Economic Policies Impact All Of Us

The Trump economy has been good for everyone. Taxes are lower, wages are moving up, unemployment is low, and the workforce participation rate is moving up. Wages on the lower economic scale have seen a marked increase in the past year. However, one thing that impacts government spending as well as being an indication of economic conditions  is food stamps. Yesterday Breitbart reported that the most recent USDA data revealed that 37,911,631 people received food stamps through the Supplemental Nutrition Assistance Program (SNAP) in December 2018, marking the lowest level of overall participation in the nation’s food stamp program in nearly ten years. That is good news for the people who no longer need food stamps, and it is good news for taxpayers who fund food stamps.

The article reports:

The last time overall participation in food stamps reached this level was in October 2009, when 37,672,818 people were on the government dole, according to USDA data.

…After 2013, SNAP enrollment plummeted once state legislatures passed laws requiring food stamp recipients to work, attend school, volunteer, or participate in job training for a set number of hours per week to receive benefits.

Food stamp enrollment dropped even further under President Trump’s administration partly because of the administration’s efforts to reform welfare programs like SNAP at federal and state levels of government and an improving economy spurred by Trump’s tax reform package.

The article concludes:

According to the latest USDA data, 4.2 million Americans have dropped off of the food stamp rolls during Trump’s presidency.

President Trump also signaled that he is looking to limit dependency on welfare programs like food stamps even further.

The president recently told Breitbart News in an Oval Office interview that he does not want any immigrants coming into the U.S. to be dependent on welfare programs.

“I don’t want to have anyone coming in that’s on welfare,” Trump told Breitbart News last Monday.

The asylum program was not meant to be a free lunch. There is a difference between people coming here to work and people coming here for free stuff.

A Border Will Will Save Taxpayers Billions

Betsy McCaughey posted an article at Townhall today about the cost of not having a border wall.

The article reports:

Look what it costs us when a Central American teen crosses the border illegally without an adult. Uncle Sam spends a staggering $775 per day for each child housed at a shelter near Florida’s Homestead Air Reserve Base. There they have access to medical care, school and recreation. They stay, on average, 67 days at the Homestead shelter before being released to a sponsor. Do the math. That’s almost $52,000 per child. American parents would appreciate the government spending that money on their kids. Imagine the government handing you a check for $52,000 for your teenager.

However, there are bigger costs ahead. The number of illegal border crossers just hit an 11-year high with a total of more than 76,000 during the month of February alone. U.S. and Mexican officials predict hundreds of thousands more in the coming months.

The migrants use the word “asylum” as their get-in-free card. When they say it to a border agent, they gain entry to the U.S. 80 percent of the time according to Homeland Security Secretary Kirstjen Nielsen. They are temporarily housed and eventually released with an immigration court date. But half never go on to file an asylum claim, disappearing into the U.S., said former Attorney General Jeff Sessions.

Asylum is supposed to be reserved for people facing persecution and danger in their home country whose safety depends upon their leaving that country. People who simply want better lives are asked to go through the legal process. Unfortunately our southern border is so porous that it is very easy for people to come here illegally and then simply disappear. We need a wall. It is sad that Congress is playing political games in order to avoid building one. Congress has never wanted a secure southern border–the Democrats see future voters and the Republicans see cheap labor for the corporate sponsors. No one is looking at the security of America right now except the President and very few members of Congress.

The Economy Under President Trump

I am not an economist, but I have learned over the years to listen to the people with the best track records on analysis. One of those people is Stephen Moore, who posted an article at The Wall Street Journal yesterday.

The article reports:

Liberals are tripping over themselves to explain why the economy has performed so much better under Donald Trump than it did under Barack Obama. The economy has grown by nearly 4% over the past six months, and the final number for 2018 is expected to come in at between 3% and 3.5%. The U.S. growth rate has doubled since Mr. Obama’s last year in office.

When Mr. Trump was elected, many Democratic pundits predicted an economic and stock-market meltdown. Then the economy started surging and they abruptly changed their tune, arguing that Mr. Trump was simply riding a global growth wave. That narrative was shattered when U.S. growth kept steaming ahead even as global growth—especially in China and Germany—stalled.

The people who predicted an economic crash if President Trump was elected are now saying that the tax cuts have given us a ‘sugar high’, and the market will crash when the sugar wears off. That makes about as much sense as President Obama taking credit for the move toward American energy independence.

The article continues:

The real contradiction in the “sugar high” argument is that it ignores the slow growth of the Obama years, which featured an avalanche of debt spending. Deficits as a share of GDP were 9.8% in 2009, 8.6% in 2010, 8.3% in 2011 and 6.7% in 2012. Where was the sugar high then? Instead of the expected burst in output coming out of the 2008-09 recession, borrowing more than $1 trillion a year for four years yielded the worst recovery since the Great Depression. Even excluding 2009, Mr. Obama’s deficits averaged more than 5% of GDP throughout the rest of his presidency but produced less growth than Mr. Trump has with lower deficits.

This wasn’t what Keynesians expected. Mr. Obama’s economic team predicted 4% growth every year coming out of the recession. Instead the “sugar high” from record peacetime deficits produced measly 2% growth. By 2016 GDP was running about $2 trillion below the trend line of a normal recovery.

The fastest growth rate over the past three decades was recorded in Bill Clinton’s second term, when federal government spending fell from 21.5% to 18% of GDP and deficits disappeared into surpluses. So much for the idea that deficit spending is a stimulant.

Mr. Trump’s fiscal policies have produced more growth than Mr. Obama’s because they were designed to incentivize businesses to invest, hire and produce more here at home. The Obama “stimulus,” by contrast, went for food stamps, unemployment benefits, ObamaCare subsidies, “cash for clunkers” and failed green energy handouts.

