The Real Numbers

Yesterday Investor’s Business Daily posted an editorial about the federal deficit and federal revenues. The numbers tell a very different story than the one the media would have you believe.

The editorial reports:

The latest monthly budget report from the Congressional Budget Office shows the deficit jumping $102 billion in just the first two months of the new fiscal year.

…A true apples-to-apples comparison, the CBO says, shows that the deficit climbed by just $13 billion.

So, no, the deficit is not soaring.

The editorial explains:

In fact, the CBO report shows that overall tax revenues climbed by $14 billion in the first two months of the year, compared with the same months last year. Which means they continue to hit new highs.

The CBO report shows that combined income and payroll taxes were the same in the first two months of the new fiscal year as they were last year. That’s even though far less money was withheld from paychecks thanks to the Trump tax cuts.

It also found that corporate income taxes went up by $5 billion. That’s despite the “massive corporate tax giveaway” that Democrats want to repeal.

Why are these revenues flat or up? Simple: The tax cuts help spur accelerated economic growth, which create jobs and spark income gains. More workers and higher wages mean more tax revenues. On the corporate side, a bigger economy means more profits, which even when taxed at lower rates can produce more revenue. This is exactly what advocates of Trump’s pro-growth tax cuts said would happen.

Meanwhile, revenue from “other sources” climbed by $8 billion. (To be clear, at least some of that $8 billion came from the re-imposition of ObamaCare’s nefarious tax on insurance premiums, which Congress had suspended the year before.)

But while revenues climbed by $14 billion, spending in the first two months of the new fiscal year climbed by $27 billion.

The obvious solution to the deficit problem is to limit spending. If we can’t agree on that, we could lower taxes again to increase revenue further, but I suspect that would really cause some Congressional heads to explode.

Economic Policies Have Consequences

Today’s Washington Examiner posted a story about Congressional Budget Office (CBO) statements on the condition of the American economy. The CBO is not optimistic about the future.

The article reports:

The CBO updated its fiscal projections Wednesday, and they reflected its new gloomy view that the future of the U.S. economy is one of slower growth and lower productivity.

“They think that we will get back up to potential growth,” said Loren Adler, an analyst at the Committee for a Responsible Federal Budget, “but they make it clear that they think potential growth is lower than it used to be in the ‘80s and ‘90s.”

The CBO first reached the conclusion that future growth will be slower when it released its long-term budget projections in July, but only incorporated it into its official 10-year budget projections Wednesday.

In its new projections, the CBO sees the economy suffering from a scenario in which its potential is slightly lower than before — 1 percent lower in 2024 than previously expected.

As a result of weak economic growth this year and slightly slower potential growth over the next 10 years, the CBO sees $514 billion in lost revenue.

…The CBO’s scenario — slower growth and permanently lower interest rates — is consistent with the “secular stagnation” scenario outlined by former Obama economic adviser and Harvard professor Larry Summers, who has argued that the U.S. economy may not be able to generate enough consumer demand for goods and services on its own without stimulus from the Federal Reserve or through federal spending.

The assumption that demand will return to normal “now seems problematic,” Stein (Center for American Progress’ Harry Stein) told the Washington Examiner, noting that he wasn’t sure whether the CBO assumed secular stagnation in its model.

So how do you grow an economy? Ronald Reagan seemed to have the answer–lower taxes. If you look at the deal that President Reagan made with Congress (a Democrat-controlled Congress), Congress was going to cut spending along with the tax cuts. Unfortunately, Congress chose to ignore their part of the bargain, and spending during the Reagan years increased greatly and deficits went up despite record tax revenues coming into the government. Even with the growing deficits, the economy grew rapidly once the tax burden was taken off of the people who create jobs and produce wealth. The Obama Administration has increased the income of the wealthy while leaving the middle and lower classes behind. This is the fruit of crony capitalism. The gap between rich and poor has increased during the Obama Administration–not decreased. If you want to see America prosper again, elect people to Congress who will cut taxes and cut spending.

I Hope This Headline Is True

John Podhoretz posted an article at the New York Post today with the headline, “Congressional Budget Office sends death blow to ObamaCare.”

The article reports the contents of the CBO report:

The one-two punch: Virtually as many Americans will lack health coverage in 10 years as before the law was passed — but 2 million fewer will be working than if the law hadn’t passed.

One killer detail comes on Page 111, where the report projects: “As a result of the ACA, between 6 million and 7 million fewer people will have employment-based insurance coverage each year from 2016 through 2024 than would be the case in the absence of the ACA.”

