No one likes to talk about budgets, our eyes glaze over when big numbers are talked about. But let’s get real and talk about our federal budget and taxes.
Conservatives like to compare a family budget to a government’s budget, as if you can sit around a kitchen table and figure it out. The reality is that government provides services that no one else can.
Conservatives would have you believe that somehow we can turn back the clock and be back to the 18th Century when our country had only 3 million people. We had cow paths and roads that were impassable when it rained. Citizens took sometimes took 2 days on horseback to travel to their polling place, just to vote.
We are no longer a nation of 130 million people like we were when World War II started. We are a nation of 313 million people, we are a nation of planes, trains and waterways.
We hear conservatives preach the sermon of how our federal government should be like states and have a balanced budget. But states do not print money nor do they have the responsibility to defend our nation, take care of our veterans, and help provide and promote the general welfare of our nation. Some citizens have this idea of tough love and that we should let the sick die, that we should let our elderly go without health care, and that we should take away what financial insurance they have with Social Security. But we are a compassionate people, a nation, a quilt of many colors.
It has only been since the Gingrich days that the budget has taken on a new look and it has been used as a political football, it is now used as a means of extorting concessions from the political party in power to gain political victories that they could not win at the polls.
Prior to the Reagan Administration in the early days of Twentieth Century, government saw the passage of the Budget Accounting Act of 1921 and in 1974 due to the attempt of the Nixon Administration to abrogate the power of the purse which the Constitution gave to the House of Representative, Congress passed the Congressional Budget and Impoundment Act of 1974.
Congress created the CBO as a counterweight to the Office of Management and Budget, which is the executive branch’s budget office. Historically the President proposes a budget and Congress acts on the proposal.
How did we get to the point of having our debt increase so much after 2001?
Going into 2001 the CBO had projected a budget surplus of 5.6 trillion dollars for the foreseeable future due to the Clinton pay as you go policy and with the tax rates that he had left office with.
From 2001 to 2009, America saw the lowest tax receipts in 40 years and we also witnessed the largest increase in federal spending as a ration to GDP in 40 years as well.
Spending increased by 18.2%, with increases occurring in defense, by 1.6%, medicare and Medicaid by 1.7%, and income security is another example. Income security relates to unemployment insurance and food stamps. These increased expenditures can be attributed to the Great Recession.
The aging of the Baby Boomers is a factor in what has been an increase in Medicare and Social Security expenditures.
Most of the financial bleeding occurred as a result of 1.4 trillion spent on 2 wars, Iraq and Afghanistan, 1.6 trillion in tax cuts and 3.5 trillion in economic changes due to the global financial crisis, up to 2011. During the Obama administration from 2008 to 2011, 0.9 trillion can be attributed to his stimulus package and tax cuts.
The CBO and President Obama realized that the budget was not sustainable going forward unless things changed. We have seen cut backs on expenditures and just recently we have returned to the tax rates that President Clinton had. With a better economy and increased revenue the budget crisis has improved. The following is a brief discussion on what makes up our Federal Budget.
The budget has a mandatory spending portion and a discretionary portion. There are 12 appropriations bills required to fund the government from the Agriculture Department to Transportation and Housing and Urban Development.
For the period of time, from September 28, 2012 until March of 2013, the total revenue requested was 2.9 trillion dollars and the money that was actually funded was 2.77 trillion dollars. The total expenditures were 3.45 trillion dollars with a deficit of 680 billion dollars, which represents a 4.1% of GDP deficit.
Over the next ten years there will be a cut in discretionary expenditures of 1.2 trillion dollars to help put our fiscal house in order.
The largest expenditures in our current budget are a $600 billion dollar defense budget and roughly 20% of the budget is for Social Security and another 20% for Medicare.
It has taken budgetary cuts and new taxes to re-configure the budget and put it on a better financial footing .
But for the so-called conservatives this re-balancing of the budget is not enough. Even though we have seen the largest deficit growth occur under Republican administrations in the last 40 years, they now seek new draconian measures to further emasculate federal revenue.
The flat tax advocates are back and they have brought with them another idea that will help ensure that the wealthy not only stay wealthy, but the idea enable them to increase their wealth. That idea is to eliminate the death tax, and capital gains taxes. I am sure our former Presidential candidate Mitt Romney would love to have that done. His income was almost tax free. Where is the fairness when people who can afford expensive accountants can get away with not paying hardly any taxes. GE, for example, got a refund a year or so ago, where is the fairness in that?
Mark Levin and others just love the idea of a flat tax and limiting federal spending. Two Constitutional Amendments are being proposed.
The Constitutional Amendment being proposed to limit spending has in it the poison pill of having a cross the board cut of 5%, if an annual budget is not passed. For those who want to drown government in a bathtub this is a perfect idea.
Congress this past year, had both Houses pass a budget, but instead of following protocol and going to a conference to iron out the differences in the Senate and House bills, the recalcitrant House refused to meet.
Another unworkable part of the proposed amendment is that outlays are not to exceed receipts. I guess that leaves out the possibility of taking care of any national emergency requiring additional monies. Levin also limits outlays to 17.5% of the GDP. Well, I guess we really would have been in trouble in 1790 when the United States started out in debt with a 30% debt to GDP ratio. And please let’s forget about any Depressions or Recessions that required stimulus to get us out of trouble. And I guess we would have had to let Germany win World War II when our debt reached 113% of GDP. To place artificial barriers up is just darn stupid. Life is full of change and we can not anticipate with any degree of accuracy what the future will bring. Maybe these so-called conservatives have some magic crystal ball that will predict the future.
Now to the Romney plan of eliminating the death tax, and capital gains taxes. The flat tax of 15% is being proposed again, as well.
We have a graduated income tax system for a reason. It is a system that is or should be more fair than a flat tax if the numbers are fairly worked out on a proportional basis. For a person making $50,000 a tax of 15% is going to be more painful than what it would be on a millionaire.
The question comes to mind as to how much revenue could be raised if we had a flat tax of 15%. Would it be enough to fund the Defense budget? What amount of revenue would it bring in? Or is this idea of a flat tax just another tax cut for the wealthy? We all need to pay our fair share.
Conservatives only want cuts but refuse to consider closing loopholes. I don’t know why we call some of these exceptions loopholes when they are so big you could drive a truck through them.For Corporations we could lower the tax rate, but let’s also remove the loopholes. We should have an effective tax rate to where everyone who can afford to pay taxes pays them.
Oil companies have huge oil depletion allowances. I can see the logic of having one if the company was new and starting out. What I can’t understand is why established companies like Exxon continue to benefit from that program even though they make more than enough money and they are like many older oil companies awash in money and they should contribute more in taxes than they do.
The Founding Fathers considered having a consumption tax but these modern day neo-constitutionalist don’t want to even consider that.
It is only human nature to want to keep what you have earned through the sweat on your brow. Americans have resented taxation since the days of the Whiskey Rebellion.
It is only fair though, to have every citizen who can afford to pay taxes, pay them as we all live in a community and in the United States. We all benefit from the services that government provides all of us, from our roads and water, to Social Security and our military.
I believe that our budget balance would be better if more Americans worked and paid taxes. We need to close tax loopholes so that everyone pays their fair share.
A return to the successful days of the Clinton administration is not out of the question. We just returned to the tax rate of those years when we had a surplus in the works for years to come. Americans were working and paying taxes. Just imagine what we could do to rebuild America if we could only close the loopholes that the tax code provides that just do not make sense.