The article concludes:

Those pushing the “sugar high” fallacy also don’t realize that the Trump tax cuts aren’t going away soon. The 2017 business tax cuts can’t cause a recession in 2019 or 2020 because they don’t expire until 2025. They aren’t sugar pills.

The biggest threats to the economic boom and financial markets today are a deflationary Federal Reserve and the specter of a global trade war. Solve those problems and the American economy can keep flying high on its own power. And Mr. Trump’s critics will be proved wrong again.

When you decrease taxes and regulations on businesses, we all gain. That combination, if allowed to continue, will bring us continued economic growth.

There Are Very Few People Who Actually Want To Clean Up Washington

Yesterday The Conservative Treehouse posted an article about the uniparty that current controls Washington, D.C. The uniparty is made up of the professional republicans and the professional democrats. Their common enemy is Donald Trump.

The article reports:

The same UniParty dynamic is visible in the way the FBI/DOJ and aggregate intelligence community were weaponized against Donald Trump – with Democrats and Republicans participating in the unlawful processes.   Now, in the downstream consequence phase, we see a UniParty defense approach to block Trump from revealing what happened.

I’m not sure people fully completely understand this dynamic within “spygate”.  It was not a targeting operation by democrats; republicans were just as complicit. The ongoing goal to eliminate candidate and president Trump is *not* partisan.

Which brings me to the current state of the advisers around the executive.  Remember, there are trillions at stake here – and the downstream benefactors are both Republicans and Democrats who make up the UniParty.

Within the UniParty dynamic, in order to retain full financial benefit, the political class need to align with Wall Street priorities.  That alignment means the UniParty needs to eliminate Main Street priorities that are adverse to their interests.

The article concludes:

Border controls and immigration enforcement are adverse interests to the UniParty. Additional cross party alignment to benefit Wall Street surrounds: •budgets and massive government spending; •government controlled healthcare retention; •government controlled education (common core); •and most importantly the removal of any national economic and trade policy that would threaten the structure of the multinationals.

On all of these issues the Democrats and Republicans have identical outlooks, common interests and mirrored legislative priorities. It is not coincidental that US Chamber of Commerce President Tom Dohonue also outlined these issues as primary priorities for his massive lobbyist spending.

There are trillions of dollars at stake; and we must never discount how far the Big Club participants will go to ensure the White House counselors are shaping their advice toward those objectives.

There are no MAGA lobbying groups in Washington DC advocating for policies that benefit economic nationalism. On this objective President Donald Trump stands alone.

We don’t need a third party in Washington DC, we actually need a second one.

This is a pretty good explanation as to why the promises that Republican Congressmen running for office made were broken–as long as President Obama was in power, they were safe promises–he was not likely to sign any law they passed that differed from Democrat ideas. When President Trump was elected, the Republicans had to put up or shut up. They chose to shut up in order to maintain their big donors and people they are beholden to other than the American voters. With a  few exceptions, we haven’t had Republican leaders in Congress since Newt Gingrich, and the establishment did a pretty good job of marginalizing him. If the Republican party continues on its current path, it will no longer exist in five years.

How Cutting Taxes Creates Revenue

On November 16th, Hot Air posted an article about the impact of the Trump tax cuts on government revenue. As I am sure you remember, the Democrats called the tax cuts on individuals ‘crumbs’ and swore that the tax cuts would bankrupt the country. Well, that’s not exactly what happened.

The article reports:

Unemployment is at an historic low. Employment is at an all-time high. Wagers are growing after years of stagnation.

And now from all that increased economic activity, the federal government has just reported historic record tax revenues in October, the first month of the new fiscal year, of $252,692,000,000.

That’s more than $11.4 billion above revenue for October of last year, which was the previous record tax revenue for an October.

And it did this by collecting more than $3 billion less in personal income taxes, thanks to the tax cuts.

The new revenues were the result of increased business taxes because of increased business. Here’s how much different it was:

Corporation income tax receipts to the U.S. Treasury this year in October were a whopping $8,000,000,000. This compares to the previous October’s $3.8 billion.

Despite the record tax revenues in October, the federal government ran a deficit of $100.5 billion that month because, spending. That’s a problem that newly-elected members of Congress such as Indiana’s senator-elect Mike Braun, a businessman, said would be a major target in 2019.

The thing to remember here is that as unemployment decreases, government spending should also decrease. Unfortunately Congress did not get the message. Our problem is not the revenue–the problem is the spending. If either party were serious about curbing government spending, it would have been done by now. Obviously they are not. There are a few members of the Republican party who have been trying to put the brakes on runaway spending for years, but they are either not trying very hard or they are ineffective. At any rate, we need to elect Congressmen (regardless of party) who will pledge to bring the spending under control. It does no good to increase the revenue if the spending increases right along with it.

Who Holds Our Debt?

CNS News is reporting today:

Chinese holdings of U.S. Treasury securities are 11.5 percent below their peak level which was attained in November 2013, according to data published by the U.S. Treasury.

U.S. government debt held by entities in the People’s Republic of China peaked at $1,316,700,000,000 in November 2013, according to the Treasury. As of August 2018, according to the latest date released by the Treasury this month, China held $1,165,100,000,000 in U.S. Treasury.

That is a drop of $151,600,000,000 from the November 2013 peak.

We are still carrying way too much national debt, and that will be a more serious problem as the federal reserve raises interest rates. However, although China is holding less of our debt, it is still the the top foreign holder of U.S. Treasury securities.

The article concludes:

While China remains the top foreign owner of U.S. government debt—despite its declining holdings—the Federal Reserve still owns far more. As of the end of November, according to the Federal Reserve, it owned $2,324,589,000,000 in U.S. Treasury securities.

