The federal government currently levies an 18.4 cent tax on each gallon of gasoline you purchase for your car (unless it’s diesel fuel, in which case the tax is 24.4 cents). The Congressional Budget Office estimates that raising the tax on gasoline by 50 cents per gallon would bring in $600 billion in additional revenue in the next ten years. However, it would also raise the cost of a 10-gallon fill-up by $5.

Most federal employees have three separate retirement accounts: a 401K-style plan, a federal pension, and Social Security. One recent op-ed from progressive think tank Third Way estimates that, for each $1 a federal employee contributes to their pension account, taxpayers contribute $14. Some have suggested increasing federal employees’ contributions to their own pensions as a way to reduce taxpayer liability and the national debt.

Writing in The Hill on September 21st, 2010, Sen. John Thune of South Dakota argued that  reducing the deficit should be a top priority of Congress, and offered suggestions on how it might be accomplished.

We are witnessing a massive increase in the amount of borrowing, the amount of spending, the amount of debt and the growth of government in Washington, D.C. We need to start tackling this debt, and we need to start doing it now. (…) The single most important thing Congress can do this year is to clearly state to the American people that our problem is not that taxes are too low, it is that our spending is too high. The only way to fix that problem is to cut spending.

Read the whole op-ed at The Hill.

The former director of the President’s Office of Management and Budget (OMB) made waves on Tuesday, September 7^th, with this provocative thesis in The New York Times: Congress should extend the Bush tax cuts for the next two years, for Americans of all income levels, and then end them completely.

Why is this controversial? President Obama has made clear that he’s in favor of extending only the tax cuts for individuals making less than $200,000 a year (and families making less than $250,000 a year)—but doing so permanently.

The President and his former appointee both hold concerns about our country’s rapidly rising $13 trillion national debt. And rightly so: there are serious personal consequences for all Americans from out-of-control deficit spending.

There’s a difference of opinion as to what percentage of our total taxes wealthy Americans should shoulder. Some favor a “soak the rich” approach to debt reduction. As the above chart shows, the top one percent of income earners already pays 40 percent of federal income taxes.

The chair of President Obama’s debt commission (and former chief of staff to President Clinton) Erskine Bowles, recently warned that Congress can’t tax its way out of a national debt crisis. You can read elsewhere on this website why he’s right.

Instead, Congress needs to stop spending its way to over $3.5 billion a day in new debt. No one has suggested these spending cuts will be easy; but unless we start soon, higher taxes for everyone won’t be one unpleasant option – it will be the only option.

Some proposals suggest letting the Bush tax cuts expire for those individuals in the top two tax brackets. That covers individuals currently earning ~ $171,000 or more, and families earning ~$209,000 or more. Opponents point out that individuals making $160,000 or more already pay 60% of all income taxes.

Some have argued that the tax cuts President Bush enacted in 2001 and 2003 should be allowed to expire. Allowing tax rates to return to their pre-2001 levels would mean a tax increase for Americans of almost every income level.

Representative Paul Ryan has proposed an alternate form of Medicare for Americans currently age 55 and under. The federal government would provide eligible seniors with a voucher to put toward their medical expenses, instead of reimbursing medical providers directly. Low-income Americans would receive a larger voucher than wealthy Americans.

Currently, seniors are eligible for the Medicare entitlement at age 65. Due to the retiring members of the “baby boom” generation, the cost of Medicare is projected to double in the next ten years. Some have suggested increasing the age that seniors are eligible to receive Medicare.

Jobs with the federal government have typically been viewed as “recession proof;” they’re one of the few employers that keep hiring new employees during an economic downturn. But growth in the size of government also means growth in its cost. Legislation like the Federal Workforce Reduction Act would freeze hiring for all but those deemed essential government employees.