Tuesday, September 29, 2015

Budgets (controversial)

Warning: economic reality will be encountered below. If you are allergic to facts, go away.

Warning: contents will be considered by some to be political. I don't care. If what you read angers you then go away. If you have specific, rational objections I'd love to hear your opinion. You might change my mind, and I would prefer to catch and correct any mistakes.

Warning: I choose to rely on facts and on models and theories that have demonstrated their effectiveness in real-world conditions, not on rhetoric and cultish following.



I believe NASA could be doing much more to promote space exploration and utilization, but that requires money. So, let's take a brief look at the US budget for 2015. I will be proposing a list of changes I would have made; this may not exactly match the mutant monstrosity that will emerge from Congress and henceforth be known as the 2016 budget, but we're talking about sweeping generalizations anyway.

Let's look at NASA's budget for 2015 first.




FY 2013 Op Plan* | FY 2014 Enacted** | FY2015 | FY2016 | FY2017 | FY2018 | FY2019
Science | 4,781.6 | 5,151.2 | 4,972.0 | 5,021.7 | 5,071.9 | 5,122.6 | 5,173.9
 - Earth Science | 1,659.2 | 1,826.0 | 1,770.3 | 1,815.5 | 1,837.6 | 1,861.9 | 1,886.3
 - Planetary Science | 1,274.6 | 1,345.0 | 1,280.3 | 1,304.9 | 1,337.1 | 1,355.7 | 1,374.1
 - Astrophysics | 617.0 | 668.0 | 607.3 | 633.7 | 651.2 | 696.8 | 993.0
 - James Webb Space Telescope | 627.6 | 658.2 | 645.4 | 620.0 | 569.4 | 534.9 | 305.0
 - Heliophysics | 603.2 | 654.0 | 668.9 | 647.6 | 676.6 | 673.3 | 675.5
Aeronautics | 529.5 | 566.0 | 551.1 | 556.6 | 562.2 | 567.8 | 573.5
Space Technology | 614.5 | 576.0 | 705.5 | 712.6 | 719.7 | 726.9 | 734.2
Exploration | 3,705.5 | 4,113.2 | 3,976.0 | 4,079.9 | 4,061.2 | 4,119.5 | 3,673.4
 - Exploration Systems Development | 2,883.8 | 3,115.2 | 2,784.4 | 2,863.3 | 2,917.7 | 2,993.9 | 3,106.6
 - Commercial Spaceflight | 525.0 | 696.0 | 848.3 | 872.3 | 791.7 | 730.9 | 172.0
 - Exploration Research and Development | 296.7 | 302.0 | 343.4 | 344.3 | 351.8 | 394.7 | 394.7
Space Operations | 3,724.9 | 3,778.0 | 3,905.4 | 3,951.9 | 4,051.0 | 4,073.8 | 4,601.8
 - Space Shuttle | 38.8 | 3,680.3 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0
 - International Space Station | 2,775.9 | 0.0 | 3,050.8 | 3,126.5 | 3,266.9 | 3,290.3 | 3,818.6
 - Space and Flight Support (SFS) | 910.2 | 97.7 | 854.6 | 825.4 | 784.1 | 783.5 | 783.2
Education | 116.3 | 116.6 | 88.9 | 89.8 | 90.7 | 91.6 | 92.6
Cross Agency Support | 2,711.0 | 2,793.0 | 2,778.6 | 2,806.4 | 2,834.4 | 2,862.8 | 2,891.4
 - Center Management and Operations | 1,991.6 | 0.0 | 2,038.8 | 2,059.2 | 2,079.7 | 2,100.5 | 2,121.6
 - Agency Management and Operations | 719.4 | 2,793.0 | 739.8 | 747.2 | 754.7 | 762.3 | 769.8
Construction & Envrmtl Compl Restoration | 646.6 | 515.0 | 446.1 | 379.0 | 382.7 | 386.6 | 390.4
 - Construction of Facilities | 589.5 | 515.0 | 370.6 | 302.7 | 305.7 | 308.7 | 311.8
 - Environmental Compliance and Restoration | 57.0 | 0.0 | 75.5 | 76.3 | 77.0 | 77.8 | 78.6
Inspector General | 35.3 | 37.5 | 37.0 | 37.4 | 37.7 | 38.1 | 38.5
Grand Total | 16,865.2 | 17,646.5 | 17,460.6 | 17,635.3 | 17,811.5 | 17,989.7 | 18,169.7

We're looking at a top-level budget of $17.46 billion, all-inclusive. My four proposed programs are a mix of things NASA already intends and new projects, but let's treat them as entirely new standalone programs at a cost of $1.85 billion per year. In addition, the budget listed above is the result of savage cuts and years of effort at gutting anything that isn't absolutely essential. Note for SLS critics that NASA has no choice but to continue development of a heavy booster; cutting the vehicle is not a politically viable option unless Congress decides to do it. They won't. At any rate, I would add another 10% to the base values, double the amount for education and boost exploration R&D by 50%. That's $19.424 billion plus my $1.849 billion, a total of $21.273 billion and a net increase of $3.812 billion. Virtually all of that money gets spent in the US.