China’s $1,165,100,000,000 in U.S. Treasury securities was only 50.1 percent of the Fed’s holdings.

It’s time to cut government spending and get out of debt!

 

 

Representative Walter B. Jones Is Sounding The Alarm On The Deficit

Monday morning, a group of taxpayers and I were fortunate to sit down with Representative Walter B. Jones and ask him questions about his votes and his views. The interview will be aired on 107.1 WTKF The Talk Station on Sunday at 11am and 8 pm. You can stream the interview if you live outside the listening area. The interview will also be available on the Coastal Carolina Taxpayers Association website later in the week.

Representative Jones has been a warrior for responsible government spending since he has been in Congress. His voting record reflects that. He will not support a bill that increase the deficit, regardless of what is in the bill.

This is the handout he gave us about the deficit. I think all of us need to read it carefully. We need to understand the consequences of the unbridled spending that is currently the norm in Washington.

Americans need to learn to live within their means at home and at the federal and state levels. Most Americans carry some level of personal debt and do not realize that as the economy improves and the fed raises interest rates, the cost of that debt (and the cost of the national debt) will increase. It is time we all learned to spend responsibly–both at home and in government.

The Immediate Impact Of The Tax Cuts

The Daily Signal posted an article today about the immediate impact of the tax cuts recently passed by Congress.

I would like to remind people of what happened the in the 1980’s when President Reagan and Congress passed major tax cuts.

According to a Washington Post article April 10, 2015:

…the government’s budget numbers show that tax receipts expanded from $517 billion in 1980 to $909 billion in 1988 — close to a 75 percent change (25 percent after inflation),” Moore (Stephen Moore of The Heritage Foundation) wrote.

We checked the historical records of the White House budget office, and those numbers are right. But it’s devoid of important context.

First of all, revenues as a percentage of gross domestic product (GDP), which is the best way to compare across years, dropped from 19.1 percent in 1981 to a low of 16.9 percent in 1984, before rebounding slightly to 17.8 percent in 1989. One reason the deficit soared during Reagan’s term is because spending went up as a share of the economy and revenues went down.

A HeraldNet article of December 15, 2012 reminds us that President Reagan made a deal with the Democrats that included spending cuts as well as tax cuts. Conventional wisdom concerning that deal was that for every dollar in tax cuts there would be a three dollar cut in spending. Unfortunately, the Democrats never kept their end of that bargain.

The HeraldNet article reports the plan:

Here’s the actual breakdown of the three-year agreement, according to a June 1982 chart prepared by the GOP-controlled Senate Budget Committee staff, which appears in the 1989 book “The Deficit and the Public Interest,” by Joseph White and Aaron B. Wildavsky. (Note: The numbers represent reductions from anticipated outlays.)

Revenue:

$98.3 billion (26 percent)

Defense cuts: $26.4 billion (7 percent)

Nondefense cuts: $34.8 billion (9.1 percent)

Entitlement cuts: $30.8 billion (8.1 percent)

Other reductions/offsets: $7.8 billion (2 percent)

Freeze federal pay raise: $26.1 billion (6.9 percent)

Management savings: $46.6 billion (12.3 percent)

Net interest: $107.7 billion (28.4 percent)

Total non-revenue:$280.2 billion (74 percent)

Total: $378.5 billion

…At best, the spending savings that Congress could deliver, including defense cuts, amounted to a 1:1 ratio.

As Congress debates spending, we can hope that they will not repeat this mistake. Increased government revenues due to tax cuts should not lead to increased federal spending.

So far the results of the recent tax cut have been positive.

The article at The Daily Signal reports:

More businesses are announcing bonuses, higher minimum wages, and new benefits for employees after passage by Congress of Republicans’ tax reform bill. 

An email from House Speaker Paul Ryan’s press office highlights 33 businesses—including Aflac, Associated Bank, and PNC Bank—that have announced raises, bonuses, and other improvements for employees.

In moves that may defuse efforts to mandate higher minimum wages across the nation, at least nine of the 33 businesses announced they are boosting their minimum wage for thousands of workers to $15 or more an hour.

The article at The Daily Signal includes a partial list of companies offering benefits to their employees as a result of the tax cut. The article also includes a link to a complete list.

All working Americans have many reasons to celebrate the tax bill.

 

Preventing The Fleecing Of The Middle Class

The American tax code is a tribute to the effectiveness of lobbyists and big campaign donors. The loopholes in the code for people who make a lot of money are numerous. Even with loopholes in place, the rich pay a lot of taxes. As I have previously reported, The top 10 percent of income earners, those having an adjusted gross income over $138,031, pay about 70.6 percent of federal income taxes. About 1.7 million Americans, less than 1 percent of our population, pay 70.6 percent of federal income taxes. These numbers come from actual IRS data.

However, it seems that when it comes to eliminating loopholes, it’s always the middle class loopholes that go away.

Breitbart posted an article today about Congress‘ latest effort to take away a middle-class tax break. Because of a certain lack of faith in the future solvency of Social Security, many employers offer employees 401k retirement plans. Aside from allowing middle-class families to save for the future, these programs provide a place to put money so that it will not be taxed during the highest earning period of the employee. It will be taxed later at retirement when traditionally a person’s earnings are lower and generally taxed at a lower rate. Congress was evidently planning to alter the current system.

Breitbart reports:

“There will be NO change to your 401(k),” Trump tweeted. “This has always been a great and popular middle class tax break that works, and it stays!”

