April 13, 2015
The Heritage Foundation has published a Tax Reform Primer, discussing ways to simplify our tax codes, while providing adequate funding for government in a fair and transparent process. This primer reviews four different ways to do this: the Traditional Flat Tax, the New (Expenditure) Flat Tax, a Business Transfer Tax and a National Sales Tax. The detailed report is here.
February 2, 2015
President Obama’s new budget proposes $50.3 trillion in spending and collecting $44.7 trillion in taxes for 2016 through 2025. (I guess that means also adding $4.4 trillion in borrowing to cover the difference.) The White House estimates that yearly deficits will stay about the same.
However, the CBO estimates that under current law, spending would be $49.3 trillion and taxes $41.7 trillion for 2016 through 2025, with deficits building each year. This means the President wants to increase spending by $1 trillion, raise taxes by $3 trillion, still have big deficits, and continue to add trillions of dollars to the national debt. (Gee, it’s like the stimulus all over again.)
July 17, 2014
It got almost zero press coverage, but the CBO has released The 2014 Long Term Budget Outlook. It isn’t pretty.
The total amount of federal debt held by the public is now equivalent to about 74 percent of the economy’s annual output, or gross domestic product (GDP)—a higher percentage than at any point in U.S. history except a brief period around World War II and almost twice the percentage at the end of 2008 … Twenty-five years from now, in 2039, federal debt held by the public would exceed 100 percent of GDP, CBO projects. Moreover, debt would be on an upward path relative to the size of the economy, a trend that could not be sustained indefinitely.”
October 18, 2013
We don’t. What Senators Reid and McConnell, and President Obama, hope you don’t figure out is that this administration has no plans to pay down the national debt. In fact, it plans to increase our debt.
The US National Debt is currently just under $17,000,000,000,000.00. (See my previous blog entry for the exact amount.) The interest we pay on the debt annually is $400,000,000,000.00. (That’s $17 trillion and $400 billion.)
We could use tax revenues to pay off the interest. But we don’t. $400 billion is about 16% of our tax revenues for last year. However, this administration has run deficits (overspending) of about $1 trillion every year that Obama has been in office. Along with costs for Entitlements and Defense, this administration has spent billions on the Stimulus, bail-outs, green incentives, expanding and enforcing new regulations, and, of course, the ACA.
We can’t use revenues to pay off the interest we owe because we’ve already spent all our revenues. We are always in a budget deficit. So we BORROW money to pay our interest due on our debt. This adds to the principal we owe and adds to the interest we owe next year. Instead of paying off debt, we are growing debt.
The debt “ceiling” is a problem for this administration because it plans to continue to spend and continue to borrow. Again, we have enough revenues to pay off the debt interest, and maybe a little principal. But that would mean not spending money on new programs like the ACA or not expanding regulations under the EPA or making real reforms to Entitlements or making real reforms to the tax code or simply tightening budgets to improve efficiency. (What did we learn from the “shut down”? That’s right – we have 900,000 non-essential federal workers. What did we learn from “Sequestration”? We can make budget cuts, even poorly planned, untargeted cuts, that reduce the deficit without crashing the economy or the government.) President Obama doesn’t want to do any of these things.
President Obama does not want to reduce our debt. He does not want to reduce or slow spending. President Obama, and Senators Reid and McConnell, plan on spending and borrowing even more. (In the recent deal to raise the debt “ceiling,” over $2 billion was earmarked for a dam project in Senator McConnell’s home state. That’s another $2 billion added to the debt.) Besides, to borrow a phrase from Senator Reid, “Why would they want to do that?” Government officials may incur debt for the nation, but they are not responsible to pay it off. Tax payers are. (To see your individual share of the national debt owed, click here.)
How do we pay down our national debt? We can’t. Not while President Obama is in the White House and Senators Reid and McConnell lead the Senate majority and minority. Until voters make a change to the balance of power in Washington, nothing will change.
August 23, 2013
Milton Friedman explains why somebody has to pay the bills, and that somebody is us.