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:

https://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:

https://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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A Chart That Tells It All

The chart below was posted in the Wall Street Journal yesterday:

image

The chart is based on numbers from the International Monetary Fund. The chart is contained in an article by Arthur Laffer about the impact of government stimulus spending.

In the article Mr. Laffer points out:

The four nations—Estonia, Ireland, the Slovak Republic and Finland—with the biggest stimulus programs had the steepest declines in growth. The United States was no different, with greater spending (up 7.3%) followed by far lower growth rates (down 8.4%).

These numbers are particularly relevant as countries around the world are debating whether or not another round of stimulus spending is the answer to the current recession.

Mr. Laffer states:

Still, the debate rages between those who espouse stimulus spending as a remedy for our weak economy and those who argue it is the cause of our current malaise. The numbers at stake aren’t small. Federal government spending as a share of GDP rose to a high of 27.3% in 2009 from 21.4% in late 2007. This increase is virtually all stimulus spending, including add-ons to the agricultural and housing bills in 2007, the $600 per capita tax rebate in 2008, the TARP and Fannie Mae and Freddie Mac bailouts, “cash for clunkers,” additional mortgage relief subsidies and, of course, President Obama’s $860 billion stimulus plan that promised to deliver unemployment rates below 6% by now. Stimulus spending over the past five years totaled more than $4 trillion.

If you believe, as I do, that the macro economy is the sum total of all of its micro parts, then stimulus spending really doesn’t make much sense. In essence, it’s when government takes additional resources beyond what it would otherwise take from one group of people (usually the people who produced the resources) and then gives those resources to another group of people (often to non-workers and non-producers).

If the government wants the producers in our society to continue producing, it needs to understand how human nature and incentives work. If I can make more money by not working than I can for working, it doesn’t take a rocket scientist to figure out that I am less likely to work.

I think Mr. Laffer is on to something. Please read the entire article at the Wall Street Journal for more information on the impact of government stimulus programs.

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When Facts Get In The Way Of Spin

The latest pre-election spin from the Obama campaign is that President Obama has slowed spending. Wow. If they get away with that one, they will begin to tell us that the sky is green. Investor’s Business Daily is my favorite source for numbers I don’t easily understand, and they have posted the story explaining the sleight of hand involved in the Obama campaign’s claim.

Ann Coulter wrote the article. She explains how the books are being cooked:

It turns out Rex Nutting, author of the phony Marketwatch chart, attributes all spending during Obama’s entire first year, up to Oct. 1, to President Bush.That’s not a joke.

That means, for example, the $825 billion stimulus bill, proposed, lobbied for, signed and spent by Obama, goes in … Bush’s column. (And if we attribute all of Bush’s spending for the Iraq and Afghanistan wars and No Child Left Behind to William Howard Taft, Bush didn’t spend much either.)

Nutting’s “analysis” is so dishonest, even The New York Times has ignored it. He includes only the $140 billion of stimulus money spent after Oct. 1, 2009, as Obama’s spending.

And he’s testy about that, grudgingly admitting that Obama “is responsible (along with the Congress) for about $140 billion in extra spending in the 2009 fiscal year from the stimulus bill.”

It’s early in the silly season. I am sure there is much more of this to come.

Ms. Coulter further reports:

But Obama didn’t come in and live with the budget Bush had approved. He immediately signed off on enormous spending programs that had been specifically rejected by Bush.

This included a $410 billion spending bill that Bush had refused to sign before he left office. Obama signed it on March 10, 2009.

Bush had been chopping brush in Texas for two months at that point. Marketwatch’s Nutting says that’s Bush’s spending.

One begins to wonder how long it will be before everything is not Bush’s fault.

 

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Does This Spending Represent Your Priorities ?

CBN News posted an article today listing some of the things that our government is currently spending money on. Remember, this is a time when we are borrowing one out of every four dollars we spend and Congress is saying that it is impossible to cut spending without seriously hurting certain sectors or our economy.

Please follow the link above to read all of the article, but here are a few highlights:

Like the $120 million for federal retirement benefits to retirees who are already dead. Patrick Knudsen, The Heritage Foundation’s senior federal budget expert, pointed showed CBN News a recent example.

“After a retiree had died, his son continued cashing his checks for 37 years. And it didn’t stop until 2008 when the son himself died,” he said.

…More federal funding in the amount of $593,000 went to a primate research center to study where in chimpanzees’ brains they get the idea to throw their feces.

…A Virginia university received $55,000 to study Jordanian students’ water pipe smoking habits.

…A new grant of $176,000 joined $350,000 already spent to study how cocaine hurts or helps the sex drive of Japanese quail.

Some other gems:

…A museum of magic received $147,000 to study the audiences of magic shows.

…More than $550,000 of U.S. taxes went to the production of a documentary on how rock bands contributed to the fall of the Soviet empire.

…A television production of a Pakistani version of PBS’ “Sesame Street” has already cost tax payers $10 million and $20 million more has already been budgeted.

…IPad 2s were purchased for $96,000 for students in Maine, where 96 percent of their parents said the cost wasn’t worth it.

…Nevada’s Western Folklife Center received $50,000 for cowboys and cowgirls to gather once a year to recite cowboy poetry.

Somehow, I think we can find some room for spending cuts in these programs.

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Why We Need To Stop Runaway Spending

USA Today posted a story today that the U. S. National Debt is now equal to all goods and services produced by the entire U. S. economy in one year.