House Republicans were considering a plan to slash the amount of income American workers can save in tax-deferred retirement accounts. Currently, workers can put up to $18,000 a year into 401(k) accounts without paying taxes on that money until they retire and withdraw money from their savings. Proposals under discussion on Capitol Hill would set the cap lower, perhaps as low as $2,400. The effect would be a huge tax hike on middle class workers.

The plan to lower the cap on 401(k)’s would not have had an effect on long-term government deficits. Instead, it would have raised tax revenue now but lowered it in the future, since the retirement savings would already have been taxed. But taxing the savings would have had an impact on household budgets and may have discouraged workers from saving, increasing their future dependence on government benefits.

Let’s cut spending to ‘pay for’ tax cuts. Actually, if taxes are cut, economic growth should increase to a point where there is no loss of revenue. During the 1980’s, after President Reagan cut taxes, government revenue soared. Unfortunately, the Democrats who controlled Congress at the time greatly increased spending, so the government debt increased rather than decreased. Generally speaking, lowering taxes increases revenue–people are less inclined to look for tax shelters.

The Laffer Curve works:

Congress needs to keep this in mind while revising the tax code.

 

Restoring The Rule Of Law

A website called usconstitution.net explains the procedure involved in government spending:

…”All bills for raising Revenue shall originate in the House of Representatives” (Article 1, Section 7). Thus, I’ve listed the House’s “original jurisdiction” over revenue bills (laws that affect taxes) as a check. The House, however, views this clause a little differently, taking it to mean not only taxation bills but also spending bills.

The plain language of the clause would seem to contradict the House’s opinion, but the House relies on historical precedent and contemporaneous writings to support its position. In Federalist 66, for example, Alexander Hamilton writes, “The exclusive privilege of originating money bills will belong to the House of Representatives.” This phrase could easily be construed to include taxing and spending. The Supreme Court has ruled, however, that the Senate can initiate bills that create revenue, if the revenue is incidental and not directly a tax. Most recently, in US v Munoz-Flores (495 US 385 [1990]), the Court said, “Because the bill at issue here was not one for raising revenue, it could not have been passed in violation of the Origination Clause.” The case cites Twin City v Nebeker (176 US 196 [1897]), where the court said that “revenue bills are those that levy taxes, in the strict sense of the word.”

Yesterday, John Hinderaker at Power Line Blog posted an article explaining how recent actions by President Trump are restoring that constitutional principle. On Thursday, President Trump announced that he was ending payments to insurance companies that were implemented by Executive Order under ObamaCare. Since the payments were never approved by the House of Representatives, the payments were illegal and should never have begun in the first place. The Obama Administration had made those payments.

The article at Power Line states:

Liberal news outlets are offering a parade of horribles that will ensue if the federal government doesn’t continue to pay off insurance companies. In most cases, they pay little or no attention to the constitutional issue at stake. Whether such consequences will result is not so clear. Chris Jacobs points out:

For the time being, individuals likely will not see any direct effects from the payments ceasing. Carriers cannot exit Exchanges mid-year, and contracts for the 2018 plan year are already signed. (A provision in carriers’ 2017 and 2018 contracts lets them exit Exchanges if enrollees do not receive cost-sharing reductions—not if the insurers themselves do not receive reimbursement for those cost-sharing reductions. This clause, awkwardly drafted by insurers’ counsel, may provide them with little legal recourse—and further highlights their questionable assumptions and behavior surrounding the subsidies.) So maybe—just maybe—Washington can spend some time focusing on the real issue behind the Administration’s action: Upholding the Constitution.

If Congress wants to continue the subsidies, it can do so. Its appropriation, obviously, will make them constitutional. But regardless of what happens from now on, the Trump administration has acted admirably by refusing to go along with the unconstitutional regime that Barack Obama instituted.

This is not about politics–it is about following the U.S. Constitution as the law of the land.

Exactly What Did The Stimulus Do?

The American Thinker posted an article today about what happened to the Middle Class under President Obama. Basically the value of the American dollar shrank and the Middle Class shrank.

The article reports:

A December 2015 study of the American middle class done by the Pew Research center found that for the first time in over forty years the middle class no longer includes the majority of Americans.  The plain fact is, after the largest so-called stimulus government spending program in world history, conducted by President Obama and his Democratic Party, both the number of persons in the middle class and the proportion of the population shrank.

The Pew Hispanic Center May 2016 Study found that at the end of President Obama’s second term, the middle class had been shrinking in the vast majority of metropolitan areas of the US.  The important of the metropolitan areas is that 1) 76% of all Americans live in metro areas, 2) metro areas are the areas where most jobs are located, and 3) illegal immigration is promoted in metro areas all across the nation.

While the shrinking middle class proves that government cannot raise the incomes of middle class persons in the US through stimulus spending, at the same time it shows that the increasing tax burden on the middle class eats away at their disposable income and their lack of spending hurts the local economies.

The article concludes:

The Tax Foundation also looked at the sources of state and local taxes and published a study in June 2017.  While property taxes remain the single greatest source of tax revenues, the idea that the property tax goes solely to fund public services such as police, water and sewer maintenance, street lighting, etc. is now a lie in many areas.   The Illinois Policy Institute audited all the cities of Illinois and found that in 10 of the cities including Chicago, all of the property taxes collected go only to pay public sector pensions.  This leaves a huge gap in the funding of local public services, which is why Chicago has the highest sales tax, some of the highest taxes on tobacco products, alcoholic beverages, etc.

OXFAM reported that during Obama’s terms, 95% of the wealth created went to the top 1% of the world’s wealthy.  This can be interpreted as proof that stimulus programs don’t work or, as I have argued, that the spending was never intended to stimulate the economy: only to bolster the equities values of public sector union pension plans, since they are the largest contributors to the Democratic Party’s national machine in all fifty states.  We are losing our incomes because we’ve been forced to subsidize Obama’s political party.   The debt, Fed balance sheet, and financial instability indicate there’s no end in sight. 

