I’ve allowed Obama’s coming fiscal year budget to digest, and it’s still giving me indigestion. I am sympathetic to the need to increase spending in some areas to promote job growth, but there is no effort to try and cut costs in other non-essential programs or to hold off on spending areas that do need improvement but not instantly. I am tired of his sorry excuse repeated over and over by progressives that if it wasn’t for President Bush, we wouldn’t have to build on this deficit. I know he got dealt a shitty hand. But it didn’t force him to fold when he got his party’s nomination. Since when do two wrongs make a right? What I think, is that he’s happy to deal with the problem because it allows him to pass more spending and promote some of his socialist views under the cover of recovering the economy. I don’t think it’s some sinister plot to destroy America…but he has made no qualms about hiding that he believes government can cure-all that ails us. Someone in this country, needs to make the tough decisions and get us back on track fiscally before our dollar has no value or our debt to foreign nation’s leads to something catastrophic.
First of all, with all the criticisms I have with the budget, I have to point out where the government can run effectively and still prosper. 10 years ago, President Clinton’s 2001 budget had outlays of $1.7 Trillion and receipts of $1.83 Trillion for a budget surplus. In 10 years, spending has inflated to $3.5 Trillion, with receipts earned of $2.1 Trillion. Considering inflation, government spending has increased 90% in a decade. Not only must spending freeze, it must be cut just to make us viable enough to cover our spending with our tax revenue. We need to borrow 40% of our spending from foreign governments, that we cannot rely on as a bank to harbor our mistakes forever. It’s a must that we get back to fiscally conservative practices that we haven’t seen since 2001.
Here are some quick numbers from the budget. What jumps out at you are the trillion dollar deficits, year in and year out. I understand that you can’t accurately project the future budgets without knowing where the economy is at that time. But it shows a lack of vision by the President that they are announcing that for the next decade they figure on a budget that continues to be in the red to the tune of $10 Trillion.
Remember the promised freeze to begin next year on non-discretionary, non-defense, non-major entitlement program parts of the budget? Well, that represents about 17% of the total budget spending that have the potential to be partly frozen. What it doesn’t address is that at some point, one of our future leaders will need to make a major decision on how to reform Social Security, Medicare and Medicaid. Obama will probably continue to punt this, because when Bush even suggested they look into privatizing Social Security – he got loudly chastised for even the thought. But in reality, if no reform is accomplished this decade, the only way we’d be able to pay the dues off while still running the programs would be to DOUBLE everyone’s tax rates.
Now the President is proposing taxing the rich more heavily to help increase tax revenues in a time of high unemployment to counter receiving less total revenue because of fewer workers. A dubious strategy considering the mounting evidence of how this will play out. Did you realize that in the last century, tax revenues have grown the most during periods of tax cuts by Coolidge, Kennedy, and Reagan? The burden of tax revenue hits the middle and lower classes HARDER when tax cuts are raised. People get rich because they are lucky or smart. And a smart guy is going to know how to invest his money to limit his exposure to increased taxes. Whereas middle/lower class has all their funds exposed because we need it to be more liquid. How would you react if someone told you they were going to take a greater share of your earnings? Probably hide it (legally) from the tax code, right?
Where are some of those increased spending dollars that are promoting job growth going? Well here is $550 Billion of it:
- Defense- $58 B
- International Affairs- $13.6 B
- Science & Space- $3.5 B
- Energy- $14.2 B
- Natural Resources- $11.4 B
- Agriculture- $4.3 B
- Transportation- $22.1 B
- Education/Training- $62.7 B
- Health- $38.0 B
- Medicare- $27 B
- Unemployment- $71.7 B
- Welfare/Assistance- $78 B
- Social Security- $38.5 B
- Veterans Programs- $29.5 B
- Dept. of Justice- $3.5 B
- General Government- $7.2 B
- Interest on Debt- $42 B
And finally, one of the scariest parts of the budget was not even in the budget. Despite comments made previously by Orszag when he felt the bailout to Fannie Mae and Freddy Mac should be included in the budget, now that he is control of the budget, he conveniently overlooked it. So now, hidden from the American public, is an additional $6.3 Trillion dollars that our government has guaranteed to cover their debt.