The irony of the whole ObamaCare program is the fact that ObamaCare was supposedly designed to provide health insurance to some 30 million Americans who are currently without health insurance. The CBO report predicts that in 2024, under ObamaCare, 31 million Americans will be without health insurance. If you consider ObamaCare as  the ‘War on the Uninsured’ in America, it appears that it will be about as successful as the War on Poverty in America.

The article also reports:

If that’s not startling enough, there’s also the telling projection about ObamaCare’s impact on employment — “a decline in the number of full-time-equivalent workers of about 2.0 million in 2017, rising to about 2.5 million in 2024.”

Overall employment will rise, the report says, but not steady, secure, long-term assured employment. The possibility of securing government-provided health-care without employment will give people a new incentive to avoid it. “The estimated reduction stems almost entirely from a net decline in the amount of labor that workers choose to supply,” the report says.

Indeed, overall, between 2017 and 2024, the actual amount of work done in this country will decline by as much as 2 percent.

It really is time to come up with an alternative to ObamaCare. I only hope Congress is up to the task.

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How To Lie With Statistics

This article has three sources–a Power Line article by John Hinderaker posted yesterday, a Hot Air post from yesterday, and a CNS News article from today. The subject of this article is the Congressional Budget Office report being hailed by supporters of the immigration bill as another reason to pass the bill. Not so fast.

The Congressional Budget Office (CBO) is non-partisan. It is also required to base its report of the numbers given to it. This makes it fairly easy for Congress to scam the system. Since the CBO only scores a ten-year window, all Congress has to do is put the major expenses of the legislation being scored outside of that window. Thus the current immigration bill says that the newly legalized immigrants will not be eligible for any federal programs for ten years. Amazing coincidence that the period of ineligibility ends after ten years. Does anyone want to predict what will happen on the first day after the ten years is up and our government is flooded with applications for government aid?

The article at Power Line points out:

Behind these rather antiseptic observations lies a human tragedy: falling wages and rising unemployment for the very segment of American society that has struggled the most in recent years. On top of that, the nation’s welfare system will be severely strained. While newly-legalized immigrants will not immediately be eligible for federal welfare benefits, that does not apply at the state and local levels. Those welfare systems will be overwhelmed with millions of new claimants–the cost to be borne, of course, by the taxpayers.

CNS News reports:

However, the cost estimate of the legislation that was released on Tuesday by the Congressional Budget Office says that the legislation would actually allow the flow of new illegal aliens into the United States to continue at a rate equal to 75 percent of the current rate of illegal immigration. This will be the case, in part, argues CBO, because of people who overstay temporary work visas that will be authorized by the bill.

This revelation that 75 percent of illegal immigration would continue if the Senate immigration reform proposal were enacted is included in a section of the report headlined, “Future Unauthorized Residents.” The section is on page 23 of the 63-page report.

So let’s get this straight. The current immigration bill would negatively impact wages of Americans, strain state welfare programs, hurt taxpayers, and only stop 25 percent of illegal immigration. So why in the world would we want to pass it?

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A Disturbing Report On The Economy

CNS News posted a story yesterday about the fate of the American economy under President Obama. The article cites a Congressional Budget Office (CBO) report projecting that America will never see full employment under President Obama.

The article reports:

The natural unemployment rate, according to CBO, is the “rate of unemployment arising from all sources except fluctuations in aggregate demand. Those sources include frictional unemployment, which is associated with normal turnover of jobs, and structural unemployment, which includes unemployment caused by mismatches between the skills of available workers and the skills necessary to fill vacant positions and unemployment caused when wages exceed their market-clearing levels because of institutional factors, such as legal minimum wages, the presence of unions, social conventions, or wage-setting practices by employers that are intended to increase workers’ morale and effort.”

CBO Director Doug Elmendorf has stated, “we think it will take four more years to get back close to full employment.”

I believe that America will recover from this recession. I also believe that the recovery would be much faster if businesses were not totally over-regulated by the government. A glaring example of this is the fact that the energy revolution that is taking place in America is taking place on private land–the government has blocked fracking on government land. If the government land were opened up and the Keystone pipeline put in place, the economy would recover very quickly.

We can recover, but we need to let private citizens have more power and the government have less. That won’t happen as long as the current Washington politicians are in power.

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I Don’t Believe This, But It Will Make The Discussion More Interesting

CNS News is reporting that the Congressional Budget Office (CBO) has predicted that federal revenues for 2013 will exceed $2.7 trillion in 2013, slightly higher than the $2.6 trillion the government collected in 2007, when the last recession officially began.