There are a number of conclusions we can draw from this. First of all, when workers in local municipalities formed unions, bad things happened. Unions donate to political candidates. Therefore people elected to municipal offices have an incentive to be nice to unions. How do you be nice to unions and also nice to taxpayers? When negotiating contracts, you provide benefits that will not immediately show up in the budget. You create unfunded liabilities such as permanent health care for retirees or wonderful pensions that employees don’t have to pay into.  Unfunded liabilities are the burden that is poised to sink many of our towns and cities in America.

In actuality, if the federal government had simply given every taxpaying American $40,000, the stimulus would have been cheaper and actually made a difference in the average American’s life. Instead, the President who claimed to represent the little people simply paid off the wealthy donors who paid to elect him.

The Numbers Are Staggering

On Sunday The Washington Times reported that with the signing of the new budget deal reached with Congress, by the time he leaves office President Obama will have increased to national debt to $20 trillion.

The article reports:

Mr. Obama’s spending agreement with Congress will suspend the nation’s debt limit and allow the Treasury to borrow another $1.5 trillion or so by the end of his presidency in 2017. Added to the current total national debt of more than $18.15 trillion, the red ink will likely be crowding the $20 trillion mark right around the time Mr. Obama leaves the White House.

When Mr. Obama took over in January 2009, the total national debt stood at $10.6 trillion. That means the debt will have very nearly doubled during his eight years in office, and there is much more debt ahead with the abandonment of “sequestration” spending caps enacted in 2011.

“Congress and the president have just agreed to undo one of the only successful fiscal restraint mechanisms in a generation,” said Pete Sepp, president of the National Taxpayers Union. “The progress on reducing spending and the deficit has just become much more problematic.”

Some budget analysts scoff at the claim made by the administration and by House Speaker John A. Boehner, Ohio Republican, that the budget agreement’s $112 billion in spending increases is fully funded by cuts elsewhere. Mr. Boehner left Congress last week.

This amount of debt is unsustainable.

I would also like to mention that the budget deal included taking $150 billion dollars from the Social Security Trust Fund (as if that ever existed) that working people continually pay into. (see rightwinggranny.com).

We need to elect people who will cut government spending–not increase it. Remember as you vote in your state’s primary election and next November that the debt we are incurring will be laid on your children and grandchildren. For their sake (as well as the sake of not becoming a third-world country), we need to rein in government spending as quickly as possible.

Another Reason To Oppose An Increase In The Gasoline Tax

I have previously stated my objection to raising the tax on gasoline now that the price per gallon has dropped–the gas tax is much more of a burden on lower income people than on the upper middle class. As much as I do think tax burdens should be somewhat equal, I don’t like to see people spend a major portion of their income just getting to work. When the price of gasoline dropped, I think everyone breathed a sigh of relief–it was like getting a tax rebate. Now Congress is ready to mess that up.

The Wall Street Journal posted an article today explaining where the money paid in gasoline taxes has been spent. Because we are hearing cries about our crumbling infrastructure, you would think that the gasoline tax money would be spent on roads. Think again.

The article reports:

But before considering any policy that would raise additional revenue, Congress should first reform where the fund’s money goes. The Highway Trust Fund now pays for a plethora of projects that have little to do with highways. According to a 2013 analysis by the Heritage Foundation, at least 20% of gas-tax revenues in recent years went toward other programs, from light rail to bike lanes to landscaping projects. Some funds even went toward establishing transportation museums.

Hence the financial problems. According to an editorial in this newspaper, spending on non-highway projects has increased by nearly 40% since 2008, while highway-related spending has remained flat. If Congress directed the fund to spend its money only on highways and other road-related infrastructure—what it was initially created to do—it would be 98% solvent for the next decade.

This is the perfect picture of the problem with government spending–the problem is not lack of money–the problem is how the money they have is being spent.

The article concludes:

Higher gas prices, tax-induced or otherwise, also correspond with diminished economic growth. When you and I have more money to spend, we usually do so, benefiting the economy in the process. Financial analysts at Goldman Sachs predict that lower gas prices could add as much as half a percentage point to GDP growth this year. Some of this will be offset by corresponding declines in the oil and gas industry, but the overall effect on America’s economy is still expected to be positive in 2015.

This puts in perspective the first quarter’s lackluster 0.2% economic growth. Without the benefits of lower gas prices, growth could have been even slower, which is the last thing Americans need. When the Highway Trust Fund’s future comes up for congressional debate in the coming weeks, legislators should consider reforming it rather than simply demanding that you and I pay more at the pump.

There are Republicans and Democrats who have authored this bill. Every one of them should be voted out of office at the next opportunity. This is not the time to raise taxes–this is the time to begin to spend responsibly.

If You Misdiagnose The Problem, You Won’t Get The Right Solution

The federal deficit is out of control. For whatever reason, the Obama Administration is convinced they can reduce the deficit by cutting military readiness and benefits to the military.

A website called trivisionno.com posted the following:

http://www.rightwinggranny.com/wp-content/uploads/2015/01/food-stamps-monthly-benefit.jpg

Note that the average food stamp benefit per person is $125.35 per month.

The chart below (from the same site) shows the benefits paid out:

http://www.rightwinggranny.com/wp-content/uploads/2015/01/food-stamps-annual-benefits.jpg

These benefits are given to people based on their income. There is no work requirement, generally no drug testing, and nothing to encourage people to get off of food stamps. Why are we not doing some serious cutting here? I am not trying to pick on food stamp recipients, but my point is that we need to look at many ways to deal with runaway government spending.

