May 10, 2011; Source: The Heritage Foundation | Funded by a grant from the Peter G. Peterson Foundation, the Heritage Foundation has issued a special report called Saving the American Dream as a prescription for fixing the federal budget. It is a list of prescriptions that many nonprofits might find difficult to swallow:

  • Balance the budget within a decade at no more than 18.5 percent of GDP;
  • Cut the size of government in half within 25 years;
  • Reduce the federal debt to 30 percent of GDP (compared to current level of 70 percent);
  • Eliminate government-mandated health care;
  • Convert taxes into a single flat-rate system;
  • Stop all scheduled tax increases as well as future ones;

Heritage proposes a very detailed overhaul of both Social Security and Medicare, the two major drivers of long term federal spending, but doesn’t omit non-defense discretionary spending as a target for cuts. The report calls for reducing non-defense discretionary spending (programs such as foreign aid, K-12 education, housing, and community development) from 4.5 percent to 2.0 percent of GDP by 2021.

Heritage says this would get the federal government to “focus on performing a limited number of appropriate governmental duties will while empowering state and local governments, which are closer to the people, to address local needs creatively in such areas as transportation, justice, job training, the environment, and economic development.”

While some of the implications of the Heritage budget proposals will make more than a few nonprofits shudder, and the likelihood of its prescriptions being followed in toto nil, the report is well worth the read. Heritage explains its thinking well, especially the assumptions behind its analysis.

Heritage is also, in the long run, likely to be far more influential on the specifics of the budget than the Tea Party movement, whose budget prescriptions seem to be a little less compelling. Dana Milbank wrote in the Washington Post about a Tea Party press conference at the National Press Club, with Tea Party Founding Fathers chairman William Temple, dressed in colonial garb with tricorn hat and musket, excoriating House Speaker John Boehner and fiscal year 2012 budget proposal author Paul Ryan (R-WI) .

Temple and his companions suggested that Republicans use the debt-ceiling budget fight to keep gays out of the armed forced and to prevent “the effeminization” of the military that results from “injecting open homosexuality and females into forward-combat roles.” The Heritage Foundation seems to have missed the link between the deficit and homosexuality.—Rick Cohen