The article reports:

The amount of money the federal government owes to its creditors, combined with IOUs to government retirement and other programs, now tops $15.23 trillion.

The article includes a graph:

The graph shows how rapidly the national debt has risen in recent years.

The article concludes:

The White House and Congress agreed in August to cut about $1 trillion from federal agencies over 10 years. An additional $1.2 trillion in automatic spending cuts looms beginning next year if lawmakers can’t agree on a better way to do it.

Economist Mark Zandi of Moody’s Analytics says reaching the 100% mark shows “the grave need to address our long-term fiscal problems.”

We need to elect people in November who will stop the runaway spending.

  

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Is Fairness Really The Issue ?

Investors.com posted an article yesterday about President Obama’s speech declaring that his policies would bring ‘fairness’ to America. Unfortunately, all President Obama’s policies have brought is shared misery.

The article reports:

But by Obama’s own measure, the country has gotten more “fair.” The richest 1% now pays almost 40% of all federal income taxes, up from 25% two decades ago, while the bottom half pays only 2%, down from 6%. The federal regulatory state has never been as big, and government spending as a share of the economy is at record levels.

What’s unfair is what these policies have produced — a woeful economic recovery that’s hurt the middle class the most.

In fact, as IBD reported recently, the only winners since Obama took office have been corporations (profits are up 68%) and Wall Street investors (the Dow’s up more than 45%). The rest of the country has gotten the shaft.

The article further reminds us that since President Obama took office, unemployment is higher, house prices are lower, and inflation is beginning to rise. Since the recession supposedly ended in June 2009, household income has dropped almost 7 percent.

The article also reminds us that:

And income inequality — which was flat during the Bush years — has started to rise.

What we have now is crony capitalism. Solyndra and other ‘green’ companies staffed by President Obama’s fundraisers have received large amounts of money from the government in the past year, as have many Wall Street firms. Meanwhile the rest of us are struggling to keep up.

The only economic fairness President Obama has brought us is shared misery. We need to remember this in 2012–regardless of who the Republican candidate is.

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Why We Need New Republican Leadership

CNS News reported yesterday:

House Speaker John Boehner (R-Ohio) and House Majority Leader Eric Cantor (R-Va,) were not among the 72 House Republicans who signed a letter to the Joint Select Committee on Deficit Reduction–the so-called “Supercommittee”–asking the committee not to call for increasing taxes.

This is a chart from USGovernmentSpending.com which shows where the budget problem is:

It shows a dramatic rise in government spending as a percentage of the gross domestic product since about 2006 (when the Democrats took over the House of Representatives–the branch of government that controls the purse strings). Until the spending is brought down to the traditional 18 to 20 percent of the gross domestic product, we will continue to borrow (from China) 40 cents of every dollar we spend. Eventually, we will go bankrupt.

The problem is not low taxes–it is out of control spending. If the Republican leadership does not realize that, we need new Republican leadership.

 

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Some Notes On The Current Budget Debate

The super committee is desperately trying to find a way to cut the budget deficit. I am not alone in believing that no solution will be reached.

On Friday Heritage.org posted an article about what exactly is being discussed. Some basic facts pointed out in the article:

Words can’t even begin to describe the scope of borrowed federal spending, but it is no doubt a staggering figure that has risen dramatically in the last decade and is more than $4 trillion higher than when President Barack Obama took office less than three years ago.

Federal spending, at about 24 percent today, is significantly over the average of 20 percent of GDP, but in a decade it will top 26 percent.  Within a generation it will reach nearly 35 percent of GDP.

The facts are simple: Entitlements are going to generate European style debt levels unless they are reformed. Paying for it without bringing down their spending would require constant, crushing tax hikes on all taxpayers — not just the top 1 percent.

And there are some in the House and Senate who understand the problem and are advocating significant action. Seventy-two Members of the House and 33 Senators are standing against continued overspending, over-borrowing, and overtaxing. In a letter yesterday to the super committee, the House Members wrote, “It is evident that America has a fiscal crisis because Washington spends too much, not because it taxes too little,” and warned, “Increasing taxes on Americans would destroy jobs, erase all hope of an economic recovery, and simply serve to feed out-of-control spending in Washington.”

If those in Washington do not have the courage to cut the spending, we need to elect people who do.

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The Myth Of Actually Cutting Spending

As long as we have the current leadership in Congress, the federal government will continue to grow. That is true despite what you are hearing about coming drastic cuts by the super committee or drastic cuts if the super committee fails.

This is where we are:

George Will posted an article at the Washington Post yesterday explaining that the current discussions are all smoke and mirrors.

The article reports:

But suppose the sequester occurs. Ignore loose talk about “draconian” spending cuts. Veronique de Rugy of George Mason University’s Mercatus Center has a graph you should see.

It shows two lines. The top one charts spending, 2013-2021, without the sequester; the other shows spending with the sequester. Both lines are ascending. Both show annual spending rising from less than $4 trillion to more than $5 trillion. The space between them is so narrow that it is difficult to see that there are two lines. Without the sequester, spending will increase $1.7 trillion; with the sequester, spending will increase $1.6 trillion. Here are categories of spending:

Ten-year spending increases:

                                                     Without                         With

Defense                                   20 percent                    18 percent

Nondefense discretionary     14 percent                   12 percent

Medicare                                   62 percent                    62 percent

Other mandatory                      51 percent                     51 percent

Net interest                            152 percent                   136 percent

This whole super committee thing seems to be much ado about nothing.


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