Obama’s Budget Busting With Tax Hikes

Tuesday, February 3rd, 2015 and is filed under Blog, Debt, Economy

Submitting his $4 trillion busting-at-the-seams budget to a Republican Congress today might have felt a little pointless to President Obama — and redundant.

As the Heritage Foundation’s economic policy analyst Curtis Dubay wrote,

This is the seventh budget he has released, and each of them had trillions of dollars of tax hikes that would needlessly increase the tax burden on American families and increase the already bloated size of the federal government.

But it’s been trending #2016budget all day on social media and analysts are coming out of the woodwork to praise or criticize depending on which policy perspective they come from.

Obama calls for higher taxes for businesses and the  wealthy to cover the cost of increased domestic and military spending and infrastructure — as well as an end to sequestration and tax credits for things like education, childcare, paid leave and more.

He seemingly continues to live in fantasy world where government provision, supposedly, costs middle class and lower class Americans nothing, but that’s far from the truth.

“We need to put politics aside, pass a budget that funds our national security priorities at home and abroad and gives middle class families the security they need to get ahead on the new economy,” he said of the budget.

Of course, Obama is the first to employ politics in nearly everything he does, including the making of this budget — and Republicans in Congress know that.

Conservative Rep. Tim Huelskamp sent this humorous tweet:

Blatantly missing from the budget are ways to fix social security and medicare entitlements, which are drowning our country in more debt every single year.

The budget does include $561 billion in military spending, to help in the fight against Russia, ISIS and cybersecurity issues. Conservatives can get on board with that, but they aren’t going to stand for it being paid for with tax increases that will hurt the economy.

Conservatives like Rep. Mike Kelly spoke out, calling the budget a “nonstarter” and Rep. Raul Labrador called it “tone deaf.”

It’s clear Obama hasn’t been listening to the American people, who called for real change in the last election. It’s up to the Republican Majority in Congress to stand up to Obama’s bad policies and formulate something that truly meets the needs of our country.

Congress Rushing Through Massive New Healthcare Entitlement Before August Recess

Wednesday, July 30th, 2014 and is filed under Blog, Debt

In a classic Washingtonian political maneuver, both parties are prepared to introduce a massive new Veterans Affairs health care entitlement and force members to vote up or down on the entire package before they hustle off to their awaiting flights home for the August recess. While containing one or two good proposals, the Sanders-Miller conference agreement will create a new entitlement, possibly as big as Medicare Part D, without addressing the fundamental problems with the VA that are short-changing our veterans. Most of the funds will be designated as “emergency spending,” which will exempt it from the requirement for offsets.

Much like most crisis-driven pieces of legislation, this bill sounds good on the surface. It would authorize $5 billion for hiring of additional staff and almost $2 billion for construction of 27 new facilities. The bill would also spend $10 billion granting veterans the option to seek care at private facilities, for those who are 40 miles away from a VA system or for those who have waited in line without getting an appointment for 30 days. $5 billion of the spending would be offset with other cuts to the VA while the rest of the tab would be exempt as emergency spending.

Here are some of the core concerns with the bill:

Read more at Breitbart:

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CBO Report Shows Why National Debt is not Just a Number

Tuesday, July 15th, 2014 and is filed under Blog, Debt, Economy

Earlier today, the Congressional Budget Office released its updated long-term budget projection, and there is not a lot of black ink in that report.  CBO estimates that, despite receiving record revenue gobbled up from the private economy, the Treasury will continue to run enormous deficits over the next 25 years.  By 2039, the public share of the debt is projected to rise from 74% of GDP to 106%.

In light of this new report, it’s worthwhile to go back a tally Obama’s debt tab from the past 5 years and explore what it means for our future.

At present, the gross federal debt stands at $17.589 trillion, which is more than 103% of our GDP.  That is an increase of almost $7 trillion since President Obama was inaugurated five and a half years ago.  To put that in perspective, it took from the presidency of George Washington until 2004 to accumulate $7 trillion in debt.  Concurrently, Obama accumulated roughly $2.9 trillion in foreign-held debt over a little more than 5 years – from $3.071 trillion to $5.96 trillion.

