The problem: how to tackle the deficit. Not extending the cuts immediately raises taxes on everyone. Spending cuts are difficult since Medicare, Social Security, and Medicaid represent 50% of our budget by 2015 ( Peter Orzag ). The other half of our budget is split 50/50 between interest payments on US debt and discretionary spending. The discretionary spending is 50% defense and 50% non-defense.
Here’s an opportunity for you to try your hand at balancing the budget. Especially pay attention to the revenue options: you’ll find many of the tax effects you may face in 2010.