 Bear in mind that NASA at present is obligated to deliver a manned asteroid visit circa 2025 and a manned Mars mission in the 2030's. None of my projects endanger those goals and most of them advance them one way or another. The buildup for the Mars mission will require additional funding. One thing I would add is a contingency program in case Russia decides to separate the ISS and build their own station; the US would require some additional functionality in short order, so part of the ISS category's 10% extra should be spent deciding on how best to do that. The ISS represents an enormous investment in manned space exploration, one that is nowhere near the end of its useful life. It cannot be abandoned while it is still useful, and we should be investing in expansion rather than focusing on end-of-life.


With that out of the way, let's look at the overall federal budget and where the money can come from. While doing so I will include changes I consider to be for the better.

First, some very basic changes:
1. Eliminate the debt ceiling entirely. It's a pointless artifact and a harmful lever for division and internal conflict. There is no evidence for a debt cliff and no evidence for any structural risk in our current economic conditions.
 - 1a. Current economic conditions will not last forever. Advice based on current conditions will change when conditions change. I am not arguing any specific policy as a permanent feature of our economic stance, rather I am arguing that we act on evidence. As of right now there is no evidence of looming inflation and no causal evidence of harmful effects from high levels of debt in sovereign economies. There is abundant evidence that in our current conditions, spending money on goods and services produced by Americans will create jobs, stimulate demand and improve the economy with historically low borrowing costs.
2. Prohibit Congress from directing specific agencies on what exactly to spend their money on within the appropriations bill. If it is important enough to merit Congressional direction then it can be codified in law as a standalone bill. If the House can't muster the votes to pass a law then that spending provision should not be a horse trade bundled into the appropriations bill proper.
3. Elected Senators and Representatives shall not be paid during any period where an official budget is not in force. This includes continuing resolutions and other temporary negotiations. Their staff will still receive salaries.

Next, let's look at the numbers (in billions):
(This is from wikipedia, but you are welcome to check the official numbers from budget.gov.)


Income
Source | Requested | Enacted

Individual income tax | 1,534 | 1,478
Corporate income tax | 449 | 342
Social Security and other payroll tax | 1,056 | 1,065
Excise tax | 111 | 96
Customs duties | 37 | 37
Estate and gift taxes | 18 | 20
Deposits of earnings and Federal Reserve System | 88 | 94
Allowance for immigration reform | 2 | -
Other miscellaneous receipts | 43 | 45
Total | 3,337 | 3,176


Expenses
Function | Title | 2014 enacted | 2015 Presidential request

050 National Defense | 620.562 | 631.280
150 International Affairs | 48.472 | 50.086
250 General Science, Space and Technology | 28.718 | 30.839
270 Energy | 13.375 | 8.620
300 Natural Resources and Environment | 39.102 | 41.349
350 Agriculture | 22.659 | 16.953
370 Commerce and Housing Credit | -82.283 | -31.430
400 Transportation | 95.519 | 97.825
450 Community and Regional Development | 33.305 | 28.865
500 Education, Training, Employment and Social Services | 100.460 | 117.350
550 Health | 450.795 | 512.193
570 Medicare | 519.027 | 532.324
600 Income Security | 542.237 | 535.963
650 Social Security | 857.319 | 903.196
700 Veterans Benefits and Services | 151.165 | 158.524
750 Administration of Justice | 53.102 | 55.843
800 General Government | 22.407 | 25.706
900 Net Interest | 223.450 | 251.871
920 Allowances | 1.875 | 29.285
950 Undistributed Offsetting Receipts | -90.740 | -95.653
Total | 3650.526 | 3900.989

As you can see, money coming in is less than money going out. This is normal during wars and recessions; fighting it makes the economic damage worse.

 First, income. The big three are individual and corporate income taxes plus payroll taxes. As an aside, we could pay for the entire increased NASA budget simply by changing the threshold for estate tax from $10 million to $5 million, even if we include an exception for small family businesses like farms. Let's assume the estate tax revenue increases to $25 billion, individual income tax increases to $1.9 trillion (by taxing unearned income as income, taxing capital gains as income, taxing carried interest as income, then increasing the dollar amount of each tax bracket significantly while also increasing the top-level tax amount significantly), corporate income tax increases to $600 billion (not including several hundred billion dollars in fines for tax dodging, forgivable for those that repatriate their cash and pay taxes) and payroll tax stays flat (this by increasing the lower bound for when people start paying payroll taxes and eliminating the upper bound). That puts us at $3.861 trillion.