More importantly, roughly 90%, or $6.2 trillion, of that $7 trillion increase is comprised of the public debt, not the so-called intra-governmental debt from Social Security (the money we ‘owe ourselves’).  It took from 1789 until the final months of the Bush administration for us to accumulate $6.2 trillion in public debt, which now stands at $12.6 trillion, roughly 74% of the economy.  It is this number that is projected to rise to 106% over the next 25 years, according to the CBO.  And remember, this president still has another two and half years to radically transform America.

So what does all of this mean?  Who cares about some banal numbers on a federal balance sheet?

Contrary to the perception of many policy-makers, the national debt is not some abstract problem that will only affect future generations once investors no longer trust the security of federal treasures.  As CBO explains (page 10), this is an immediate and near-term problem:

  • The large amount of federal borrowing would draw money away from private investment in productive capital in the long term, because the portion of people’s savings used to buy government securities would not be available to finance private investment. The result would be a smaller stock of capital and lower output and income than would otherwise be the case, all else being equal. (Despite those reductions, the continued growth of productivity would make output and income per person, adjusted for inflation, higher in the future than they are now.)

  • Federal spending on interest payments would rise, thus requiring higher taxes, lower spending for benefits and services, or both to achieve any chosen targets for budget deficits and debt.

  • The large amount of debt would restrict policymakers’ ability to use tax and spending policies to respond to unexpected challenges, such as economic downturns or financial crises. As a result, those challenges would tend to have larger negative effects on the economy and on people’s well-being than they would otherwise. The large amount of debt could also compromise national security by constraining defense spending in times of international crisis or by limiting the country’s ability to prepare for such a crisis.

Much like over-burdensome regulations, high levels of debt serve as a hidden tax on the economy by sucking out private investments through an inefficient allocation of capital diverted towards growing dependency and perpetuating political careers.  Also, the relatively-low annual payments for interest on the debt, hovering around $230 billion a year, are only a temporary reprieve due to historically low interest rates.  According to Investors’ Business Daily, “if Washington had to pay the average interest now that it paid in 2000 (6.4%), it would be paying $500 billion more each year to stay afloat.”

Sadly, Americans are used to navigating opportunities and challenges based upon instant gratification or imminent danger.  Warning voters about the threat of our national debt to the future of their grandchildren is not enough.  Conservatives need to make the case that the current level of debt is a mitigating factor to current economic growth and that it will continue to diminish their wages and job opportunities.

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New Highway Stop-Gap Bill a Consummate Washington Budget Gimmick

Wednesday, July 9th, 2014 and is filed under Blog, Debt, Economy

After years of controlling most of our transportation policy from Washington, there is no longer enough money in the Highway Trust Fund (HTF), to cover the cost of construction projects for the remainder of the year.  Naturally, instead of looking for policy changes to solve the problem, such as returning transportation authority to the states, repealing Davis-Bacon wage mandates, and cutting mass transit funding, the politicians in both parties are reverting to their comfort zone.  They are doubling down on our failed federal transportation system by either proposing new taxes or increasing spending to cover the projected $16 billion annual shortfall in the trust fund.

With the August 1st deadline looming, when the DOT is expected to cut back on federal funding for projects, the House and Senate are now working on two short-term patches.  Short-term fixes would be palpable if they were used to make structural policy changes in the long-run.  However, as is the case with most reauthorizations, both parties are looking for immediate notional spending offsets so they can plan a long-term package that either increases taxes or spending on a failed system.

The House proposal, HR 5021, sponsored by Rep. Dave Camp (R-MI), would plug the shortfall in the HTF through May 2015 by using a combination of notional and superfluous offsets that have been trotted out as an accounting gimmick for many reauthorization bills in recent years.  The projected $10.9 billion cost would be “offset” by extending custom fees for another year in 2024 – 10 years from now.  Additionally, the bill would “save money” by extending a “pension smoothing” provision for taxpayer-backed pension insurance for another few years.

