By Dave Anderson:
The current debate over the debt ceiling has the outline of a deal --- $2.4 trillion dollars in deficit reduction over ten years. The sticking point is how much the bottom 90% of the economic distribution in the US will cry in pain. The Democrats are offering some aspirin while the Republicans aren't offering anything.
If we had a functional political process that was not in-hoc to creating and protecting elite revenue streams, there is an easy way to cut $2 trillion dollars from projected Federal spending without harming the bottom 90% of the US population.
The CBO will credit a $1.4 trillion dollar savings over a decade as soon as there is a credible policy for pulling out of Afghanistan and Iraq. The credible policy is fairly simple: As of July 1, 2012, or Jan. 1 2013 or whatever logistically compatible date, no US combat troops or combat support troops would remain in both Afghanistan and Iraq.
The next step is to address healthcare. The plan would be two fold. The first is simplely allow either the Veterans Administration to offer their current formulary to Medicare Part D subscribers. The VA has the lowest pharamceutical costs in the US for two reasons. The first is that it is the single largest buyer of drugs in the US. Secondly, it actually restricts choices of expensive drugs so the VA can actually say no. Initial estimates indicate this could save between $140 and $200 billion over ten years before interest expenses are included.
The second chunk of the healthcare savings plan is to introduce a public option to the ACA exchanges and move the exchange open date up six to twelve months on a rolling basis (as the state based exchanges become ready) This would save another $150 to $200 billion dollars over a decade without actually hurting people.
Throw in reductions on energy subsidies, increases to the IRS enforcement budget and small but consistent increases in using federal bargaining power for medical supplies purchased by Medicare, and we could easily save $2 trillion dollars from the leeching sectors of the economy without actually hurting people.
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