There are basically only four ways the US can reduce its defecit, as far as I can see.

[Donald Ian Rankin]

Here is a pie chart of the US budget; I think it makes instructive viewing (although it's from wikipedia, so usual caveats apply).



So basically, if you want to reduce the defecit, you have to either

1) Spend less on healthcare,
2) Spend less on social security,
3) Spend less on defence,
or
4) Raise more revenue, from taxes etc.

There are marginal gains that can be made outside those four, but not much.



The striking one to me is the healthcare expenditure - back-of-an-envelope calculations suggest that's about $2,200 per person per year. In the UK we spend about 50% more than that (about £2000 per person per year = $3300 dollars, give or take a lot), *but that provides almost all of our healthcare*, whereas my understanding is that most Americans *also* spend a fortune on private health insurance, and have comparable health outcomes. I think this is evidence that the NHS is much more efficient than paying private health-care providers.

[Vincardog]

1. First off take SS out of the discussion, it is self funding and by law cannot be included.

In fact the SS surplus actually hides the true deficit. I also believe that you are overstating the UK's expenditure I think we have the highest COST least effective health system, in the world.
The way to reduce our healthcare cost would be to institute single payer system that paid for outcomes not procedures.

We can also GROW our way out of the problem. If we increased the number and salary of our jobs the "deficit problem" would disappear. It would help if the Top Marginal Rate was over 50% and the corporations paid their traditional 33% of the Federal costs.

[Thinkingabout]

7. You are correct, US spends about $7800 per person annually. International health insurances

Are telling their policies holders if they emergency care while traveling in the US to get that care, if other procedures are required to go to another country besides the US because of cost. Too many Congress members are voting as the insurances and drug companies wants cost continues to rise.

[geek tragedy]

2. Another way: create jobs and a growing economy

to bring in more revenue.

Of course, this is the least likely to prevail in Washington.

[Donald Ian Rankin]

5. That's an objective, not a policy.

What Washington can do is pass laws, which may or may not result in a growing economy further down the line. The government can't just decree that the economy will grow, whereas it can just decree cuts or increases to spending or taxation.

Moreover, many of the laws most likely to result in a growing economy would have costs greater than there benefits - the easiest way to stimulate economic growth is to reduce taxed and deregulate, which often makes things even worse for poorer people.

[geek tragedy]

10. The policy is to grow the taxbase and economy in order to reduce the

deficit, instead of trying to cut it using deflationary measures, i.e. austerity.

[karynnj]

12. They did with the stimulus

One part of the stimulus was money for states for teachers, fire and police. These were SAVED jobs and they meant those people would continue buying goods and services.

When this was done, unemployment was spinning out of control. The stimulus DID change the direction the economy was going. (Yes, the Republicans say you can't count saved jobs, but I say they don't make the rules. That bill did change the economy.

Another less long term piece of legislation(or threat of legislation) might help the deficit this year. The fear last December was that capital gains would greatly increase in 2013. How could people holding highly appreciated stock act to not have to pay higher 2013 rates, sell in 2012. If a significant number of people did, that means that tax revenues will surprise people by being higher than expected.

[ChairmanAgnostic]

3. Do you mean DEBT or do you mean DEFICIT?

they are two very different things. Reducing one or the other takes different approaches.

[Donald Ian Rankin]

6. I believe that I mean defecit.

My understanding is that defecit = d/dt (debt), so in practice if you want to reduce one you need to reduce the other.

[HiPointDem]

4. our deficit is *already* being reduced.

[yodermon]

8. The Deficit has been decreasing since 2009. You mean the Debt.

[Donald Ian Rankin]

11. No, actually I meant what I said.

The defecit is the rate of change of the debt with regards to time.

[yodermon]

13. ...which is already decreasing. So to answer your question, simply observe what policies

are already in place.

[karynnj]

9. You are looking at this in a static, rather than dynamic way

The EASIEST way out is to grow the economy. If the economy grows, many costs (unemployment, Medicaid etc) all go down. In addition, revenue goes up. Magically the deficit will be much smaller or --- at some point gone.

On the super committee, both Kerry and Van Hollen used their time with the CBO guy (Elmendorf ?) to ask how much moving to a more acceptable unemployment rate would change the numbers. This was part of the basis for the (rejected) Democratic plan that Baucus put out including things like infrastructure spending and other stimulus programs.

Even now, I wonder if part of the slow walk on both sides is because the deficit had already shruk considerably as projected in September and earlier this year. I know at the end of the year, there were millions of stories suggesting that people sell highly appreciated stock by the end of year - as the capital gains rate could go up in 2013. (Even NOT looking for financial articles, I heard and read them everywhere.

If people actually did this, by April 15, the federal government AND the state governments might be in the position that taxes revenues would come in higher than expected. This could help lower the deficit estimate again! It might also lead states to rehire some laid off police, fire or school employees.