From a site called U.S. Government Spending:

govspendingwelfareMeanwhile, Stars and Stripes reported yesterday:

The Military Compensation and Retirement Modernization Commission will release its long-awaited report Thursday, which will propose fundamental changes to military benefits including ending the 20-year retirement, according to the Military Times, citing sources familiar with the report.

The plan calls for Congress to create a hybrid system of smaller defined-benefit pension along with more cash-based benefits and lump-sum payments. A significant portion of retirement benefits would come in the form of government contributions to 401(k)-style investment accounts, those familiar with the report told Military Times.

In addition to the 401(k) for troops serving less than 20 years, the commission will suggest promising a pension to troops who serve a long-term career, but one that would be more modest than what military retirees receive today, a defense official briefed on the plan told the Times.

And, unlike the current system, this pension would not start upon separation from service; instead, those payment checks would begin at a traditional retirement age, such as 60 or older, according to the official.

So let’s see. Rather than deal with the people who choose to collect welfare rather than work (I realize that does not apply to all welfare recipients, but it applies to some of them), we are going to take away the benefits of the men and women who voluntarily risk their lives to keep us free. It’s even worse than that. When a career military man leaves the military at age 40-something, he starts out as an employee in the civilian world at square one. His military experience does not necessarily translate to seniority in a civilian job. His retirement pay helps bridge the gap and allow him to support his family. He (or she) has given up many of the peak advancement years in order to serve America. Why in the world would the government even consider taking away something that makes the military a reasonable option to civilian life? If I didn’t know better, I would believe that the military commission was attempting to destroy our volunteer army.

Your Tax Dollars At Work

CBN News posted an article today about the release of Republican Sen. Tom Coburn‘s annual “Wastebook” report, which lists 100 examples of wasteful government spending totaling $25 billion.

The article reports:

Examples of wasteful federal spending include the following:

$10,000 to watch grass grow at a Florida reserve

$19 million in paid vacations for government workers, about a third of whom were placed on “administrative leave” for disciplinary reasons, including criminal offenses

$350 million to build a launch pad tower that was mothballed immediately because the rockets it was designed to test had been scrapped years ago

The report also found the State Department used part of its $3 million counterterrorism communications budget to debate terrorists on Twitter.

Why are we debating terrorists on Twitter? Why not use their smart phones to located them and deal with them in a way that prevents terrorism (use your imagination)?

This is another reason we need a new Congress that will put a stop to this foolishness.

Why Leadership Matters

Yesterday Hot Air posted an article about the loss of economic freedom in America.

The article reports:

For going on 20 years now, the Heritage Foundation and the Wall Street Journal have been putting together an annual Index of Economic Freedom by evaluating countries the world over based on ten criteria along the lines of property rights, government spending, freedom from corruption, trade freedom, and the like. They released the 2014 edition of their annaul Index today, and here’s the good news: Worldwide economic freedom has reached record levels, huzzah! The various governments of 114 countries took steps in 2013 that increased their citizens’ economic freedom, and 43 countries all over the world have now reached their highest ranking in the Index’s history. Awesome, right?

But, here’s the bad news: The United States is no longer among the relative elite of these economically free nations. Oof.

What happened? The article points out that a tax rate exceeding 43% cannot even keep pace with the government’s runaway spending. The article also cites the problem of over-regulation by the government which impacts economic and personal freedom.

The article concludes:

As I mentioned earlier today, the Obama administration is currently prepping for the president’s fifth State of the Union address by touting all the sweet executive actions they’ve freshly come up with to spur along the economy should Congress fail to act on their legislative proposals. Yet again, however, the Obama administration’s ideas all seem to center around ways to spend more taxpayer money, increase top-down federal intervention, and layer the regulations on even more thickly — i.e., take our economic freedom even further down the drain — and their only regret seems to be that this spitefully obstructionist ‘Republican’ Congress of ours hasn’t permitted them to do even more of the same.

Leadership matters.

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One Reason Government Spending Is Out Of Control

On Saturday the Washington Post posted an article about some of the end-of-the-year spending done by government agencies. The spending is a result of one of the side effects of baseline budgeting, which is something our government needs to get rid of. Baseline budgeting is the concept that a department’s budget is based on how much money they spent in the previous year. If they spend 90 thousand dollars and their budget was 100 thousand dollars, the department budget will be 90 thousand dollars in the following year. If they don’t spend all of the money in their budget, their budget is cut. This creates a mad rush to spend their entire budget by September 30, the end of the fiscal year. If they spend the full amount and ask for a 10 percent increase and get a 5 percent increase, that is considered a 5 percent budget cut. That is how Congress can claim they are cutting the budget while the spending continues to increase. These two concepts explain some of the rather interesting end-of-the-year spending done in the past few weeks by the government. As you read this, remember that this is under sequestration when Democrats are complaining that there is no money.

The article posts some examples of spending in recent weeks:

On Monday, VA paid $27,000 for an order of photographs showing sunsets, mountain peaks and country roads. They would go into a new center serving homeless veterans in Los Angeles; a spokeswoman described the art as “motivational and calming, professionally designed to enhance clinical operations.”

On Tuesday, the USDA bought $127,000 worth of toner cartridges (“end of year,” the order explained). VA spent another $220,000 on artwork for its hospitals.

On Wednesday, the Coast Guard paid $178,000 for cubicle furniture, replacing high-walled cubes with low-walled ones to improve the air flow in a large office area.

“Other higher-priority projects were not able to be executed, so they moved [money] to this lower-priority project” before the year’s end, said Coast Guard spokesman Carlos Diaz. “The money was going to be spent anyway.”