The article reports:

Government revenues had fallen by nearly $500 billion during the recession to $2.1 trillion in 2009, contributing to the $1.5 trillion deficit that year. However, federal revenues have been recovering since the recession ended in June 2009, and the CBO now projects that they will slightly eclipse their pre-recession peak.

In fact, the $2.7 trillion in revenue will be the most money the federal government has collected in history.

Obviously, if government revenue is the highest it has ever been in history, why do we have to increase taxes?

The article reports:

Democrats say we should replace the president’s ‘sequester’ with revenue increases, or delay it.  Republicans say we should replace [it] with responsible reforms that will help put us on a path to balance the budget in 10 years,” House Speaker John Boehner (R-Ohio) said at a news conference on Wednesday.

Frankly, I would love to see federal revenues increase, but I am not convinced they will. Unemployment is still high, and the number of people working part-time who want to work full-time is at an all time high. Much of the revenue the government gets comes from personal income taxes, and if the unemployment situation does not change, I don’t think the revenues will change significantly. The CBO does its calculations based on the numbers it is given. It would be interesting to know where they got the numbers that convinced them 2013 was going to be a banner year for tax revenue.

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Where Are The Fact Checkers ?

Yesterday CNS News reported that despite President Obama’s statement on Thursday that “we got back every dime we used to rescue the financial system,” the Congressional Budget Office (CBO) has stated that the government will lose about $24 billion on the bailout.

On Thursday, President Obama stated, “We got back every dime we used to rescue the financial system, but we also passed a historic law to end taxpayer-funded Wall Street bailouts for good.”

The article reports the CBO’s statement:

“The cost to the federal government of the TARP’s transactions (also referred to as the subsidy cost), including grants for mortgage programs that have not yet been made, will amount to $24 billion,” said the CBO report, which was released on the same day Obama spoke.

…CBO said that the cost of TARP “stems largely from assistance to American International Group (AIG), aid to the automotive industry, and grant programs aimed at avoiding home mortgage foreclosures,” noting that the losses will be so large they will eclipse the financial gains the government will realize from bailing out other large financial institutions.

It really is time to tell the truth about how American taxpayer money is spent and to rein in the budget.

 

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This Sounds Like A Lose Lose Situation

CNS News is reporting today that the Congressional Budget Office (CBO) is predicting that if tax rates rise in 2013, the economy will slip back into recession. Unless Congress acts, there will be a significant tax increase on January 2013.

The article points out that Congress will not act to change the projected increase in taxes until after the election. Great. Translated loosely, that means that Congress does not want to take responsibility for any actions they might take regarding taxes. As you know, President Obama is already saying that he won’t do anything to stop the drastic defense cuts included in sequestration unless the Republicans agree to raise taxes. Does anyone honestly believe that additional tax revenue will be used to pay down the deficit? In the past, when taxes have been raised, has spending ever actually remained the same or been cut?

The article concludes:

While CBO included mandatory spending cuts from the federal budget sequester (the “fiscal cliff”) in its analysis, the vast majority of the impact to the economy will come from the tax increases – the expiration of the Bush tax cuts — due to their sheer size.

CBO estimated that the combination of spending cuts and tax increases would reduce the federal deficit by $487 billion in fiscal 2013, with the vast majority of that figure coming from tax increases.

CBO projects that if current tax policies are kept in place and do not expire in 2013 as scheduled, revenues would be $5 trillion less between 2012 and 2022.

Congress is not expected to address either the mandatory spending cuts or the expiration of the Bush tax rates until after the election.

We need to examine the way that we look at taxes, tax rates, etc. The American public has been fed a line that somehow the government has a legitimate right to the earnings of the American people. It does not. There is nothing greedy about wanting to keep money that you have worked hard to earn. There is something basically wrong about taking money from people who have worked hard to earn it and giving it to people who have chosen not to work. I am sure we have all heard stories about people who refused to take low paying jobs because they could make more money simply by being on welfare and they didn’t have to go to work all day. Because of the amount of taxes taken out of all of our paychecks, the line between making money at the bottom of the economic spectrum and collecting welfare has become very blurred.

It’s time to remember that money belongs to the people who have earned it–no one else is entitled to it–not even the government. Unless we elect an administration that understands that people are entitled to the rewards of their hard work (they did build that!), we are going to wind up in the same place as the bankrupt countries of Europe.

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