How to End the Deficit by 2017 with No New Taxes

The Crisis

The Federal Government is spending $1.3 trillion dollars per year more than it receives in taxes in 2011^[1]. This deficit is paid for by borrowing from China and others, increasing our national debt. The Treasury Department has forecast that the interest on the debt will grow from $300 billion per year in 2011 to $842 billion per year in ten years. These interest payments will subtract from spending on Medicare, Social Security, Defense, etc. David Stockman, President Reagan’s Director of the Office of Management and Budget, said we have a “here and now problem” and must eliminate the deficit in the next three years or face economic collapse. Stockman said the plans of both Parties are “delusional” because they do not eliminate the deficit for 20 years^[2]. The subject of the Republican Presidential debate of October 11, 2011 was “Focus on the Economy”. The  Deficit was mentioned only once by one candidate, but no plan to eliminate it was offered. It’s as if Franklin Roosevelt did not mention Pearl Harbor on December 7, 1941!

The Solution

Strong America Now was created to inform the people of

America of this peril so they will arise and demand that their government eliminate the Deficit by 2017 by reducing  waste. Eliminate that waste and pass the recommendations of the Deficit Commission and the deficit is eliminated by 2017 per the graph. In 2018 we begin paying down our National debt with the surplus!

The US Army has found that, on average, 25 percent of every dollar spent is waste. For example, the Army found that the cost of assembling an  armored vehicle known as the MRAP (Mine Resistant Ambush Protected)was 90 percent waste which they have eliminated^[3]. The Army detects and eliminates this waste using a method known as Lean Six Sigma pioneered by Mike George, Director of Strong America Now who has no commercial interest but wrote six books on the subject. Medical care contains 30-40 percent waste according to the Institute of Medicine^[4]. For example, Stanford University hospital applied waste reduction to Cardiac Bypass surgery. They found that the cost could be reduced by 40 percent while the mortality rate fell by 48 percent! Applying waste reduction across the medical care system would reduce the cost of Medicare by 20 percent by 2017 with better results, and by 30 percent by 2010. Read the white paper “Saving Medicare by Reducing Waste” for more details. Obamacare will create deficits of more than $75 billion per year and must be repealed and replaced. The reductions to Social Security are related to the estimated $100 billion in fraud per year. There are 50 more case studies on the Strong America Now website which will convince you that we really can reduce the cost of government, both discretionary and entitlement spending by an average of 25 percent by 2017 if we start in 2013. Remember, we won WWII in four years!

Why politicians who lack private sector experience do not believe in waste reduction

Most people in government have no private sector experience and do not believe that waste is significant, as Doug Elmendorf, the Director of the Congressional Budget Office claimed in his testimony before the Super Committee. President Obama also has no private sector experience and has said^[5]:

“But the American people deserve the truth from their leaders. And the truth is, you can't get rid of the deficit by simply eliminating waste and fraud, or getting rid of pet projects and foreign aid, like some have suggested. Those things represent only a tiny fraction of what we spend our money on.”

The “real truth” is that more than 25 percent of every dollar spent by the Federal Government is waste as proven by the data, and that is not a “tiny fraction”. The few people in government who do have private sector experience are strong advocates of Lean Six Sigma, such as Tom Latham, who has introduced the waste reduction legislation House Bill 2188. The reason why recent private sector experience is so important is that the majority of the Fortune 500 have adopted Lean Six Sigma waste reduction process in the last ten years. In fact the Army studied the Caterpillar and Xerox deployments of Lean Six Sigma in designing their own deployment. To answer the excuse “it won’t work in the government”, the Army has over 800 waste reduction projects in process and has completed over 5000 projects saving billions of dollars. This was confirmed at the Strong America Now conference in Des Moines, Iowa on June 18th, by the former Secretary of Veteran Affairs, Jim Peake, Deputy Secretary of Defense Gordon England, and Deputy Under Secretary of the Army Mike Kirby. You can learn more about the Army deployment by watching the DVD “Deficit Free America Summit” available at the Strong American Now website.

 The total spending of the Federal government is projected at $3.6 trillion in 2011¹. Approximately 25 percent, or $900 billion is waste can be eliminated without losing any essential service or curtailing entitlements. Based on large scale deployment of waste reduction in the US Army, Caterpillar, Xerox etc, $500 billion per year can be eliminated by 2017. Coupled with portions of either the bi-partisan Bowles-Simpson Deficit Commission Plan (without tax increases) or the Paul Ryan plan, the deficit will be eliminated by 2017 per the graph on page 1. Both plans simplify and lower personal income taxes. The additional $400 billion per year of waste can be eliminated in the 2017- 2020 time frame. A budget surplus of $200 billion will be generated in 2018 which will allow the first reduction of the national debt since 2000 and will restore our AAA credit rating.

Don’t buy this answer: “We’ll grow our way out of the deficit”

In the private sector, a CEO would be fired by his Board of Directors if he gave the “we’ll grow our way from losses to profits” answer, as it is based on wishful thinking, not facts. Successful managers have to cut their spending so that they can make profits at current levels of sales. When and if sales pick up, you then make a lot of money and can invest in the future because you have one! Likewise, a competent President of the USA must cut spending to generate a surplus at current tax income levels. But most people in government have no private sector experience and have never faced, and therefore do not wish to face, the tough problem of cutting spending. Their lack of experience makes the idea of “growing” out of the deficit their only option. All current projections of deficit reduction by Obama’s Office of Management and Budget are based on unrealistically optimistic growth rates. The advantage of waste reduction is that it makes spending reductions far less painful by cutting $500 billion per year of fat rather than muscle.

Reducing the Deficit will help eliminate unemployment

A major by-product of Deficit elimination is that it allows the country to conquer unemployment through tax and regulation reduction. Because our deficits are so large, Congress has levied high taxes. American businesses pay 35 percent tax compared to an average 22 percent for the developed nations. This has contributed to driving 2.9 million jobs overseas over the last 10 years. By eliminating the deficit, we can afford to make our taxes competitive with the rest of the world and start bringing those jobs back home. Read “Reduce Unemployment from 9% to 4% by 2017” for more details.

Conclusion: Americans know the stakes: if we do not eliminate the deficit in 2017 we will lose our economic life and liberty! Join Strong America Now and add your voice to those demanding our elected oficals listen to this message and act.

Michael L. George is the Founder of Strong America Now and retired founder of the George Group which applied the waste reduction method known as  Lean Six Sigma to Xerox, Caterpillar, ITT, Alcan, Eli Lilly among other Fortune 500 companies, as well as the US Army and US Naval Aviation,. The George Group was sold to Accenture in 2007. Mike also founded International Power Machines which was sold to Rolls-Royce in 1984. He earned a BS in Physics from the University of California and an MS in Physics from the University of Illinois.