Saturday, July 23, 2011

Balancing the budget

If you haven't seen the Budget Hero yet, it is a sort of online game that you can use to make decisions about how to balance the US budget. 

Personally, I find it hard to use (if I want to replay it to change some things, I have a hard time getting it started again, and it seems hard to get the thing to play right away without instructions), but my main problem is the lack of options. It seems that the programmers merely put in a few options that are on the table without allowing you to change things that neither the Democrats nor the Republicans currently propose.

For instance, the first thing I would do is start gradually raising peak tax rates for the rich back up to the levels we had during the baby boom years, for instance under Republican President Eisenhower. As Robert Reich has pointed out, the peak tax rate was 91 percent back then. Note that this would not affect the middle class much – only the people who are able to pay more in taxes would pay more.

The problem with our budget deficit is that we have reduced tax revenue over the past three decades even as we increased spending.

Budget Hero does not allow me to change the peak tax rate, though it would be informative to see how that would affect the budget deficit. In my attempt, I managed to postpone US bankruptcy until 2032 – but we still went bust. In other words, there is no plan on the table for the US to get out of the red.

Here it is if you want to give it a go.


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