savings would be reduced and work would be discouraged;
- Rising interest costs would force reductions in important government programs;
- Restrictions to the ability of policymakers to use fiscal policy to respond to economic challenges; and
- An increased risk of a sudden fiscal crisis, in which investors demand higher interest rates.[56]

CBO scenarios (Congressional Budget Office)

The CBO reported during June 2011 two scenarios for how debt held by the public will change during the 2010-2035 time period. The "extended baseline scenario" assumes that the Bush tax cuts (extended by Obama) will expire per current law in 2012. It also assumes the alternative minimum tax (AMT) will be allowed to affect more middle-class families, reductions in Medicare reimbursement rates to doctors will occur, and that revenues reach 23% GDP by 2035, much higher than the historical average 18%. Under this scenario, activities such as national defence and a wide variety of domestic programs (excluding Social Security, Medicare, and interest) would decline to the lowest percentage of GDP since before World War II. Under this scenario, public debt rises from 69% GDP in 2011 to 84% by 2035, with interest payments absorbing 4% of GDP vs. 1% in 2011.[57]

CBO estimated in August 2011 that if laws currently "on the books" were enforced without changes, meaning the "extended baseline scenario" described above is implemented along with deficit reductions from the Budget Control Act of 2011, the deficit would decline from 8.5% GDP in 2011 to around 1% GDP by 2021.[58][59]

NOTE: Working on GDP scenarios, is in practice working a business model on turnover rather than profit

The "alternative fiscal scenario" more closely assumes the continuation of present trends, such as permanently extending the Bush tax cuts, restricting the reach of the AMT, and keeping Medicare reimbursement rates at the current level (the so-called "doc fix", versus declining by one-third as mandated under current law). Revenues are assumed to remain around the historical average 18% GDP. Under this scenario, public debt rises from 69% GDP in 2011 to 100% by 2021 and approaches 190% by 2035.[57]

The CBO reported in June 2011: "Many budget analysts believe that the alternative fiscal scenario presents a more realistic picture of the nation’s underlying fiscal policies than the extended-baseline scenario does. The explosive path of federal debt under the alternative fiscal scenario underscores the need for large and rapid policy changes to put the nation on a sustainable fiscal course."[57]

CBO reported in September 2011: "The nation cannot continue to sustain the spending programs and policies of the past with the tax revenues it has been accustomed to paying. Citizens will either have to pay more for their government, accept less in government services and benefits, or both."[60]

Contemporary issues and debates
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Main article: Political debates about the United States federal budget

See also: Social Security debate in the United States

See also: Health care reform debate in the United States

Topics frequently in the news in the 2010-2011 time period included: a) the effect of the Bush tax cuts and related extension; b) causes of deficit and debt increases; c) the effects of fraud, waste and earmarks; d) whether a "danger level" of debt exists; and e) the effects of globalization and free trade on employment[61], among others.

Many of the debates surrounding the United States federal budget centre on competing macroeconomic schools of thought. In general, Democrats favour the principles of Keynesian economics to encourage economic growth via a mixed economy of both private and public enterprise, a welfare state, and strong regulatory oversight. Conversely, Republicans generally support applying the principles of either laissez-faire or supply-side economics to grow the economy via small government, low taxes, limited regulation, and free enterprise.[62][63] Debates have surrounded the appropriate size and role of the federal government since the founding of the country. These debates also deal with questions of morality, income equality and intergenerational equity. For example, Congress adding to the debt today may or may not enhance the quality of life for future generations, who must also bear the additional interest and taxation burden.[64]

Economic growth and employment are key factors driving recent deficits. The Congressional Budget Office (CBO) estimated in October 2011 that approximately one-third of the deficit projected for fiscal year 2012 is due to economic factors, which have caused safety net expenditures to increase and tax revenues to decline with high unemployment.[65]

The U.S. last balanced its budget in 2001. Between 2001 and 2010, spending increased by 5.6% GDP (from 18.2% GDP in 2001 to 23.8% GDP in 2010), while revenues declined by 4.6% GDP (from 19.5% GDP in 2001 to 14.9% GDP in 2010), resulting in a 9.4% GDP deficit. Medicare/Medicaid spending increased by 1.9% GDP and defense spending increased by 1.7% GDP. Individual income tax revenues fell by 3.5% GDP and payroll taxes fell by 0.8% GDP.[66][67]

