Tag Archives: Federal Deficit

Time for Some Economic Truth Telling

I have something to say to the politicians and the buffoons in the media. “Enough with the lies and the spin and the mis-information! The fraud you are perpetrating on the American people is (or should be) criminal.” For years now, we’ve been told that Reagan ran massive deficits unnecessarily; that Bill Clinton created a surplus; that the Bush tax cuts of 2003 caused the current debt crisis; and my least favorite, that all we need today is tax increases to get out of our current fiscal mess. Using the chart above, and in only 800 words, I will completely disprove each of these idiotic opinions. They are progressive myths perpetrated in an attempt to justify an ever larger U.S. government. So in order:

The deficits of the Reagan years aren’t pretty, but they pale in comparison to the sheer madness of today and more importantly, they had a purpose. When Mr. Reagan took office the Country was in a quagmire financially and militarily and the policies of his administration brought us out of both and to new heights never seen before in America. During his entire Presidency, Democrats held a death grip on Congress and its purse-strings. They could have stopped all that ‘horrible spending’ any time they wanted to – they didn’t. Trust me when I say, I hate deficits, but as deficits go, these had a usefulness at least. Things were accomplished. For the debt incurred, the country gained peace with its greatest-ever threat, the Soviet Union as well as new-found economic prosperity.

Bill Clinton is the luckiest President in U.S. history. He was a philanderer in the only moment in history when one might get away with it – that is after the country gave up its morals and before blogs, twitter, facebook etc. which might have led to a very different outcome (look at Anthony Weiner – his actions were nothing compared to Mr. Clinton’s and he was ridden out of town on a rail). On the financial front, he rode an economic boom driven by the internet to government financial nirvana and he and his progressive friends continue to take credit for something they had virtually nothing to do with. Look at the chart; it’s right there in red and blue. From 1984 to 2000 Federal revenue more than doubled. Tax cuts from the 80’s and the resulting economic crescendo capped by the tech-boom drove federal tax receipts through the roof. Did he pay down the debt? Nope. Instead, Washington spent more money than ever before in the nation’s history. Though they tried very hard, Mr. Clinton’s administration couldn’t spend it all and a small surplus was left over.

Along comes President Bush. He campaigns on returning the American people’s money (remember now, despite the progressives’ slight of hand tactics to make you forget this fact, it is our money)  to them via tax cuts. Coupled with the tech bubble bursting and 9/11, this leads to a drop in Federal revenue and a return to annual deficits. But, wait; look what happens next. Revenues explode upward starting in 2004 and reach the highest in our nation’s history in 2007. How can this be? I’ve been told repeatedly that the Bush tax cuts ruined this country. I’m sure it must be true; I mean, MSNBC says so. Sorry, liberals, wrong again. Mr. Bush is not blameless however. He presided over a federal spending bonanza that out-paced all the income gains created by the tax cuts. But, Progressives don’t argue against the ‘Bush spending’ however. That wouldn’t work with their agenda of always spending more; so they say the tax cuts are to blame. Think what they are actually saying – “We wanted to spend all the money we did spend, PLUS all the money Bush gave back in tax cuts”. Incredible!

Last lie, “Tax increases will get us out of this”. What?!?! The current tax code is virtually identical to that of 2007. That means we have a tax system in place today that produced the largest single year Federal revenue in American history. That isn’t enough for them? They need more? Look at the chart again. In the imaginary years to come, Mr. Obama is counting on Federal income reaching all new highs. And even if it does, he still expects to run $500 and $600 BILLION deficits EVERY YEAR!  He wants to increase taxes in the hopes of increasing revenue (despite all the evidence that it doesn’t work that way), not to get our budget balanced and pay down some debt. No, that would be far too sensible for Washington. These morons want to increase spending even more. They want to go to all-new record levels of spending. I guess they’ve never heard of the idea of cutting back when times are tough.

There you have it; four lies of the left debunked. Where does that leave us? I’ll leave that for another time, but there are some lessons here for those willing to see. How does 2007 revenues with 1999’s spending sound? The result is a $900 billion annual surplus. $450 billion per year of that could go to debt reduction and $450 billion to replacing the money Washington has robbed from Social Security. That sounds like a good place to start.

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What Do NBC News and Barack Obama Have in Common? Neither One Understands the Deficit

Last night I watched in utter disbelief as a news report on NBC Nightly News claimed the President was going to shave $4 trillion from the $14 trillion deficit over the next ten years. Why is this shocking? Because the $14 trillion isn’t a deficit (an annual shortfall in revenues compared to spending) but rather the nation’s debt (outstanding monies owed). Furthermore, the President’s campaign speech – I mean detail deficient “plan” – doesn’t cut one penny from the $14 trillion national debt. Instead it merely cuts $4 trillion from planned future spending over the next 12 years.

