US Federal Budget Reform

The White House issued in December 2010 "The Moment of Truth: Report on the National Commission on Fiscal Responsibility and Reform".

The objective of this report is found in the preamble: "America cannot be great if we go broke".

The Federal Government plans to use the guidelines of this report to tackle an unsustainable budget plan, to anticipate austerity measures that might be triggered if China, the largest foreign holder of US' debt, loses confidence that the US government is able to repays its loans.

The plan to address the nation's overwhelming debt burden, make Social Security solvent, reduce long-term growth of health care spending, and cut red tape consists of a fiscal restraint program that promotes reform and efficiency forcing the government to produce better results and save money.

The components of this fiscal restraint program are:

1) Discretionary Spending Cuts. The consequences of this measure are i) force budget discipline in Congress, ii) include enforcement mechanisms, and iii) cut low-priority programs.

2) Comprehensive Tax Reform. This reform requires to i) sharply reduce rates, ii) broaden the base, iii) simplify tax code, iv) reform corporate tax, v) cap revenue to avoid excessive taxation, and vi) cut spending in tax code.

3) Health Care Cost Containment. Achieve this goal by implementing a common-sense reform to i) physician payments, ii) cost-sharing, iii) malpractice law, iv) prescription drug costs, iv) government-subsidized medical education

4) Mandatory Savings. For these savings it is necessary to i) cut agriculture subsidies, ii) modernize military & civil service retirement systems, and iii) reform student loan programs.

5) Social Security Reforms. "Reform it for its own sake, not for deficit reduction".

6) Process Changes. In other words, reform the budget process to ensure that the debt remains on a stable path.

http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/TheMomentofTruth12_1_2010.pdf