Economist Paul Krugman summarized these causes in May 2011: "What happened to the budget surplus the federal government had in 2000? The answer is, three main things. First, there were the Bush tax cuts, which added roughly $2 trillion to the national debt over the last decade. Second, there were the wars in Iraq and Afghanistan, which added an additional $1.1 trillion or so. And third was the Great Recession, which led both to a collapse in revenue and to a sharp rise in spending on unemployment insurance and other safety-net programs."[68]

CBO has estimated that letting current laws take effect would significantly reduce future budget deficits. For example, the Bush tax cuts of 2001 and 2003 (extended by President Obama in 2009) are scheduled to expire at the end of 2012. Other deficit reducers per CBO include allowing other tax cuts enacted in 2009 and 2010 by President Obama to expire in 2012, allowing the alternative minimum tax (AMT) to affect more taxpayers, and reducing Medicare reimbursements to doctors. These and other current laws, if allowed to take effect, reduce the deficit from an estimated 4.7% GDP in 2021 to 1.2% GDP.[69] Total deficit reduction could be as high as $7.1 trillion over a decade if current law is enforced and not overridden.[70]

Solving the problem
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Strategies

Strategies for addressing the deficit problem may include policy choices regarding taxation and spending, along with policies designed to increase economic growth and reduce unemployment. These policy decisions may be evaluated in the context of a framework:[71]

- Promote economic growth and employment: A fast-growing economy offers the win-win outcome of a larger proverbial economic pie to divide, with higher employment and tax revenues, lower safety net spending and a lower debt-to-GDP ratio.
- Make equitable trade-offs: Many budget choices have win-lose outcomes, reflecting how government revenues are divided, with some benefiting and others incurring costs. For example, taking away benefits from those in or near retirement may be considered inequitable, while phasing out retirement benefits for younger workers may be considered less so.
- Keep short- and long-term issues in perspective: Healthcare cost inflation and an aging population are the primary long-term deficit drivers. Unemployment and various tax and spending policy choices are the primary short-term deficit drivers. Measures to encourage economic growth today can be implemented along with other measures to reduce future deficits.[72]
- Limit or avoid future spending increases: Policy choices may focus on preventing future increases via freezes or reducing annual rates of increase, as federal spending has not declined year-over-year in nominal dollars since at least 1970. Annual growth rates since 2001 in the top three expenditure categories (Healthcare, Social Security, and Defense) are far above the economic growth rate.
- Invest productively: Some spending can be categorized as investments that lower future deficits. For example, if infrastructure, education or R&D investments could make U.S. workers and products more competitive or generate a revenue stream, these could reduce future deficits. Examples might include installing windows that reduce energy costs, toll roads and bridges, or power plants.[71]
- Avoid uncertainty and unnecessary regulation: Complex legislation may create uncertainty regarding future costs of doing business, which affects investment decisions made by businesses and households.[73]
- Implement budget process reforms: Budget rules could be implemented that require new legislation or programs to be funded by either cutting other spending or raising taxes (i.e., "Pay as you go" or PAYGO rules.)[74]

The CBO reported in September 2011 that: "Given the aging of the population and rising costs for health care, attaining a sustainable federal budget will require the United States to deviate from the policies of the past 40 years in at least one of the following ways:

- Raise federal revenues significantly above their average share of GDP;
- Make major changes to the sorts of benefits provided for Americans when they become older; or
- Substantially reduce the role of the rest of the federal government relative to the size of the economy."[75]
During testimony before the Congressional Joint Deficit Reduction Committee in September 2011, CBO Director Douglas Elmendorf counseled members of Congress to make decisions about the role of the federal government, then make policy choices to obtain the revenue necessary to fund those roles, to put the U.S. on a sustainable fiscal path.[76]

Specific proposals

A variety of government task forces, expert panels, private institutions, politicians, and journalists have made recommendations for addressing the deficit and debt:

- President Obama established a budget reform commission, the National Commission on Fiscal Responsibility and Reform, which released a draft report in December 2010. It included various tax and spend adjustments to bring long-run government tax revenue and spending into line at approximately 21% of GDP, with $4 trillion debt avoidance over 10 years.[77]