[Side note: this is the first time any Washington nitwit has gone out 12 years with a budget (it’s normally ten) and, of course, was done to pretty-up a very ugly picture.]

I can hear you now, “$4 trillion is nothing to sneeze at”. Well, look at it this way – that’s only $340 billion per year and when you’re going backwards $1.5 trillion per year as we are now, that’s not going to even make a dent in this crisis. Politician’s talk in these big numbers over many years because it obscures the truth and they know it. They do silly things like tell you they’ll fix this massive crisis by raising taxes on the rich as the President did yesterday.

Newsflash, Mr. Obama – According to the IRS, the entire income of all Americans earning over $100,000 in 2008 was about $1.58 trillion. Even if  we taxed them all at 100%, it wouldn’t fix the problem. And, of course, taxing them at 100%, even 50% isn’t feasible as it will kill investment, economic growth and job creation; so please, I know it makes good campaign fodder, but can we drop that charade already? I’m begging you!

So, whether you’re NBC and are going to claim to be a national news service, or you are Barack Obama and claim to be qualified to be President, it would perhaps be good if you had ANY idea what you were talking about when it comes to the fiscal matters of this country. Feel free to call me if you need some help!

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Filed under Financial, Taxation

Representation Without Taxation Doesn’t Work Either

Today being tax day, it seems a good time to remind ourselves of some key figures. Most Americans give at least a cursory look at their household budget monthly as they pay their bills or perhaps weekly if they’re in the tough position of living paycheck-to-paycheck. But, few stop to review their country’s financial state even once a year. Perhaps that should become a tradition on tax day. After all, Americans would call their cell phone provider and dispute a $10 unexplained charge; so why do they continue to pay thousands each year without asking why or where it’s going?

So here it is, the federal budget for the next ten years, as laid out by President Obama. Be sure to note, it is displayed in billions of dollars.

Allow me to round some figures off in summation: This year, the federal government will take in $2.2 trillion while spending $3.7 trillion (a $1.5 trillion deficit on top of the existing $11 trillion federal debt). Notice they expect the best year in the next ten, 2014, to still be a net loss of $706 billion, even if some wild optimism on Washington’s part comes to fruition.

This is the equivalent of an American family that earns $100,000 per year spending $168,000 while carrying $600,000 in debt; writing IOUs for the $68,000, and planning to do the same thing each of the next ten years and beyond. None of us would do that, so I can’t believe there’s a person in this country dumb enough to think the government’s numbers work, but there is. In fact, there are millions of them. A few of these work in the Lame Stream Media and will go on TV tonight and deride their fellow citizens who are at rallies all over the country today protesting this very spending lunacy, even though it seems the protesters are the only ones paying attention.

But how can millions of people who think the government’s budgetary suicide is ok? Well, that’s easy – 47% of all Americans pay NO FEDERAL INCOME TAX! Put simply, these people have no skin in the game. They are too short-sighted to realize that at the very least, their kids might some day have to pay this bill; or much worse, that a financial default by this country will mean financial pain for all – especially those who currently live off the taxpayer’s largess. Still, come election day, they have the same voting power as those footing the bill, and therein lies the problem. As Ben Franklin so accurately said, “When the people find that they can vote themselves money, that will herald the end of the republic.”

Taxation without representation was cause for a Declaration and War of Independence. Turns out representation without taxation doesn’t work so well either.

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More Debt Anyone?

The federal debt limit is going up faster than my credit limit with Visa during the economic boom of the last decade. The difference being, just because Visa kept upping my limit, didn’t mean I was stupid enough to spend it! But Washington is. Yesterday Senate Democrats voted yet again to raise the federal debt limit – this time by $1.9 Trillion to a staggering $14.3 Trillion. That’s up from the previous limit of $12.4 Trillion which they’ve borrowed and spent all of. That’s right, your elected representatives have maxed out your country’s credit cards again and they’re back for more. Does anyone else find it incongruous that few if any Americans would put up with their teenager running up a big cell phone bill or a few hundred dollars in credit card debt, but these same Americans have no problem with their employees in Washington borrowing trillions in our name without the slightest inclination as to how to pay it back?

In this case, one might be tempted to ask ‘Why so much of an increase at one time’? The answer is simple – it’s politics, of course. You see, the government is on track, according to the CBO, to run another $1.4 Trillion in the red this year, matching 2009’s record setting deficit (that’s a record that was TRIPLE the previous high mark by the way). With this in mind, the Democrats wanted to raise the debt limit enough to prevent another such vote prior to November’s elections. They don’t want to have to bring you the credit card bill a month before asking for your vote. Quick math says they’ve given themselves a $500 billion margin for error. I wonder if that will be enough?

