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Showing posts with label Deficits. Show all posts
Showing posts with label Deficits. Show all posts

Thursday, March 01, 2018

We have to stop deficit spending and lower the national debt



The national debt virtually doubled in the 8 years of President Barack Obama. From the $10.6 trillion debt when he took office in 2009 that was created by all the presidents before him, until the end of his terms in 2017, the debt grew to nearly $20 trillion. That was, of course, the largest increase under any president in history.

President Donald Trump claimed that in his first month in office he actually saved money, reducing the national debt by $12 billion. That is true, but is a mere pittance compared to the $20 trillion total. It was a baby step in the right direction, but it was also only a moment in time for a number that rises and falls month-to-month.

Campaigning in 2016, Trump promised voters he would balance the budget. His first budget does not accomplish that difficult task, and in fact, the budget for fiscal year 2019 is projected to add another trillion to the existing debt, contrary to his promise to voters.

Trump’s proposed spending plan is a $4.4 trillion monster for fiscal year 2019 that some describe as dangerously unbalanced. He still has some time to balance the budget, but what a great thing it would be if his first budget actually moved decidedly in that direction.

Everyone who manages a business or organization, or a home budget understands the situation: ideally, income exceeds expense. Historically, the federal government achieves surpluses only rarely, and a properly operated government shouldn’t produce large surpluses, or large deficits.

Our gargantuan national debt is the result of gross budgetary malfeasance, and it is at crisis proportions. The nation’s debt now exceeds its GDP, and net interest payments on the debt are estimated to be 6.8 percent of all federal outlays at $276.2 billion this fiscal year. That is enough to pay for all administrative office employees for this year.

A comparison of what the government is doing with what it is allowed to do by the U.S. Constitution needs to happen.

The Preamble to the Constitution lays out its purpose, in broad terms: “We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”

James Madison, one of the Constitution’s creators, certainly can be cited as an expert on the document. “The powers delegated by the proposed Constitution to the federal government are few and defined,” he wrote in Federalist No. 45, in 1788. “Those which are to remain in the State governments are numerous and indefinite.”

But in direct opposition to this founding principle, phrases such as “promote the general Welfare,” have been expanded well beyond what the Founders intended, and contribute greatly to a government that has grown in size, control and cost beyond all reason.

The federal government has its nose and fingers in far too many areas of our lives. It should not regulate mud puddles or control education. It should not use its power against some legal businesses or organizations to the benefit of others. The federal government owns and controls 640 million acres of America’s land, about 28 percent of its total surface, the majority of it in western states. The list goes on.

Given the degree to which these improper activities have grown and are so much a part of life, it may not be possible to completely eliminate them, but there are certainly areas ripe for reduction.

As designed, the federal government should not require much money from citizens to operate, and the tax cuts that finally made it through Congress have been a boon to taxpayers and businesses. Businesses can expand, replace equipment, hire new workers and/or increase wages, and taxpayers will have more of their earnings at their disposal to buy things they need and want, which will increase spending in the private sector and increase tax collections.

And government positions left unfilled by the administration will provide some reduction in government spending. But even under the best of circumstances, these factors will not make a large dent in the deficit.

According to downsizinggovernment.org, “The federal government employs 2.1 million civilian workers in hundreds of agencies at offices across the nation. The federal workforce imposes a substantial burden on America’s taxpayers. In 2017 wages and benefits for executive branch civilian workers cost $276 billion.” And that does not count the courts, the Congress or postal workers.

Getting federal spending down to the balanced budget level requires drastic cuts in government, and will require closing some unnecessary administrative agencies, and reducing the number of federal workers in the remaining agencies. As Madison reminds us, the powers delegated to the federal government are few and defined, and the rest of the things needed are to remain the responsibility of the state governments.

One of Trump’s favored phrases in the campaign was “draining the swamp.” Getting government under control and reduced to its proper size and function has never been more important than it is today.

Tuesday, May 30, 2017

Democrats say that Trump’s budget proposal is “dead on arrival”



President Donald Trump’s budget proposal went to Congress last week, while Trump was on his first overseas trip visiting Saudi Arabia, Israel, the Palestinians, the Vatican and NATO. Trump’s $4.1 trillion plan is titled “A New Foundation for American Greatness.”