- President Obama announced a 10-year (2012–2021) plan in September 2011 called: "Living Within Our Means and Investing in the Future: The President’s Plan for Economic Growth and Deficit Reduction." The plan included tax increases on the wealthy, along with cuts in future spending on defense and Medicare. Social Security was excluded from the plan. The plan included a net debt avoidance of $3.2 trillion over 10 years. If the Budget Control Act of 2011 is included, this adds another $1.2 trillion in deficit reduction for a total of $4.4 trillion.[78]

- The House of Representatives Committee on the Budget, chaired by Rep. Paul Ryan (R), released The Path to Prosperity: Restoring America's Promise. The Path focuses on tax reform (lowering income tax rates and reducing tax expenditures or loopholes); spending cuts and controls; and redesign of the Medicare and Medicaid programs. It does not propose significant changes to Social Security.[79]

- The Congressional Progressive Caucus (CPC) proposed "The People's Budget" in April 2011, which it claimed would balance the budget by 2021 while maintaining debt as a % GDP under 65%. It proposed reversing most of the Bush tax cuts; higher income tax rates on the wealthy and restoring the estate tax, investing in a jobs program, and reducing defense spending.[80]

- The Peter G. Peterson Foundation solicited proposals from six organizations, which included the American Enterprise Institute, the Bipartisan Policy Center, the Center for American Progress, the Economic Policy Institute, The Heritage Foundation, and the Roosevelt Institute Campus Network. The recommendations of each group were reported in May 2011.[81]

- The Bipartisan Policy Center sponsored a Debt Reduction Task Force, co-chaired by Pete V. Domenici and Alice M. Rivlin. This panel created a report called "Restoring America's Future," which was published in November 2010. The plan claimed to stabilize the debt to GDP ratio at 60%, with up to $6 trillion in debt avoidance over the 2011-2020 period. Specific plan elements included defense and non-defense spending freezes for 4-5 years, income tax reform, elimination of tax expenditures, and a national sales tax or value-added tax(VAT).[82][83]

[edit]

Timing of solutions
How urgently should the U.S. put plans in place to address its budget challenges? Fed Chair Ben Bernanke stated in January 2007: "The longer we wait, the more severe, the more draconian, the more difficult the objectives are going to be. I think the right time to start was about 10 years ago."[84]

Total outlays in recent budget submissions
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

- 2012 United States federal budget - $3.7 trillion (submitted 2011 by President Obama)
- 2011 United States federal budget - $3.8 trillion (submitted 2010 by President Obama)
- 2010 United States federal budget - $3.6 trillion (submitted 2009 by President Obama)
- 2009 United States federal budget - $3.1 trillion (submitted 2008 by President Bush)
- 2008 United States federal budget - $2.9 trillion (submitted 2007 by President Bush)
- 2007 United States federal budget - $2.8 trillion (submitted 2006 by President Bush)
- 2006 United States federal budget - $2.7 trillion (submitted 2005 by President Bush)
- 2005 United States federal budget - $2.4 trillion (submitted 2004 by President Bush)
- 2004 United States federal budget - $2.3 trillion (submitted 2003 by President Bush)
- 2003 United States federal budget - $2.2 trillion (submitted 2002 by President Bush)
- 2002 United States federal budget - $2.0 trillion (submitted 2001 by President Bush)
- 2001 United States federal budget - $1.9 trillion (submitted 2000 by President Clinton)
- 2000 United States federal budget - $1.8 trillion (submitted 1999 by President Clinton)
- 1999 United States federal budget - $1.7 trillion (submitted 1998 by President Clinton)
- 1998 United States federal budget - $1.7 trillion (submitted 1997 by President Clinton)
- 1997 United States federal budget - $1.6 trillion (submitted 1996 by President Clinton)
- 1996 United States federal budget - $1.6 trillion (submitted 1995 by President Clinton)

The President's budget also contains revenue and spending projections for the current fiscal year, the coming fiscal years, as well as several future fiscal years. In recent years, the President's budget contained projections five years into the future. The Congressional Budget Office (CBO) issues a "Budget and Economic Outlook" each January and an analysis of the President's budget each March. CBO also issues an updated budget and economic outlook in August.