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Medicare and Social Security Running Out of Money

2017. That is when the Medicare system will run out of money at the current pace. Eight short years from now the federal government will have to begin borrowing money (on top of all the money it is already borrowing) to pay for its obligations under Medicare. The Social Security picture seems practically rosey by comparison with 30 years of solvency remaining. But, don’t be lulled into a false sense of security on that front. Social Security is the single largest government expenditure next to Defense costing roughly $650 billion annually. When it goes insolvent, and it will, the magnitude of that problem will be staggering.

So then, it makes perfect sense that while the government can’t fund the obligations it has, we should add more un-fundable obligations to the books in the form of national health care, right? ‘Cause if any one of us had a mortgage we couldn’t afford to pay what we’d do is run right out and buy a second home with a price tag 10 times the size, right? Let’s have a little common sense people. Anyone with even the slightest ability to reason, should be able to take one look at the chart below and understand that the jig is up, the game’s over, or whatever other cliche’ you prefer.

federal spending

Note that Medicare, Medicaid and Social Security spending alone will exceed TOTAL FEDERAL TAX RECEIPTS in roughly 40 years. Now imagine that we tack on a new program larger than all of those combined (yes I said larger than all of those combined!); where will that put us? It is time for this government, this administration, to put the brakes on its giddy spending spree and first see if they can even figure out how to fund their exisiting obligations before they go saddling the American people with more.

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Filed under Financial, Government

Another Bail Out?

If you are at all like most people you’ve spent the past few months wondering who the Government is going to bail out next?” Well, Senator John Kerry (D-MA) has your answer and it is… wait for it – the U.S. Newspaper industry. It seems many of the nation’s most well known newspapers are in serious financial trouble. The New York Times is a reported $133 billion in debt and its subsidiary, the Boston Globe,  is expected to lose $85 million this year. Major daily papers in Seattle and Denver have been shut down completely and the LA Times, Chicago Tribune and many others are seeking bankruptcy protection.

Whether one is in favor or opposed to the financial and automotive bailouts by our Government (and I’ll admit, I go back and forth), there is little doubt that there are complex issues at play and it’s a tough question. Perhaps the experts are correct and a collapse of the financial system was imminent, and potentially catastrophic, had the government not stepped in. Perhaps there is more to be gained than lost by saving the U.S. auto industry, although I doubt it. But newspapers Senator Kerry? Really?

Apparently Mr. Kerry wasn’t listening on April 15th when hundreds of thousands of American citizens took to the streets at 800 tea parties around the country to demand that this government stop throwing money away, money it doesn’t have to begin with. Although the incompetent U.S. media (some of the same ones who apparently now need a bailout) tried to portray these peaceful rallies as anti-tax, the key issue for these concerned citizens was out-of-control spending. Now Senator Kerry wants Congress to consider spending even more.

Consider the political ramifications of such an action. Afterall, journalists although they rarely act like it in these partisan days, were once known as the Fourth Estate for their ability to provide one more check and balance on government. So, I ask the question that is obvious to everyone except John Kerry; how does a newspaper honestly report on a government that is subsidizing their very existence?

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Funny Math – Not So Funny

Numbers are funny things. They don’t lie per se, but they can be manipulated to say almost anything. And this week when President Obama released his proposal to, “cut the federal deficit in half in four years”, some numbers were manipulated to say some pretty funny things. Although I’m not sure any of us will be doing any laughing when it is all said and done.

Prior to this year’s monstrous projected deficit of $1,300,000,000,000 (man, that’s a big number) the largest single year deficit in U.S. history was $455 Billion in fiscal year 2008.  Yes, you read that right, our 2009 deficit will be three times the previous record! By the way, half of $1.3 Trillion is $650 Billion.  Did you catch it?  Look at those numbers again.  When Mr. Obama promises to cut the federal deficit in half over the next 4 years, what he’s really promising you is that he will run the 2nd, 3rd, 4th and 5th largest deficits in U.S. history behind only this year – and that’s if everything goes according to plan.  Gee, thanks Mr. President!

This would be amusing if it weren’t so tragic.  I noted this detail within 30 seconds of hearing his speech and waited for someone in the press to act like a journalist and comment on this point, but nothing.  Instead they lauded the President with praise for “reigning in spending”, “making the tough decisions”, etc. etc.  Well, there’s just onYeah, this'll worke problem.  The President isn’t reigning in spending.  Instead spending is going to increase every single year under his budget as this chart indicates.

So, we are going to spend more than we’ve ever spent, run bigger deficits than we’ve ever run and every thing will get better?  That sounds like a great plan.  But it gets even sketchier folks!  Look closely at this chart, the administration expects tax revenues to grow $2 Trillion in the next 10 years.  Every dollar short of these revenue projections will be another dollar of debt, because we already know that Congress has no idea how to restrain themselves when it comes to spending.

This truly is some funny math. But it’s not so funny!

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