I am not trying to play this off as easy. It’s mind-numbingly difficult work. But you run for elected office to make difference for the country. Health Care, Clean Energy, Financial Reform, Job Recovery….none of that will have the impact on the President’s legacy more than his success or failure at improving our dire economic future.
3conservativebros
MacGregor
Johnny M
Timmy K
This is both a great and horrible post. It makes me feel depressed. 😦
3.5 billion for the Dept of Justice? Is that so they can think its a good idea to try non US terrorists in civilian courts in our most heavily populated cities?
22.1 B for Transportation? Is that light rail?
The spending growing some 90% in a decade is alarming. I assume that will be blamed on Bush’s prescrip coverage and Iraq. There’s just so much blame to dole out here.
Let me ask you this, would you be opposed to any tax increases?
Yes, one of the major flaws is while every nitpicks about the budget, no one is forced to explain why these budgets need billions more to function in a year, especially in a downturn? Some Im sure are for jobs projects, but not most.
And here is my thoughts on tax increases. I think they are a horrible idea during a recession, and in general I dont think we need them. You see the receipts have increased over the decade even after Bush tax cuts. Its the spending thats gone haywire. However, I dont think its realistic to think we can balance the budget without some tax increase…although Id still cap it below the pre-Bush tax numbers. However, if Obama increases taxes without seriously trying to reinvent entitlement programs, then its all a joke to me.
So you would agree with putting the top marginal rate back to 39.6% from 35% that G Dub made it? I would not, the only Federal Income tax rate hike id be for at this point is a super rate, maybe 40% on incomes over say 5 million adjusted for inflation.
With all the demonizing of Fortune 500 CEO’s who have worked a lifetime to get their status and pay, I see Justin Verlander signing a contract extension the other day for the Tigers for over 15million per year. People dont realize when they’re buying a shitty upper deck ticket for $18 bucks that Verlander’s making 425k PER GAME…. WTF. Instead the outrage is over a 65 year old CEO who’s worked 60 hours a week for the past 50 years.
“I would not, the only Federal Income tax rate hike id be for at this point is a super rate, maybe 40% on incomes over say 5 million adjusted for inflation.”
And you’re the conservative one? 😉
I would be very much against this. Great Britton did this to their super stars, and a bunch of them moved over here to escape those taxes. The Rolling Stones moved here enmass so they could pay US taxes instead of Brittish taxes.
The people making 15 million a year have the most to lose with targeted tax increases and will find ways to avoid paying those taxes, and easy way is to move. California has been losing the super wealthy for years now. I’m from New Jersey, and this problem is beginning to hit us hard (our property taxes are insanely high, highest in the nation, and the wealthy are leaving). When the wealthy leave, they pay zero taxes. Tiger Woods could move to france or some place and America would lose out.
Much better would be the fairtax, with a rebate on all purchases under the poverty level. That would prevent the super-wealthy from using loopholes and tax shelters, while giving the economy a huge kick in the rear.
The more I learn about the Fair Tax, the more Im beginning to like it. I still cant tell if it will be more revenue, but if you told me my tax threshold would reduce to 23% of my income and the government still made more money or even broke-even, I am all for it. It seems to make perfect sense to leave more cash in hand for the public to invest, and pay taxes when they spend. It will actually incentivize people to budget without incurring heavy debt.
Im surprised this didnt get more of a look during the Bush admin. Of all Republican candidates, Ive only really heard Huckabee talk about it, but Ill be paying attention to who wants to reform the tax policy.
Yes, the 23% “inclusive” national sales would break even. The reason it didn’t get more of a look during the Bush years is because Republicans aren’t conservative. They like controlling people and taxing people just as much as Dems do. They only complain about that power when they don’t have it.
A flat tax (there are several kinds, the fair tax is just my preference) would among other things:
Take away governments power to pick who pays more and who pays less, it would prevent the government from hiding taxes, everyone would know exactly how much they spent in taxes, it would encourage savings, tax the underground black markets such as drugs and prostitution, tax illegal alliens, make our exports incredibly cheap on the world market, get rid of the IRS and save America billions of dollars a year by not havign to jump through IRS hoops. The people at the bottom will enjoy a more progressive tax rate, the people at the top will not be hit with overly burdensom taxes, but also won’t have any of their old tax loopholes, and the stock market will jump like a MOFO.