Actual budget data for prior years is available from the Congressional Budget Office [85] and from the Office of Management and Budget (OMB).[86]

1.28 pm GMT - Friday January 27th 2011

I have a new set of best friends, which is useful as I have sacrificed all my friendships for this project. The name of my new best friend is “THE CBO”

I’m off for a well deserved walk, and a period of reflection.

5.13 pm GMT - Friday January 27th 2011

I finally found the tax evasion stat I was looking for,

http://en.wikipedia.org/wiki/2007_United_States_federal_budget

Total receipts
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Receipts for fiscal year 2007 were $2.4 trillion. FY2007 on-budget receipts were $1.7 trillion. FY2007 off-budget receipts were $608 billion. Off-budget receipts include Social Security and Medicare payroll taxes, as well as the net profit or loss of the U.S. Postal Service.

- $1.1 trillion - Individual income tax (43.9%)
- $869.6 billion - Social Security and other payroll taxes (34.7%)
- $370.2 billion - Corporate income tax (14.8%)
- $65.1 billion - Excise taxes (2.6%)
- $26.0 billion - Customs duties (1%)
- $26.0 billion - Estate and gift taxes (1%)
- $47.2 billion - Other (1.9%)

Source: preliminary FY2007 year-end estimate from the U.S. Treasury Dept.

The IRS estimated that there were about $345 billion in uncollected taxes, which is sometimes referred to as the "tax gap.".[1]

Tax noncompliance describes a range of activities that are unfavorable to a state's tax system. These include tax avoidance, which refers to reducing taxes by legal means, and tax evasion which refers to the criminal non-payment of tax liabilities.[1]

Groups that do not comply with taxes include tax protesters and tax resisters. Tax protesters attempt not to pay tax believing that they have discovered interpretations of the law that show that they are not subject to being taxed, whilst tax resisters refuse to pay a tax for conscientious reasons (because the resister does not want to support the government or some of its activities). Tax resisters typically do not take the position that the tax laws are themselves illegal or do not apply to them (as tax protesters do) and they are more concerned with not paying for particular government policies that they oppose. Because taxation is often perceived as onerous, governments have always struggled with tax noncompliance since the beginning of civilization.[2]

I have found another useful article

http://en.wikipedia.org/wiki/US_public_debt

United States public debt
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The United States public debt is the money borrowed by the federal government of the United States at any one time through the issue of securities by the Treasury and other federal government agencies. The US national public debt consists of two components:

- Debt held by the public comprises securities held by investors outside the federal government, including that held by investors, the Federal Reserve System and foreign, state and local governments.[1]

- Intragovernment debt comprises Treasury securities held in accounts administered by the federal government, such as the Social Security Trust Fund.

Public and government accounts

The total or gross national debt is the sum of the "debt held by the public" and "intragovernmental" debt. As of February 2011, the "debt held by the public" was $9.6 trillion and the "intragovernmental debt" was $4.6 trillion, for a total of $14.2 trillion.[16]

The national debt can also be classified into marketable or non-marketable securities. As of February 2011, total marketable securities were $9.0 trillion while the non-marketable securities were $5.2 trillion. Most of the marketable securities are Treasury notes, bills, and bonds held by investors and governments globally. The non-marketable securities are mainly the "government account series" owed to certain government trust funds such as the Social Security Trust Fund, which represented $2.5 trillion in 2010.[16][17] Other large intragovernmental holders include the Federal Housing Administration, the Federal Savings and Loan Corporation's Resolution Fund and the Federal Hospital Insurance Trust Fund (Medicare).

Fannie Mae and Freddie Mac obligations excluded

Not included in the debt figures reported by the government, the U.S.

Consisting mainly of mortgage payment guarantees [18] the extent to which the government will be required to pay these obligations depends on a variety of economic and housing market factors. The federal government provided over $110 billion to Fannie and Freddie by 2010.[19]

Guaranteed obligations excluded

the U.S. federal government in late-2008 guaranteed large amounts of obligations of mutual funds, banks, and corporations under several programs designed to deal with the problems arising from the late-2000s financial crisis.