On Thursday, VA was buying art again. It spent $216,000 on artwork for a facility in Florida. In all, preliminary data showed that the agency made at least 18 percent of all its art purchases for the year in this one week. One-sixth of the buying in one-52nd of the year.

This is not a reasonable system. There is a spreadsheet at adelphi.edu that shows the federal deficit over the years. When President Obama took office, the deficit was approximately 12 million dollars. The deficit is now approaching 17 million dollars. That’s a pretty hefty increase in five years. However, the really interesting part of the spreadsheet is the relationship between the deficit and which party controls the House of Representatives. Remember, the House controls the spending. Please follow the link to the spreadsheet and take a look at the history of the federal deficit.

At any rate–baseline budgeting needs to go.

 

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Some Perspective Posted On Facebook

Photo

See the National Center For Public Policy Research for further information.

The article reports:

You’re also probably not hearing that the taxpayers are spending about $80 billion annually for food stamps.

Or that food stamp spending increased under Obama from $39 billion in 2008 to $85 billion in 2012, and it doubled during the George W. Bush Administration, as reported by Katherine Rosario of the Heritage Foundation.

Or that the massive food stamp spending increases since 2008 occurred during a period of massive unemployment and underemployment. As the economy recovers — surely it will over the next ten years, President Obama? — the need for food stamp spending should go down.

Or that, as Robert Rector and Amy Payne of Heritage have written, “If converted to cash, means-tested welfare spending is more than five times the amount needed to eliminate all poverty in the United States,” so the amount of money we’re spending isn’t really the issue, it’s how we’re spending it.

Do your homework–check the stories the media is reporting.

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Misplaced Priorities

As spring break approaches and class trips are planned to Washington, D. C., the White House has announced that tours of the White House will be cancelled until further notice due to the budget cuts in the sequester. Meanwhile, The Weekly Standard reported today that the three White House calligraphers, with annual salaries of $96,725, $85,953 and $94,372 (for a yearly total of $277,050) are not in danger of being laid off.

It really is unfortunate that budget cuts seems to bring out the worst in our President. He is trying to do things to anger the public so that he can increase spending and taxes.Please remember that this is all about the 2014 elections. If the Democrats can win the House of Representatives, government spending and government growth can continue unchecked. That is the reason the President is attempting to use the sequester to turn public opinion against budget cuts and against the Republican party. It is important that voters stay informed and not fall for this plan.

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Why Sequestration Was Necessary

CBS News reported yesterday that the national debt has risen by more than $6 trillion since President Obama took office. During the eight years George W. Bush was President, the debt grew by $4.9 trillion.

The ‘cuts’ in sequestration are not the best cuts that could be made. There were better ways to do this. The most obvious improvement would have been to actually cut the budget. Although sequestration cuts the budget from now until June by about $40 billion (to keep things in perspective–aid to the victims of Hurricane Sandy was  $50 billion), it only cuts the future rate of growth–it does not cut future spending. Next years budget is larger than this years budget.

The Independent Journal Review posted an article listing five basic things all Americans need to know about the sequester:

1. The cuts are small, and most of them take place in future years. We know how that generally works.

2. Government spending is still increasing, even with the cuts.

3. The Pentagon budget will be about $500 billion, not counting war-related and emergency appropriations.

4. One example of how badly the government manages money is that the  one program which the sequester cuts by $2 million ended last year and does not even exist anymore.

5. The sequester was the President’s idea. The President and the media should not be allowed to use the sequester as a battering ram against the Republicans. First of all, runaway spending should not be a political issue–it impacts all of us.

Since the current leadership in Washington does not want to put the welfare of the country over their own petty politics, both parties need new leadership. Sequester happened because there was no one with the courage (or possibly the will) to cut government spending. Until Americans elect more people who are willing to stand up for the rights of working Americans who pay taxes, we will only have more spending, more debt, and eventually, bankruptcy.

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Some Suggestions For Cutting Government

Yesterday Fox News posted a story that provided some perspective on the current sequestration debate.

The article reports:

The sequester is expected to take a $85 billion bite out of the fiscal 2013 budget, though only half of that impact is expected to be felt this year.
But lawmakers say the government already has $45 billion in unspent money which could be used to offset the shortfall.

Rep. Tom Price, R-Ga and Sen. Marco Rubio, R-Fla. introduced legislation on Tuesday that would require the director of the White House budget office to rescind funds that haven’t yet been obligated.

The article further reports:

Republican Sen. Tom Coburn has also identified several programs at the Pentagon he’d set aside, including a video called “grill sergeants” in which the instructors show their favorite recipes; money for a plan to send a space ship to another solar system; funds to find advancements in beef jerky from France; and $6 billion on questionable research, including what lessons about democracy and decision-making could be learned — from fish. 

I have enough input into my decisions–I have no plans to consult my local fish.

Please follow the link above to see some of the places where money is available and government spending can be cut. The upside of this discussion is that it will bring attention to government waste. Hopefully we can learn from our past overspending and cut our spending in order to reduce the credit card bill we are handing our children.

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Scaring American Voters For Fun And Profit

The chart below is from Heritage.org. It shows the actual impact of sequestration on federal spending:

Government spending is expected to grow from $3.6 trillion to $6 trillion over the next 10 years. Sequestration will cut only 2.4 percent of this spending.

The article at Heritage.org reports:

Tax increases are no solution. President Obama already grabbed $618 billion in tax increases. These tax hikes harmed opportunity for Americans by increasing taxes on investors and job creators, and yet the budget remains out of balance. Washington has a spending problem—not a revenue problem—and only spending cuts can put the budget on a path to balance.

