According to my sources
The #1 expense is entitlements and unfunded liabilities
The #2 is national defense
The #3 is interest payments on debt and
The #4 is education.
Please correct me if I’m wrong.
Entitlements were promises made without plans to finance them. With unemployment among the youth at record highs and the baby boom “bubble” in the demographics it has helped in a climate of slow growth and during a European Crisis with sovereign defaults mounting to produce the perfect storm and lead to a fiscal cliff.
It doesn’t matter who’s “fault” it is, we need to fix it.
The problem? We owe more than we earn.
Can it be solved without entitlement cuts?
I think so, but it requires a radical change in the education system that utilizes technology.
Education costs $810B per year. That is perhaps one of the biggest misuses of funds I have ever seen. Education is terrible, spending more doesn’t make it better. The test scores aren’t #1 yet we spend about 5 times more than the next largest country’s education expense, Japan.
According to 2010 census data, age range 5 to 19 includes just over 63M americans. Doing some math. $810B divided by $63million is over $12500 per student. Yet I have seen the figure of around $7,000 per person.
Anyways, I could bring down education costs very drastically and get rid of what we currently call “schools”.
Give every kid an ipad custom made that doesn’t allow them to access anything but a few apps unless they complete the required assignments. Apple would love to cut a deal and get free branding and marketing, but lets just say it costs $1,000 per custom Ipad like this preloaded with an “education app.” That is only $63B a far cry from $810B.
Now get rid of teachers in a way. You are going to give them a severance package if they agree to record their lectures and record video of their lectures for awhile. The severance package will be about $100,000 per teacher, which will help forgive their debts, their student loans and compensate them for the time they spent pursuing a career that we just made obsolete (more or less). Assuming 1 teacher per 30 kids there are about 2M teachers in the world, so you are talking about maybe $200B for this. You could make it bigger since it’s a one time thing if you really need to and buy off the unions and whatever political pork you have to do to get it done. Now you have the 1 time cost of Ipads and then you only have to cover replacement and repairs going forward. You have the teachers uploading lectures, but also the students to younger students that are less advance so the students teach what they learned. And you have question and answer section that will find similar questions and answers and if your question still isn’t answered you can submit it for students, teachers, and parents. You can have audio, books, tests (which can be printed out and then answers you can take a picture of and upload the picture with answers back),etc.
You can rent out every kid age 5-19 an Ipad or other tablet and make an app for education and it will only cost you about $35B as a one time cost plus additional cost for replacement, repairs, and for population growth requiring more in the future. I bet Apple/google/microsoft/whoever would love to give the government a deal for name recognition and branding and they may even cut that price in half or cover all repairs and all future expenses to cover population growth.
Then have all the current teachers and experts and students (for younger students) upload lessons and course material and audio and any teaching material.
Even if you have to throw in a bunch of crap like a daycare center, software updates, etc… You can in the future save at least a minimum of perhaps $500 B a year on education.
Plus you would be laying the foundation for an education system that could teach kids important lectures that aren’t usually covered like basic finance, business, investing, how to raise capital and financial education that can train more people to become job creators rather than looking for jobs. The sad fact is that technology will continue to make human labor obsolete and leave more and more people jobless if we don’t make up for it by skyrocketing amount of entrepreneurs, businessmen and investors since more businesses can get by with less employment.
It also can teach them at a much faster rate as the slowest kids won’t have to repeat an entire grade, but can just take maybe 12-14 months per school year, rather than just 8 months or however long students are in school. The fastest students might learn in 4 months, knowing that they can advance a grade and go at their own pace, and that they can learn about alternate subjects of their own choice if they finish the mandatory stuff. Maybe students can go through k-12 working the full year rather than just 4 months and they can get normal k-12 done in 4 years.
Now maybe you can have a test every 3 months or something and use those tests and tracking of which lectures they listened to and watch and determine what lectures yields better test scores to provide a better rating system for helping kids learn efficiently.
I think ultimately you could save hundreds of billions of dollars and provide a MUCH better education system for the modern era that will lead to a huge rise in productivity, employers and as a result reduce unemployment and raise wages at the same time while boosting the economy globally as well.
That would make a huge dent in the trillion dollar deficit.
The other side is revenue enhancing. I have heard talk of a tax amnesty which I agree with to bring in delinquent tax payments and those that are involved in illegal activity who owe taxes but don’t want to pay for fear of persecution.
I think you can finish the rest and reward income earners more while punishing black market and illegal income earners by eliminating the income tax and replacing it with a national sales tax.
Average personal expenditures in US in 2011 is nearly 50k. There’s about 220M people 20 and up times 50k is about 11 trillion. Times about 18% national sales tax is about 2trillion.
During FY 2011, the federal government collected approximately $2.3 trillion in tax revenue or 15.4% GDP. Primary receipt categories included individual income taxes (47%), Social Security/Social Insurance taxes (36%), and corporate taxes (8%). Other types included excise, estate and gift taxes.
47% of $2.3Trillion is 1.081Trillion compared to the 2T or so you collect with a sales tax. You raise about a trillion more before accounting for all of the changes that may effect spending. People will keep more of their income so I don’t know if it’s fair to assume that spending will go down just because spending gets taxed. However, the poor would need exceptions so it wouldn’t unfairly hit them harder. So Food, fuel and housing/shelter costs you would not collect national sales taxes from. The reason for the plan to eventually substitute is the underground economy which tends to happen when you raise taxes and the capital that is unaccounted for. You also would collect from illegal immigrants. I’d have to really look at individuals’ average expenses and subtract food and fuel to determine what sort of revenue it would add, but I think the plan would be to make the amount you collect about even to the amount you collected before, and any additional revenue you bring in from underground economy and illegals would be a bonus.
Through illegals’ spending habits you can still collect their taxes and discourage people from avoiding taxes via illegal activity instead of encouraging via tax relief.
I think this would solve the problem, or at least a temporary solution that would give us a serious window of opportunity in which the youth would need to come through and really grow the economy as they come out of this new educational system.
Sure entitlements will still hit the fan in maybe 2016 or so when baby boomers start to reach retirement at alarming rates, but this would position the youth to deal with the economy which has fundamentally changed since the end of the industrial age and continues to eliminate the need for human labor, creating a huge void of jobs. This void will continue to grow if we do not change how we prepare children. We need an educational system that prepares them to be employers, not employees and does so at a very reduced cost. This way, they will be waiting for a job that never manifests and instead will create several.
One Response to Fiscal Cliff SOLVED
education spending is much, much less than that