Unfunded obligations excluded

The U.S. government is obligated under current law to mandatory payments for programs such as Medicare, Medicaid and Social Security. The GAO projects that payouts for these programs will significantly exceed tax revenues over the next 75 years. The Medicare Part A (hospital insurance) payouts already exceed program tax revenues, and social security payouts exceeded payroll taxes in fiscal 2010. These deficits require funding from other tax sources or borrowing.[20]

The present value of these deficits or unfunded obligations is an estimated $45.8 trillion. This is the amount that would have to be set aside during 2009 so that the principal and interest would pay for the unfunded obligations through 2084. Approximately $7.7 trillion relates to Social Security, while $38.2 trillion relates to Medicare and Medicaid. In other words, health care programs will require nearly five times the level of funding than Social Security. Adding this to the national debt and other federal obligations would bring total obligations to nearly $62 trillion.[21] However, these unfunded obligations are not counted in the national debt.

The Congressional Budget Office (CBO) has indicated that: "Future growth in spending per beneficiary for Medicare and Medicaid — the federal government’s major health care programs — will be the most important determinant of long-term trends in federal spending. Changing those programs in ways that reduce the growth of costs — which will be difficult, in part because of the complexity of health policy choices — is ultimately the nation’s central long-term challenge in setting federal fiscal policy."[22]

Measuring debt relative to gross domestic product

GDP is a measure of the total size and output of the economy. One measure of the debt burden is its size relative to GDP. In the 2007 fiscal year, U.S. federal debt held by the public was approximately $5 trillion (36.8 percent of GDP) and total debt was $9 trillion (65.5 percent of GDP).[23] Debt held by the public represents money owed to those holding government securities such as Treasury bills and bonds. Total debt includes intra-governmental debt, which includes amounts owed to the Social Security Trust Funds (about $2.2 trillion in FY 2007)[24] and Civil Service Retirement Funds. By August 2008, the total debt was $9.6 trillion.[25]

Based on the 2010 U.S. budget, total national debt will nearly double in dollar terms between 2008 and 2015 and will grow to nearly 100% of GDP, versus a level of approximately 80% in early 2009.[26] Multiple government sources including the current and previous presidents, the GAO, Treasury Department, and CBO have said the U.S. is on an unsustainable fiscal path.[27] However, ahead of predictions, total national debt reached 100% by the third quarter of 2011.[28]

As the debt ratio increases, the exchange value of the dollar may fall. Paying back debt with cheaper currency could cause investors (including other governments) to demand higher interest rates if they anticipate further dollar depreciation. Paying higher interest rates could slow domestic U.S. growth.

Higher debt increases interest payments on the debt, which already exceed $430 billion annually as discussed below or about 15 cents of every tax dollar for 2008.[29] According to the CIA Fact book, nine countries have debt to GDP ratios over 100% for 2010, the largest of which is Japan at approximately 197.5%.[30]

Further, a high public debt to GDP ratio may also slow economic growth. Economists Carmen Reinhart and Kenneth Rogoff calculated that countries with public debt above 90 percent of GDP grow by an average of 1.3 percentage points per year slower than less indebted countries. The public debt-to-GDP ratio in March 2010 is about 60 percent of GDP; CBO projects it will reach 90 percent around 2020 under policies in place in 2010. If growth slows, all of the economic challenges the U.S. faces will worsen.[31]

Calculating the annual change in debt

The annual change in debt is not equal to the "total deficit" typically reported in the media. Social Security payroll taxes and benefit payments, along with the net balance of the U.S. Postal Service, are considered "off-budget", while most other expenditure and receipt categories are considered "on-budget."

In FY2008 an off-budget surplus of $183 billion reduced the on-budget deficit of $642 billion, resulting in a total federal deficit of $459 billion. Media often reported the latter figure. The national debt increased by $1,017 billion between the end of FY2007 and the end of FY2008.[33] The federal government publishes the total debt owed (public and intragovernmental holdings) at the end of each fiscal year[34] and since FY1957 the amount of debt held by the federal government has increased each year.