The pension smoothing provision is one of the most laughable budget gimmicks, yet it has been trotted out as a savior every time Congress wants to increase spending.  This plan allows corporations to cut the level of payments into the retirement funds backed by the taxpayer-funded Pension Benefit Guaranty Corporation (PBGC).  By allowing companies to contribute less to pensions, they are entitled to less tax deductions, and in turn, incur a higher tax liability.  That tortured labyrinth of projected new revenue, estimated at $6.4 billion over 10 years, is what will be used to offset the new highway spending.

Not only is this intangible 10-year offset for a 10-month expenditure reflective of the most absurd budget tricks in Washington – it is also bad policy.

Typically, when interest rates decline to the levels we have seen in recent years, companies must contribute more to their pension funds to ensure that the principle compounds enough for them to meet their overall obligation to retirees.  If we lower the threshold for minimum contributions, taxpayers will likely be on the hook to bail out underfunded pensions in the coming years.

Alternatively, if companies are able to fill in the pension gaps in the coming years to compensate for the short-term underpayments, it will create a rubber-band effect on federal revenue.  They will be entitled to increases in tax deduction commensurate with their added pension contributions, thereby voiding out the potential revenue increase being used as an offset in this bill.  Garbage in, garbage out.

If Congress is committed to kicking the can down the road with a short-term extension, they should just be honest with the taxpayers and drop the phony offsets from the bill.

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Bob Corker Proposes Massive Hike in Gas Tax

Wednesday, June 18th, 2014 and is filed under Blog, Debt, Taxes

What better way to distinguish ourselves from Democrats than to propose a 12-cent increase in the dreaded federal gasoline tax at a time when gas prices are skyrocketing?

One of the reasons Republicans always lose policy fights is because their starting point in crafting solutions is born out of a Democrat premise.  One illustrative example of Republicans playing follow-the-leader with Democrats is on surface transportation policy.

In recent years, Democrats have bemoaned the “antiquated” and “crumbling” infrastructure as they promote more taxes and spending at a federal level to build roads and bridges – something everyone agrees is a vital function of government.

But which government or governments should be responsible for the lion’s share of surface transportation in the future?  Should we continue raising taxes and pumping hundreds of billions more into the failed federal sinkhole?  Or should we allow the 50 states to retain most of the authority over a function that is uniquely local in nature?

Evidently, Senator Bob Corker (R-TN) thinks we should double down on the latter.  He is proposing a 12-cent increase in the federal gas tax (it is currently 18.4 cents per gallon) in order to raise $164 billion over 10 years.  His plan, which is sponsored by Democrat Senator Chris Murphy, will undoubtedly lead to more waste.  And we all know that in 10 years from now they will be proposing yet another gas tax increase.

Adding insult to injury, Corker plans to offset the broad-based regressive tax hike with targeted tax breaks for corporations!

“One big GOP selling point was that the tax increase would not violate the Americans for Tax Reform pledge if it is paired with a provision making some popular tax breaks that are typically part of the tax extenders package permanent.

According to Corker, the list of tax breaks includes: research and development tax credit; Section 179 expensing, a tax break encouraging small businesses to by business equipment; the deduction of state and local sale taxes; the deduction of up to $250 in classroom expenses that teachers paid for out of their own pocket; a subsidy for mass transit and benefits given for land donated for conservation purposes.

“If you just took those, we do them each year, but you make them permanent; I don’t think there is anybody that disputes making those permanent, by the way, that alone would generate $189 billion in savings over the next 10 years,” Corker said. “So if the Finance Committee chose to link this … with that … you would not be violating the pledge.”

Wow – that is a winning message for a party that wants to appeal to the middle class.