 Note that the cost to the US government of all the tax breaks it allows is larger than the total amount of discretionary spending in the budget. If all tax breaks were eliminated we could take in an additional $1.22 trillion in revenues. We don't want to do that because some tax breaks encourage people to do things like save for retirement or donate to charity. I include this in the individual income tax section above, assuming that about 20% of tax breaks are eliminated (raising some $244 billion in revenue).

 Second, expenses. NASA appears under 250, so we will have to increase that category by at least $3.8 billion. Obviously we would like to reduce any wasteful or ineffective spending, but cutting for the sake of cutting does lasting harm. The deficit shown above is $724 billion. It would not be catastrophic to go above that value, but we should try not to go too far over it. Considering the $685 billion in added revenues, that gives us $1.4 trillion to work with.

050 National Defense - 
 - DOD : No enforced change. Consider ending the LCS, limiting the planned procurement of LRS-B, incorporating drone carrier capability on future frigates and cruisers, incorporating directed-energy weapons and hypervelocity weapons into any new surface vessels of sufficient size. Consider cost savings in space payloads using alternative commercial carriers. Essentially, give the Pentagon the freedom to decide whether to end current programs on their own. Consider a possible F-22 restart. Consider broader use of drones and robotic ground vehicles.

150 International Affairs - No change. Consider diverting funding from international narcotics enforcement to international food aid and educational funding.

250 General Science, Space and Technology - +$3.8 billion for NASA, +$3.5 billion for NSF, +$2.5 billion for DoE. Overall change +$9.8 billion.

270 Energy - +$35 billion, primarily as year 1 of a 10-year smart grid overhaul

300 Natural Resources and Environment - +$25 billion, primarily as year 1 of a 10-year municipal water and sewer overhaul but including increases to the NOAA, USGS, Fish and Wildlife (and related organizations) and particularly the Corps of Engineers, with focus on flood abatement and related activities.

350 Agriculture - +$5 billion, split between increased food inspection and agricultural research.

370 Commerce and Housing Credit - No change. If funds remain, increase regulatory oversight of finance, particularly for entities not protected by FDIC.

400 Transportation  - +$20 billion, primarily as year 1 of a 10-year accelerated maintenance and improvement program for roads, bridges, track, airports, ports and waterways. +$5 billion to increase inspection of shipping containers (including 100% cargo checks for radioactive material). +$5 billion for a competitive and comparative program to replace TSA with public/private competitors. Total change +$30 billion.

450 Community and Regional Development - +$1 billion for increased disaster assistance. +$1 billion for increased SBA loan activity.

500 Education, Training, Employment and Social Services - +$35 billion total
 - +$25 billion for education and job placement of released prisoners and anyone else that applies (this line item in support of a later item to release nonviolent drug offenders)
 - +$10 billion for school improvements, state educational aid, etc.

550 Health - +$4 billion total
 - +$3 billion for substance abuse and mental health
 - +$1 billion to FDA (speed up drug approvals / denials, enhance ability to investigate companies and clinical trials)
 - Allow Medicaid to negotiate drug prices (substantial savings possible but not included here)

570 Medicare - no change
 - Allow Medicare to negotiate drug prices (substantial savings possible but not included here)

600 Income Security - +$145 billion, to include a direct cash payment program ($30b), a housing-first homeless assistance program ($30b) plus significant increases to SNAP, TANF and other assistance programs ($85b).

650 Social Security - No change. Note that SS revenues were increased by removing the cap on SS payroll tax.

700 Veterans Benefits and Services - +$30 billion to eliminate all veteran homelessness, improve VA hospital performance and support continued research into TBI and prosthetics.

750 Administration of Justice - +$6 billion total
 - +$5 billion to support criminal investigation, focusing on police abuse of force, financial crimes and corporate tax evasion.
 - +$1 billion to modernize prison facilities including health services.
 - Eliminate all private prisons. No net change; any recovered funds to be reinvested in existing facilities.
 - Immediately release all nonviolent drug offenders to either rehab or job training. Funding is provided in line items above for both. Savings to be reinvested in the existing prison system. All inmates upon serving their sentences or being released for any other reason will be eligible for job training and placement.

800 General Government - No change.

900 Net Interest - No change.

920 Allowances - No change.

950 Undistributed Offsetting Receipts - No change.

Totals: Original total $3,901 billion. Proposed total $4,228 billion.
Deficit: Original deficit $724 billion. Proposed deficit $367 billion.

Look at that. I cut the deficit in half, boosted humanitarian aid by 50% or more, invested in infrastructure across the country, expanded scientific and educational goals, cut the prison population by more than half and gave enforcement agencies the funding they need to go after complex cases in finance and corporate malfeasance.
I didn't even need to cut any defense funding. All I had to do was recapture about 20% of the money leaking through tax loopholes. Want a balanced budget? Cut 50% of those loopholes.

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