Foreign ownership

As of January 2011, foreigners owned $4.45 trillion of U.S. debt, or approximately 47% of the debt held by the public of $9.49 trillion and 32% of the total debt of $14.1 trillion.[48] The largest holders were the central banks of China, Japan, the United Kingdom and Brazil.[50] The share held by foreign governments has grown over time, rising from 13% of the public debt in 1988[51] to 25% in 2007.[52]

As of May 2011 the largest single holder of U.S. government debt was China, with 26 percent of all foreign-held U.S. Treasury securities (8% of total US public debt).[53] China's holdings of government debt, as a percentage of all foreign-held government debt, have decreased a bit over the last year, but are up significantly since 2000 (when China held just 6 percent of all foreign-held U.S. Treasury securities).[54]

Forecasting the debt
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Tracking current levels of debt is a cumbersome but fairly straightforward process. Making future projections is much more difficult for a number of reasons. For example, before the September 11 attacks in 2001, the George W. Bush administration projected in the 2002 budget that there would be a $1.288 trillion surplus from 2001 through 2004.[61]

In the 2005 Mid-Session Review this had changed to a projected four-year deficit of $851 billion, a swing of $2.138 trillion.[62] The latter document states that 49% of this swing was due to "economic and technical re-estimates", 29% was due to "tax relief" (mainly the Bush Tax Cuts), and the remaining 22% was due to "war, homeland, and other enacted legislation" (mainly expenditures for the War on Terror, Iraq War, and homeland security).

Projections between different groups will sometimes differ because they make different assumptions. For example, in August 2003, a Congressional Budget Office report projected a $1.4 trillion deficit from 2004 through 2013.[63]

However, a mid-term and long-term joint analysis a month later by the Center on Budget and Policy Priorities, the Committee for Economic Development, and the Concord Coalition stated that "In projecting deficits, CBO follows mechanical 'baseline' rules that do not allow it to account for the costs of any prospective tax or entitlement legislation, no matter how likely the enactment of such legislation may be." The analysis added in a proposed tax cut extension and Alternative Minimum Tax reform (enacted by a 2005 act), prescription drug plan (Medicare Part D, enacted in a 2003 act), and further increases in defence, homeland security, international, and domestic spending. According to the report, this "adjusts CBO's official ten-year projections for more realistic assumptions about the costs of budget policies", raising the projected deficit from $1.4 trillion to $5 trillion.[64]

The Office of Management and Budget forecasts that by the end of fiscal year 2012, gross federal debt will total $16.3 trillion. Thus, the projected debt will equal 101% of projected gross domestic product, which represents a milestone in the U.S. economy. Public debt alone, which excludes amounts that the government owes its citizens via various trust funds, will be 67% of GDP by the end of fiscal 2012.[65]

Historical analysis of government spending or debt relative to GDP can be misleading, according to the GAO, CBO and Treasury Department. This is because demographic shifts and per-capita spending are causing Social Security and Medicare/Medicaid expenditures to grow significantly faster than GDP. If this trend continues, government simulations under various assumptions project mandatory spending for these programs will exceed taxes dedicated to these programs by more than $40 trillion over the next 75 years on a present value basis.[66]

According to the GAO, this will double debt-to-GDP ratios by 2040 and double them again by 2060, reaching 600% by 2080.[67] A GAO simulation indicates that Social Security, Medicare, and Medicaid expenditures alone will exceed 20% of GDP by 2080, which is approximately the historical ratio of taxes collected by the federal government. In other words, these mandatory programs alone will take up all government revenues under this simulation.[66]

Risks and obstacles
------------------------------------------------------------------------------------------------------------
Main article: Deficit reduction in the United States

A high debt level may affect inflation, interest rates, and economic growth. A variety of factors are placing increasing pressure on the value of the U.S. dollar, increasing the risk of devaluation or inflation and encouraging challenges to dollar's role as the world's reserve currency. The Government Accountability Office (GAO), the federal government's auditor, argues that the U.S. is on a fiscally "unsustainable" path and that politicians and the electorate have been unwilling to change this path.[20]Further, the subprime mortgage crisis has significantly increased the financial burden on the U.S. government, with over $10 trillion in commitments or guarantees and $2.6 trillion in investments or expenditures as of May 2009, only some of which are included in the budget document.[70] The U.S. also has a large trade deficit, meaning imports exceed exports.

NOTE, mention automated factories in EEE cities.