Instead of agreeing to the Democrat premise, why don’t Republicans show the American people how the entire federal transportation system is broken and inefficient?  Why hit the American people with a massive tax increase when we can devolve transportation to the states?

Just another day in the minds of those who lead the Stupid Party.

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Madison Project Scores 11 Spending Amendments in Transportation-HUD Bill

Tuesday, June 17th, 2014 and is filed under Blog, Debt, Issues

Amidst the political turmoil in the House last week, members of Congress voted on a number of spending amendments to the annual Transportation-HUD appropriations bill.  This is not exactly the most exciting topic in light of the political gamesmanship involved in running for leadership posts, but it is quite revealing when attempting to ascertain the commitment of some members to reducing the size of government.

The bill, HR 4745, appropriates roughly $52 billion for FY 2015.  Put simply, this bill encompasses more wasteful government that almost any other appropriations bill.  It spends almost $8 billion more than last year’s draft bill from the House and it contains a number of programs that should not be administered at a federal level, such as subsidies for mass transit and rural air service.   The bill also contains a number of programs that were instituted under the Obama stimulus bill in 2009.

Several members of the conference offered amendments to cut back wasteful spending, particularly among programs that subsidize housing, yet most of them were rebuffed by a coalition of Democrats and liberal Republicans.  We’ve created a scorecard of 11 amendments detailing how each member of the GOP conference voted.

Click here to view the scorecard

Please find the descriptions of these amendments from the Republican Study Committee pasted below:

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Abolish the Economic Development Administration

Wednesday, May 28th, 2014 and is filed under Blog, Debt, Economy

As the season of appropriations begins in earnest, Congress will take up the Commerce, Justice, and Science (CJS) appropriations bill.  This bill (HR 4660), which funds the Departments of Commerce and Justice, as well as NASA and other related agencies, provides $51.202 billion in discretionary budget authority.

Obviously, from a conservative perspective, the entire Department of Commerce is a waste of money and should not exist.  But at the very least, we should cut back on failed programs.  Instead, this bill actually provides $3.8 billion in extra spending relative to last year’s House bill.  The Heritage Foundation has already detailed $2.6 billion in additional spending cuts that should be included in the bill.

A number of conservative members will be offering amendments to cut spending.  One of the most important amendments that has been proposed so far is Rep. Mike Pompeo’s (R-KS) amendment to abolish the Economic Development Administration (EDA).  The EDA is a failed Great Society program that serves as a stimulus/pork slush fund for special interest communities under the guise of assistance to economically distressed areas of the country.  It’s nothing more than a fund for corporate welfare and a way of picking winners and losers in the market.  It has been as successful in creating jobs as Obama’s stimulus.  Senator DeMint wrote a great piece on the EDA two years ago analyzing its history of failed promises.

Anyone who claims to oppose earmarks and stimulus must oppose the EDA.  This bill appropriates $248 million for the EDA, a slight increase from last year’s enacted level.  Call your members and ask them to support the Pompeo amendment to end the EDA.  If we can’t close down this failed agency, we will certainly never eliminate any major agency or full department.

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House Leaders Pass Another Bill With Democrat Support

Friday, May 9th, 2014 and is filed under Blog, Debt

Evidently, the fact that Republicans “only” control the House necessitates that they pass bills with Democrats support.  Once again, House leaders passed a bill through the House with only a majority of Democrat support.

As we noted yesterday, the Overseas Private Investment Corporation is a corporate welfare bank to subsidize foreign investment.  106 Republicans voted for it while 116 voted against it.  This is yet another violation of the precedent to pass bills only with majority Republican support.  After all, Republicans control the House for a reason.  House leadership has passed bills with Democrat support on a number of other occasions:

  • “Fiscal Cliff” tax hikes and stimulus pork (HR 8 1/1/13)- This was the McConnell-Biden tax hike coupled $230 billion in new stimulus spending, including $40 billion in green energy pork.  It passed with only 85 Republican votes.
  • Sandy Pork Bill (HR 152, 1/15/13) – This bill contained $60 billion in extraneous pork spending, of which the majority would be appropriated long after the recovery from the Hurricane is over.  It passed with just 38 Republican votes.
  • “Violence Against Women Act (S. 47 2/28/13) – This was the Senate version of VAWA that dramatically expanded the unconstitutional program to include a number of social engineering provisions and violations of due process.  It passed with only 87 GOP votes.
  • Battlefield preservation pork (HR 1033 4/9/13) – This was a random Democrat suspension bill to give money to states for the purpose of buying up more land.  It passed with less than half of Republican members.
  • Obamacare pre-existing conditions program (HR 1549 4/25/13) – to pump $4 billion into Obamacare’s federally managed and manipulated high-risk pool for those with pre-existing conditions.  The bill was pulled from the floor at the last minute due to a mass revolt within the conference.
  • October CR Funding Obamacare and Raising Debt Ceiling RC#550, 10/16/13)  – Passed with only 87 Republicans supporting it.
  • February 2014 Debt ceiling increase RC# 61 (2/11/14)  – Passed under suspension with just 29 GOP votes
  • Doc Fix extension with phony spending offsets (3/28/14).  Passed by voice vote despite conservative opposition.

This end-run around the majority was perpetrated by all leaders.  This includes Cantor and McCarthy.  Cantor is openly flaunting his disenfranchisement of conservative voters.  Any effort to elect the same leadership slate for next Congress will only serve to disenfranchise the conservative voters who elected a GOP majority.  It’s time we get commitments from all members and candidates as to whether they will join the effort to replace the current leadership.

Ask yourselves this question: with hundreds of millions of dollars behind the effort to pass amnesty and comprehensive open borders legislation, will these leaders think twice about passing amnesty with Democrat support?

That’s why primaries are so important. #PrimariesMatter

Cross-posted at RedState.com

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Dependency is the Measure of Success for Obamacare

Friday, April 4th, 2014 and is filed under Blog, Debt, Obamacare

On the surface, it’s quite puzzling that Democrats would celebrate the fact they signed up 7.1 million people for Obamacare.  They essentially took a number of people who were happy with their insurance and raised the cost to the point where they could no longer afford it themselves, engendering a need for a government subsidy.  Like many Americans, my family will lose our insurance later this year and will have to pay more for subpar coverage.

As for those who had no previous insurance, most of them are being dumped into Medicaid and will be cemented in a permanent status of dependency with limited access to quality care.

Hence, celebrating 7 million people reliant on Obamacare is like rejoicing over an arsonist who burned down millions of homes but created a bungalow of dingy shelters for people to seek refuge.  Would we measure the success of such an endeavor by the number of homes burned down and, in turn, by the number of people registered at the shelters?

Sadly, in the perverse world of liberalism, this is something to celebrate as a mission accomplished.  The end-game for liberals with all government interventions in private enterprise is to make the private sector unaffordable and unsustainable, thereby forcing as many people as possible into government dependency and barring the path towards upward mobility.  Given that healthcare is one of the most vital services and the largest sector of our economy, Obamacare is indeed the crowning achievement of this long-term goal and worthy of celebration among liberals.

This observation was lost on those who opposed the effort to defund Obamacare last year, arguing that the law would implode on its own.  At the time, many of us argued that although from a policy standpoint the law would be a disaster, that is exactly the point of Obamacare.  The law was designed to destroy the private insurance industry, and by extension the entire healthcare sector, and force people into a government-run program.  The website and the incompetence was something they could overcome on some level.  Consequently, Obamacare will not implode on its own – at least not before it implodes the private sector first.

Additionally, there were those who argued that we must wait until 2017 to fight Obamacare.  But as we are seeing now, millions of people will be forced or enticed into joining Obamacare.  Even though the level of access to care and the quality of delivery will gradually deteriorate, it won’t be so apparent during the first year or two, especially if that is the only insurance individuals have.

