It's astounding that as screwed up as the budget & debt picture is, it could still be fixed if everyone were willing to be even modestly rational about our situation. The fiscal house has been on fire for a decade and most of DC wants to pretend otherwise (particularly when their favored party is in power).
- Lock spending growth for ten years at a maximum 1% per year, no matter what.
- Cut $250 billion off the military. Make the human force smaller. Trim or end various very expensive, unnecessary weapons systems. Close & consolidate a lot of bases. Aim for ~2.3% of GDP for military spending.
- Reverse the recent personal tax cuts. Raise income taxes on the top 1/3, staggered toward the top 10%. Try to get $150-$200 billion here.
- Bring Social Security costs down by $50b. Add some means testing for people that really don't need it.
- Squeeze costs out of healthcare by using Medicare/Medicaid/CHIP/VA as a club, across the board targeting of all costs in the industry. The US Government spends over $1 trillion on healthcare, find at least $100b in savings.
- Go to work on the national debt by gently abusing the position the dollar has as the global reserve currency. Have the Fed start a ten year QE program buying $500b per year back in debt and retiring it.
- Federal legalization of marijuana (another tax point for states, perhaps reducing some federal revenue dependency that could be redirected back to the federal budget); it'd also reduce the vast, expensive government prison, policing & enforcement costs. We're heading this direction now, let's just move faster.
- Meaningfully increase gasoline taxes, eg $0.20 per gallon, to fund & offset infrastructure costs. Also consider a new infrastructure tax on expensive consumer vehicles, meant to amplify the contribution by higher income persons to the infrastructure funding increase (since the gas tax hits the bottom 2/3 far harder).
That combination would produce a budget surplus within maybe five years. The surplus after a decade of spending growth locked at 1%, would be immense. We'd be down to $12 trillion in public debt within a decade, with a $26-$28 trillion economy, making the public debt easily managed. The Fed's QE debt retirement could end there. And all it would take is ten years of shared, modest pain and discipline.