Debt levels may also affect economic growth rates. Economists Kenneth Rogoff and Carmen Reinhart reported in 2010 that among the 20 advanced countries studied, average annual GDP growth was 3–4% when debt was relatively moderate or low (i.e. under 60% of GDP), but it dips to just 1.6% when debt was high (i.e., above 90% of GDP).[71]

The CBO reported several types of risk factors related to rising debt levels in a July 2010 publication:
- A growing portion of savings would go towards purchases of government debt, rather than investments in productive capital goods such as factories and computers, leading to lower output and incomes than would otherwise occur;
- If higher marginal tax rates were used to pay rising interest costs, savings would be reduced and work would be discouraged;
- Rising interest costs would force reductions in important government programs;
- Restrictions to the ability of policymakers to use fiscal policy to respond to economic challenges; and
- An increased risk of a sudden fiscal crisis, in which investors demand higher interest rates.[72]

While there is significant debate about solutions,[73] the significant long-term risk posed by the increase in entitlement spending is widely recognized,[74] with health care costs (Medicare and Medicaid) the primary risk category.[75][76] In a June 2010 opinion piece in the Wall Street Journal, former chairman of the Federal Reserve, Alan Greenspan noted that "Only politically toxic cuts or rationing of medical care, a marked rise in the eligible age for health and retirement benefits, or significant inflation, can close the deficit."[77] If significant reforms are not undertaken, benefits under entitlement programs will exceed government income by over $40 trillion over the next 75 years.[76] Should interest rates return to historical averages, the interest cost would increase dramatically. Historian Niall Ferguson described the risk that foreign investors would demand higher interest rates as the U.S. debt levels increase over time in a November 2009 interview.[78]

NOTE: The masses think about today not tomorrow, with the exception of myself, no one thinks they can change the world, so why should they think they can make a difference as such, none or few will sacrifice today for tomorrow, as such any government that “Did the right thing” would not be elected, as such it is not in any parties interest to do the right thing.

Debates
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Main article: Political debates about the United States federal budget#Debates about the public debt

Economists debate the level of debt relative to GDP that signals a "red line" or dangerous level, or if any such level exists. In January 2010, Economists Kenneth Rogoff and Carmen Reinhart stated that 90% of GDP might be an indicative danger level.[79] Fed Chair Ben Bernankestated in April 2010 that "Neither experience nor economic theory clearly indicates the threshold at which government debt begins to endanger prosperity and economic stability. But given the significant costs and risks associated with a rapidly rising federal debt, our nation should soon put in place a credible plan for reducing deficits to sustainable levels over time."[80]

Economists also debate the definition of public debt. Krugman argued in May 2010 that the debt held by the public is the right measure to use, while Reinhart has testified to the President's Fiscal Reform Commission that gross debt is the appropriate measure.[81] The Center on Budget and Policy Priorities (CBPP) cited research by several economists supporting the use of the lower debt held by the public figure as a more accurate measure of the debt burden, disagreeing with these Commission members.[82]

There is debate regarding the economic nature of the intragovernmental debt, which was approximately $4.6 trillion in February 2011.[83]For example, the CBPP argues: that "large increases in [debt held by the public] can also push up interest rates and increase the amount of future interest payments the federal government must make to lenders outside of the United States, which reduces Americans’ income. By contrast, intragovernmental debt (the other component of the gross debt) has no such effects because it is simply money the federal government owes (and pays interest on) to itself."[82] However, if the U.S. continues to run "on budget" deficits as projected by the CBO and OMB for the foreseeable future, it will have to issue marketable Treasury bills and bonds (i.e., debt held by the public) to pay for the projected shortfall in the Social Security program. This will result in "debt held by the public" replacing "intragovernmental debt".[84][85]

8.01 pm GMT - Friday January 27th 2011

Ok so that’s the analysis finished, the most useful aspects being the undisputed opinion that the medical bills are the biggest long term threat. As such, “American Butterfly” will be seen not only as a short term fix, but rather a long term.

I think I will adjust the “Give Half Back model to allow more to Medicaid
Current model

New Model

In the new model, I have taken $50 Million a year of the special projects fund and created a dedicated Medical education and staffing budget, which will train up and employ staff for the hospital

This gives a good amount of staff, further, I think it is more than fair that students that we have trained for free and housed for free and given an allowance to should be on a contract to work at more reasonable rates for 8 years, maybe 16. Thus in time reducing doctors costs, across the board.