“The reason it didn’t get more of a look during the Bush years is because Republicans aren’t conservative. They like controlling people and taxing people just as much as Dems do. They only complain about that power when they don’t have it.”
Then why do repubs decrease taxes and prefer supply side economics?
“get rid of the IRS and save America billions of dollars a year by not havign to jump through IRS hoops”
That would cost us hundreds of thousands if not millions of jobs in the short term. How will people on the bottom get a more progressive tax rate? Cuz they wont spend as much?
From what i know of the fair tax (think consumption tax or national sales tax), it makes the most sense, but to me is a pure pipe dream. We cant so much as make minor tweaks to grossly broken systems(medicare, social security etc), so what makes you think a MAJOR overhaul of our entire govt economic system which will affect 100% of Americans is anywhere near being more than a glimmer in my great-grandkids eyes?
Lets not forget over 40% of Americans these days apparently dont pay federal income tax, that’ll be a stiff portion of voters to sway without an unbelievable amount of clearly articulated information.
Also, im not sure how a Consumption tax would affect Soc Sec, Medicare and Unemployment taxes
“Then why do repubs decrease taxes and prefer supply side economics?”
Taxes are lower right now under a democrat than they were under Bush.
As for supply side, according to Arthur Laffer and Steve Moore, intellectual heavy-weights of the conservative spectrum, supply side economics (which I whole heartedly support) includes 6 tenents unrelated to low taxation.
They include:
2. Stable prices and sound money (Bush was horrible on sound money policies)
5. A generous immigration policy (Bush was good here, Republicans as a party fail miserably)
6. Less costly and more efficient government (Bush increased the Budget massively). So I for one don’t think Republicans support supply side. They like low taxes and low regulations and cheap imports, but that alone doesn’t count as supply side.
“That would cost us hundreds of thousands if not millions of jobs in the short term.”
Yeah, and pens cost pencil maker jobs. Computers cost type-writer maker jobs. Blogs cost newspapers jobs. (hehehe) Progress is messy sometimes. Also, it would probably take years to roll out, and many of those accountants would move away from tax preparation to investment consultants.
You know, I do want to answer the rest of your questions, but it’d take awhile, and it’s off-topic. So forgive my short answers,
The Prebate. No. That statistic intentionally skips certain taxes, such as payroll taxes (most of my taxes are payroll taxes). It would replace them.
For more, I have several posts up on my site about the fair tax, and the next book I’m doing will be on the fair tax. (notice I already have a category for it).
BookGuy,
thanks for the response you make some good points. Ill check your site more, but i have to reply to a few of your comments.
My main point was something like the Fair Tax though very good in theory is a long ways away from being reality. That would be a major majory change to an already incredibly volatile system. Just think there’s better things we can discuss and fight for maybe..
“Taxes are lower right now under a democrat than they were under Bush.”
You got to be kidding me. Obama’s already trying to raise taxes on the top bracket, all while possibly letting the rest of Bush’s cuts expire as they sunset this year.
“2. Stable prices and sound money (Bush was horrible on sound money policies)”
Giving people more of their money will stabilize prices. Also wasnt sticking up for Bush.
“5. A generous immigration policy (Bush was good here, Republicans as a party fail miserably)”
Reagan was good for this too, but being against open borders doesnt mean you fail miserably.
Good point on number 6, again wasnt trying to make it a repub demo thing, but part of Bush’s response was to 911.
“Progress is messy sometimes.” Another great point, just think the scale of this change in todays world is a little more complex and potentially disastrous, make that a lot more…
I understand the 40% figure only takes into account FEDERAL income tax, thats why i used the lower number and specifically stated federal income taxes, just think when you have such a high percentage of folks who pay very little to the govt it would be a hard sell regardless of whether or not the national sales tax of 20 some percent would replace the 8% they pay for Fica/Futa/Suta.
But good discussion ill read more of your posts on the subject.
Thanks,