Predictably, upon release of the proposal Democrats burst forth to condemn the budget. A couple of Congressional Democrats eagerly, and with as much flourish as they could muster, termed the proposal “dead on arrival” which, like so much of what they say, is much ado about nothing. Every budget proposal from every president is “dead on arrival,” the word “proposal” being the operative word. A president’s proposal is merely a starting point.

Since you can’t swing a dead cat without seeing the negative coverage of everything Trump says or does, this article will summarize the positive elements of the proposal.

Trump’s proposal focuses on national defense areas by boosting spending on the military and border security. This focus is what Trump campaigned on, budget director Nick Mulvaney said.

As reported on foxnews.com, Mulvaney said, “There’s not a single thing [cut] from Social Security or Medicare. Why? Because that’s what he promised.” However, other programs such as Medicaid and food stamps will see cuts.

"We look at spending differently," Mulvaney explained. “We are not going to measure compassion by the number of programs or [the number of] people on them.”

House Speaker Paul Ryan, R-Wis., said in support of the budget plan that “We can finally turn the page on the Obama era of bloated budgets that never balance.” “President Trump has proven his commitment to fiscal responsibility with a budget that … prioritizes American taxpayers over bureaucrats in Washington.”

Focusing on national defense through restoring the military and tightening our borders are badly needed corrections to critical failures of the Obama administration. The last eight years saw serious weakening of the military and policies that encouraged illegal entry into the country.

While Obama foolishly reduced the size and strength of all military forces, the Heritage Foundation’s James Carafano tells us that the “most neglected of all U.S. national security elements are our strategic forces. Here, President Obama has reined in development and deployment of ballistic missile defenses,” and “cut all advanced missile defense programs designed to keep the United States ahead of the ballistic missile threat in the future.” And, “to curry favor with Russia, he pulled the plug on planned missile defense installations in Poland and the Czech Republic, simultaneously alienating those allies while displaying weakness to Moscow.”

The plan addresses the dangerously high national debt of nearly $20 trillion and takes a fiscally responsible approach aimed at beginning the process of reducing the large annual deficits to zero in ten years, and perhaps produce a relatively small surplus by 2027.

While this year’s deficit will be a little higher than last year’s, the initiatives contained in the plan will turn the habit of annual deficits around, if they are successful. Trump depends upon producing growth in our economy, although many economists say his goals are too optimistic.

Modifications to the tax system are an important part of Trump’s plan, and include reducing tax brackets from seven to three with rates of 10, 25 and 35 percent, and will eliminate tax breaks to balance the loss of income to the Treasury from lower tax rates.

Lower rates are a good thing; they leave taxpayers with more spendable dollars, which increases consumer spending and spurs economic activity that produces jobs, and new jobs produce additional taxpayers and increase tax collections.

Big government types, which include most Democrats and liberals, believe cuts in federal spending are always a bad thing. But cuts can be made without hurting people who truly need the government payments they receive.

The Trump proposal cuts almost $3.6 trillion from an array of benefit programs, domestic agencies and war spending over the coming decade, including Medicaid, student loan subsidies, food stamps, and the highway formula for the states.

“We are not kicking anybody off any program who needs it,” said Mulvaney, who explained that the proposal doesn’t cut Medicaid, just grows it more slowly over 10 years.

However, while cutting some federal spending, the plan features one major new domestic initiative: paid parental leave estimated to cost $25 billion over the next decade.

But in this discussion of cuts let us not forget that waste, fraud and abuse account for billions of dollars of federal spending annually that accomplish nothing.

GovTechWorks.com reports on federal estimates showing “Improper payments account for about 5 cents of every Medicaid dollar, … or about $29.1 billion of the $547.7 billion program in 2015 alone,” through intentional deception or misrepresentation; inappropriate use of services and resources; and practices inconsistent with sound fiscal, business or medical practices.

And that is just one federal program. Ending or reducing those problems will go a long way to counter spending cuts.
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Those who believe the federal government cannot spend less and accomplish just as much good are living in Fantasy Land. Too many people automatically believe the scare mongering of those who profit politically from supporting high levels of spending.