I have also combined the improvements and acquisitions $250 to $125 and added a Medi reach $125, this will be an outreach programme for the greater community.

Whenever we are under budget (which I hope will be often) the excess can go back to improvements and acquisitions.

Lastly we need to remember that making of pharmaceuticals comes out of the “Special Projects” funds, further remember that the universities will be making all the formulas, and many pharmaceutical companies will be handing over their patents.

All in all, no longer a way to shave $350 Billion of the budget, more like $500,000 plus a sustainable future for ever.
__________
In general the Bush Tax, seems to be the biggest recent problem (wars aside), or more to the point, allowing them to vanish, as of the 2012 deadline, is the biggest cure for the economy.

http://en.wikipedia.org/wiki/Bush_tax_cuts

Bush tax cuts
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Bush tax cuts refers to changes to the United States tax code passed during the presidency of George W. Bush that generally lowered tax rates and revised the code specifying taxation in the United States. These were the:

- Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA)
- Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA)

Some policy analysts and non-profit groups such as OMBWatch,[12] Center on Budget and Policy Priorities,[13] and the Tax Policy Center[14] have attributed much of the rise in income inequality to the Bush administration's tax policy. In February 2007, President Bush addressed the rise of inequality for the first time, saying "The reason is clear: We have an economy that increasingly rewards education and skills because of that education."[15]

Critics state that the tax cuts, including those given to middle and lower income households, failed to spur growth. The cuts also increased the budget deficit, shifted the tax burden from the rich to the middle and working classes, and further increased already high levels of income inequality.[16][17][18][19][20] Economists Peter Orszag and William Gale described the Bush tax cuts as reverse government redistribution of wealth, "[shifting] the burden of taxation away from upper-income, capital-owning households and toward the wage-earning households of the lower and middle classes."[21] Supporters argued that the tax brackets were still more progressive than the brackets from 1986 until 1992, with higher marginal rates on the upper class, and lower marginal rates on the middle class than established by either the Tax Reform Act of 1986 or the Omnibus Budget Reconciliation Act of 1990.[22]

Economist Simon Johnson wrote in 2010: "The U.S. government doesn’t take in much tax revenue—at least 10 percentage points of GDP less than comparable developed economies—and it also doesn’t spend much except on the military, Social Security and Medicare. Other parts of government spending can be frozen or even slashed, but it just won’t make that much difference. That means older Americans are going to get squeezed, while our ability to defend ourselves goes into decline. Just because there’s a bipartisan consensus on an idea, such as tax cuts, doesn’t mean it makes sense. Today’s tax cutters have set us up for tomorrow’s fiscal crisis and real damage to U.S. national security."[23]

Debate over continuation of cuts
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In August 2010, the Congressional Budget Office (CBO) estimated that extending the tax cuts for the 2011-2020 time period would add $3.3 trillion to the national debt, comprising $2.65 trillion in foregone tax revenue plus another $0.66 trillion for interest and debt service costs.[26]

The non-partisan Pew Charitable Trusts estimated in May 2010 that extending some or all of the tax cuts would have the following impact under these scenarios:

- Making the tax cuts permanent for all taxpayers, regardless of income, would increase the national debt $3.3 trillion over the next 10 years.
- Limiting the extension to individuals making less than $200,000 and married couples earning less than $250,000 would increase the debt about $2.2 trillion in the next decade.
- Extending the tax cuts for all taxpayers for only two years would cost $561 billion over the next 10 years.[27]

In late July 2010, analysts at Deutsche Bank said letting the Bush tax cuts for those earning more than $250,000 expire would greatly slow economic recovery. However, Treasury Secretary Timothy Geithner said allowing the expiration would not cause such a slowing. The Obama administration proposed keeping tax cuts for couples making less than $250,000 per year.[29] Economist Mark Zandi predicted that making the Bush tax cuts permanent would be the second least stimulative of several policies considered. Making the tax cuts permanent would have a multiplier effect of 0.29 (compared to the highest multiplier of 1.73 for food stamps).[30]