… and counting.

 

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Click for real-time debt clock

 

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The last true reform, in 1986, under Ronald Reagan, reduced tax rates without losing revenue by eliminating swathes of tax deductions. Crucially, it was a bipartisan effort, which made it easier for Congress to take on the interest groups which avidly defend the benefits they gain from carve-outs.

President Trump and the Republican controlled Congress have promised tax cuts in 2017.  They have also promised to reduce spending and make other changes to the budget.  For some background on federal taxes and budgets, I am suggesting the following brief articles.

Phil Gramm and Michael Solon describe how “Reagan Cut Taxes, Revenue Boomed.” This demonstrated how tax cuts and deregulation can work to grow the economy while relieving the burden on tax payers.  However, because of the budget challenges facing the US now, the Economist warns that “Cutting Taxes Will Not Be Easy.”  (Of course, it never is easy to make changes to the way government functions.)  But it is possible to reform both tax and budget policy.  President Coolidge balanced the budget and reduced taxes by limiting government spending.  The results were strong economic growth, reduced burden on individual and corporate tax payers, and a boost to standard of living for the middle class.  Hopefully the President and Congress are open to the “Budget and Tax Lessons from President Calvin Coolidge“.

 

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An abandoned neighborhood in Detroit

Patrick J. Buchanan asks, “Are Illinois and Puerto Rico Our Future?”  Like Greece, the US Virgin Islands and Guam, as well as the Cities of Detroit, San Bernardino and Stockton, governments throughout the West are finding progressive taxes are unable to keep up with the costs of progressive programs.  Even federal services such as the US Postal Service and AMTRAK run deficits at or near $1 billion every year. Ironically, the progressive state is unsustainable.

The President’ budget proposal appears true to his campaign promises and includes the following elements:

Budget Blueprint for 2018:
• provides for one of the largest increases in defense spending without increasing the debt;
• significantly increases the budget for immigration enforcement at the Department of Justice and the Department of Homeland Security;
• includes additional resources for a wall on the southern border with Mexico, immigration judges, expanded detention capacity, U.S. Attorneys, U.S. Immigration and Customs Enforcement, and Border Patrol;
• increases funding to address violent crime and reduces opioid abuse; and
• puts America first by keeping more of America’s hard-earned tax dollars here at home.

You can read the full budget proposal here: https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/budget/fy2018/2018_blueprint.pdf

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Federal Debt Yearly Since 1977

At the close of Fiscal 2016 (Oct.1 – Sept. 30), the national debt had reached $19.57 trillion. That is up $1.42 trillion since the previous fiscal year ended.  (When President Obama took office, the national debt stood at $10.6 trillion.  By the time he leaves office, he will have doubled the national debt by adding $10 trillion of fiscal liabilities.)   Click the graphic above for more details on the federal FY 2016 budget.