Spending cuts from sequestration and more are necessary. Without them, Americans will suffer even more in the future as economic uncertainty undermines opportunity and as deficits become growth-reducing debt. The good news is that there are smart ways to cut spending to offset sequestration, and at least six bipartisan ways to reform entitlements.

Meanwhile, back at the ranch, PJ Media reports:

The sequester is officially still three days away, but the Obama administration already is making the first cuts, with officials confirming that the Homeland Security Department has begun to release what it deems low-priority illegal immigrants from detention.

The move is proving controversial. Immigrant-rights groups say it shows the administration was detaining folks it never should have gone after in the first place, while Republicans questioned the decision-making.

U.S. Immigration and Customs Enforcement, the agency that runs the detention facilities, said in a statement that the “current fiscal climate” has forced it to do a review of spending, and part of that is taking a look at who is being detained.

“As a result of this review, a number of detained aliens have been released around the country and placed on an appropriate, more cost-effective form of supervised release,” ICE said in a statement.

This is such garbage that there are no words for it. Again, the sequester is a cut in the rate of growth. Even with the sequester the government will spend more money this year than they did last year. To say that prisoners have to be released to cut the budget is nonsense. It is scare tactics of the worst kind. This is only one example of what happens in Washington when you attempt to cut federal spending by even a small amount. The President should be ashamed of himself.

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The Problem With Arithmetic

The problem with arithmetic is that if you always use the same numbers you always get the same answers. You can’t change the answer (solution) without changing the numbers. It’s just too rigid! Unfortunately, America is about to fall victim to the rigidness of arithmetic. It won’t be obvious until after it happens, but it is coming.

John Hinderaker at Power Line posted an article yesterday about the arithmetic involved in solving America’s financial problems. He points out that what is happening in America is also happening around the world.

The article states:

American voters accepted Obama’s claim that no change is necessary, that $16 trillion of debt is nothing to worry about. In France, voters put socialists into office, vowing not to give an inch on government benefits, ever. In Spain, Greece, and elsewhere around the world, politicians promise their constituents that nothing has to change, more money can be found somewhere. They are all lying.

The article cites an article by Janet Daley that appeared in the U.K. Telegraph on Saturday. The opening paragraph of the article asks:

Was 2012 the year when the democratic world lost its grip on reality? Must we assume now that no party that speaks the truth about the economic future has a chance of winning power in a national election? With the results of presidential contests in the United States and France as evidence, this would seem to be the only possible conclusion. Any political leader prepared to deceive the electorate into believing that government spending, and the vast system of services that it provides, can go on as before – or that they will be able to resume as soon as this momentary emergency is over – was propelled into office virtually by acclamation.

After France raised the taxes on millionaires, the millionaires began leaving the country. As California continues to raise its taxes on ‘the rich,’ the exodus of the wealthy from that state continues. After Maryland raised taxes on millionaires, the number of millionaires in the state declined, and state tax revenue declined. There is a lesson here, and America needs to learn it.

The article in the Telegraph points out:

Barack Obama knows that a tax rise of those proportions in the US would be politically suicidal, so he proposes a much more modest increase – an income tax rate of around 40 per cent on the highest earners sounds very modest indeed to British ears. But that is precisely the problem. If a tax rise is modest enough to be politically acceptable to much of the electorate, it will not produce anything like enough to finance the universal American entitlement programmes, social security and Medicare, into a future with an ageing population. There is no way that “taxing the rich” – that irresistibly glib Left-wing solution to everything – can make present and projected levels of government spending affordable. That is why Britain and almost all the countries of the EU have redefined the word “rich” to mean those who are earning scarcely twice the average wage, and pulled more and more middle-income people into high tax bands. Not only are there vastly more of them but they are far more likely to stand still and be fleeced, because they do not have the mobility of the truly rich.

As the debate on the fiscal cliff continues, we need to keep our perspective on exactly what is going on.

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A Chart That Tells It All

From the Weekly Standard today:

The Senate Budget Committee has stated that $1.2 trillion of the proposed $1.6 trillion in tax hikes would go toward new spending, while only $400 billion would go toward deficit reduction. We don’t need more taxes or more spending–we need to cut both taxes and spending.

President Obama has stated that ‘taxing the rich’ will solve our budget problems. Taxing the rich in order to spend more money will simply create more budget problems. Until we deal with the spending, there will be no solution.

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Voting With Your Feet

CBN News is reporting today that when the British government changed the tax rate on millionaires to 50 percent, wealth left the country. Wow! What a surprise.

The article reports:

The London Telegraph reports that 16,000 British citizens declared an annual income of more than a million pounds in the 2009-2010 tax year.

That number fell to just 6,000 after the government introduced the new top tax rate of 50 percent.

Analysts believe many Brits simply moved out of the country to avoid the high taxes. Others found ways to cut their taxable income.

The article further reports:

Chancellor of the Exchequer George Osborne, a member of the new Conservative Party majority, announced the top tax rate will be reduced to 45 percent next year for those with annual incomes of 150,000 pounds.

Since that announcement, the number of people making a million pounds a year has gone back up.

Tax revenue in the United States generally averages between 18 and 20 percent of the Gross Domestic Product. When you increase the taxes on the rich, tax revenue in the United States generally averages between 18 and 20 percent of the Gross Domestic Product. There is a lesson here. Attempting to ‘punish’ the rich for their success does not work. Aside from the fact that envy is not a particularly desirable trait in anyone, it does not make good economic policy. Our budget problems in America are not the result of low revenue–they are the result of high spending. Traditionally government spending has averaged between 18 and 20 percent of the Gross Domestic Product. Under President Obama it has averaged closer to 25 percent. That has created a problem. The solution to the problem is less spending–not more taxes.

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