There is no doubt that the administration will successfully throw millions of more Americans onto Obamacare by 2017.  Again, that is not a sign that Obamacare is working– as it surely is not – rather it is a measure of how successful the law’s deleterious effects on private insurance have impelled people to sign up as their only recourse of seeking coverage.  Once there are tens of millions reliant on Obamacare there is no way we could repeal the law.

This is why conservatives must keep up the pressure.  The media is trying to conflate Obamacare’s success at creating proverbial homeless shelters with real policy success so that Republicans stay away from the issue.  But if we give up on any effort to disrupt implementation now, much of the law will be immutable.

Cross-posted from RedState

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Will Paul Ryan Fight for his Budget?

Wednesday, April 2nd, 2014 and is filed under Blog, Debt, Economy, Taxes

Congressman Paul Ryan (R-WI) released his budget proposal for FY 2015 yesterday, and as expected, it is quite similar to the budget blueprints from previous years.  Let me first say that this budget would be superior to the status quo a million times over.  Medicaid and Food Stamps would be block granted to the states and Medicare would be subject to at least some optional free market reforms at the end of the budget frame.  Fannie Mae and Freddie Mac would be eliminated.  And most importantly, it defunds the Obamacare programs.

If Republicans would only fight for this budget during the debt ceiling fisticuffs, many conservatives would be more than satisfied.

But that is the point.  Given the fact that Republican have no intention to fight for even some major components of this budget when the deadline looms in September, why put out a half-baked proposal?  If this is just designed to be a messaging document that is tossed in the trash at the end of the fiscal year, why not place our ideal proposal on paper?

Ultimately, Ryan accepts the entire fiscal cliff ($618 billion) and Obamacare tax increases (roughly $1 trillion), working off the [optimistic] CBO 10-year revenue projections of $40.6 trillion.  Yet, even with the optimistic revenue projections and tax increases, the budget still runs deficits because not enough government programs are phased out or reformed, especially in the Department of Education and some of the other bloated bureaucracies.

As you can see, this year’s budget proposal is essentially the same as the FY 2014 document.  It’s just that entitlement spending will grow every year, engendering a $1.2 trillion increase in this year’s budget.  Even in the near term, this budget actually spends more, increasing spending in 2015 to $3.664 trillion ($166 billion more than what as projected in last year’s budget).

FY 2015

Outlays $42,636

Revenue $40,630

FY 2014

Outlays: $41.466 trillion

Revenues: $40.241 trillion

Hence, although the budget comes close to balancing in 10 years from now, much of that is achieved by accepting the current tax baseline.  Republicans should be able to show how the budget balances within a conservative framework of the tax code.  Granted that this budget would easily balance if we implement Medicare premium support before 2014, but that is the point.  If we plan to leave traditional fee-for-service Medicare in place and make premium support optional, why not begin the free market option earlier?

Moreover, there is a difference between balancing a budget and limiting government.  Balancing a budget is all about accounting.  You can coalesce enough small cuts across many programs and come up with a big number, without ever eliminating many of the 2228 federal government assistance programs.  I’m not sure how many of them would be abolished under this budget, although as mentioned earlier, solid reforms are imposed on Medicaid and Food Stamps.

Even as it relates to cutting raw dollars and cents, spending would increase, on average, 3.5 percent a year until 2024.  In other words, the federal government will still grow faster than the private economy.

Overall, this would be a great start if Republicans planned to fight for this document throughout the appropriations season.  They should announce upfront that they have no plans to pass a CR or omnibus bill this year and force Democrats to go to conference on each of the 12 appropriations bills through regular order.  That way, we can fight Obamacare in the HHS bill without fear of the Democrats holding the rest of government hostage.  Yet, that demand has not been made.  And sadly, we know from past experience that Ryan will be the first one to ditch his own budget when the going gets tough in September.

One other important point: if Ryan gets his way on amnesty, all of the supposed savings from welfare reform will be rendered null and void.

Cross-posted at RedState.com