Politicians and interest groups claim higher taxes are necessary because it would be impossible to cut spending by enough to get rid of red ink. This Center for Freedom and Prosperity video shows that these assertions are nonsense. The budget can be balanced very quickly by simply limiting the annual growth of federal spending.
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President Obama c/o The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500
People are being told that radical spending cuts are a must if we are to balance the budget, but maybe that is not true. Why don’t you favor holding the line on spending so we can get to a balanced budget? The Republicans are going to beat you up on this issue during the election.
Even though I favor radical reductions in the burden of government, I’ve made the point that good fiscal policy merely requires that government spending grow slower than the private sector – what I call Mitchell’s Golden Rule.
And if lawmakers simply cap the growth of spending, so that it grows by about 2 percent annually, the budget deficit disappears in a decade.
It’s even better to impose more restraint, of course, which is why I’ve said favorable things about Senator Rand Paul’s plan.
There’s also a “Penny Plan” that would reduce primary spending (non-interest spending) by 1 percent each year. As James Carter and Jason Fichtner explain, this degree of fiscal restraint would reduce the burden of government spending to about 18 percent of economic output.
Any viable solution must cut spending growth. Sen. Mike Enzi of Wyoming and Rep. Connie Mack of Florida have introduced legislation in their respective chambers to do just that. Their “Penny Plan” – recently updated to reflect the latest budget developments – calls for reducing federal spending (excluding interest payments) 1 percent a year for five years, balancing the budget in the fifth year. To maintain balance once it’s reached, Mr. Enzi and Mr. Mack would cap federal spending at 18 percent of GDP. By no small coincidence, 18 percent of GDP roughly matches the U.S. long-run average level of taxation since World War II. Is it realistic to think Congress could limit federal spending to 18 percent of GDP? Actually, there is precedent. Federal spending fell as a share of GDP for nine consecutive years before bottoming out at 18.2 percent of GDP in fiscal 2000 and 2001. The Penny Plan would return federal spending, expressed as a share of GDP, near the level achieved during the last two years of the Clinton administration.
The various interest groups that infest Washington would complain about this degree of spending discipline, but Carter and Fichtner make a good point when they say that this simply means the same size government – as a share of GDP – that we had when Bill Clinton left office.
I realize I’m getting old and my memory may not be what it used to be, but I don’t recall people starving in the streets and grannies being ejected from hospitals during the Clinton years. Am I missing something?
__________________
Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your commitment as a father and a husband.
Sincerely,
Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733, lowcostsqueegees@yahoo.com
Sen. Mike Lee (R-UT) came to Washington as the a tea-party conservative with the goal of fixing the economy, addressing the debt crisis and curbing the growth of the federal government. It’s an uphill battle for the youngest member of the U.S. Senate, but one he’s prepared to fight.
In the days following Obama’s speech to Congress, Lee sharply criticized the president’s ideas for raising taxes and hiking spending to spur economic growth. As he explained to us, “We need to not be doing more of the same things that made the problem worse. We need to refocus on getting the federal government out of the way rather than making the federal government part of the problem.”
Milton Friedman served as economic advisor for two American Presidents – Richard Nixon and Ronald Reagan. Although Friedman was inevitably drawn into the national political spotlight, he never held public office.
Milton Friedman’s Free to Choose (1980), episode 1 – Power of the Market. part 1
President Obama c/o The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500
Today you are telling us that we must raise taxes in order for us to prosper and grow our economy. I have heard that before and it has never worked!!!!
Liberals like Ernie Dumas and Max Brantley who write for the Arkansas Times have always bragged on the 7% state income tax that Dale Bumpers raised in 1971 and how Arkansas has grown economically since then. However, the facts are quite different.
Until Gov. Dale Bumpers raised income-tax rates and other taxes in 1971, Arkansas had by far the lowest per-capita state and local taxes in the United States. Afterward, we were still 50th but within shouting distance of 49th.
(June 2006) Democratic Gov. Dale Bumpers and the General Assembly raised Arkansas’ top income tax rate to “broaden the tax base” in 1971(1). Yet Arkansas’ per capita income, expressed as a percentage of the U.S. total, has barely improved, moving from 71 (1971) to 77.7 percent (2005) over the 34-year period, according to data from the U.S. Bureau of Economic Analysis. The 1971 income tax increase reversed a decades-long strong growth trend and left Arkansas with the highest income tax rate among bordering states (Mississippi, Missouri, Louisiana, Oklahoma, Tennessee and Texas).
Income Stagnation: The 1930s
One has to turn to the 1930s-the decade of the Great Depression-to find weaker income growth than in recent years.
Arkansas per capita personal income was 44 percent of the U.S. in 1929, the first year data was compiled in the BEA time series. The Great Depression started that year, and by the time it ended in 1933 Arkansas per capita income had fallen to 41 percent of the U.S. By decade’s end (1939) it had returned to 44 percent.
Growth Decades: The 1940s, 1950s & 1960s Arkansas per capita income increased as a percentage of the U.S. in the next three decades. In 1941, at the onset of World War II, Arkansas per capita income was 47 percent of the U.S. It was 59 percent at war’s end in 1945 and again in 1949. It was 56 percent in 1950, 62 percent a decade later in 1960, and 68 percent in 1969. If this growth rate had continued Arkansas would have exceeded 100 percent of the U.S. average in the current decade (2000-2009).
To summarize, Arkansas per capita income increased from 44 to 71 percent of the U.S. total between 1939 and 1971.
Anemic Income Growth (1971-2005) The trend in recent decades is anemic growth in Arkansas per capita personal income. Fiscal policy changes effect economic behavior with a time lag. Arkansas per capita income was 71 percent of the U.S. in 1971 and 76 percent in 1973. Income growth stagnated for the rest of the decade, reaching 77 percent of the U.S. in 1979. It fell to 75 percent in 1989, and was 76 percent in 1999. Today, Arkansas per capita income, at 77.7 percent of the U.S., is barely above its high point of the 1970s.
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We can look at other states and see what their experience is too.
Some of the best evidence about high tax rates vs. low tax rates comes from inside America. Art Laffer (yes, that Art Laffer) and Steve Moore have a great column in today’s Wall Street Journal. It’s sort of Reaganomics vs. Obamanomics, looking at evidence from the states.
Barack Obama is asking Americans to gamble that the U.S. economy can be taxed into prosperity. …Mr. Obama needs a refresher course on the 1920s, 1960s, 1980s and even the 1990s, when government spending and taxes fell and employment and incomes grew rapidly. But if the president wants to see fresher evidence of how taxes matter, he can look to what’s happening in the 50 states. In our new report “Rich States, Poor States,” prepared for the American Legislative Exchange Council, we compare the economic performance of states with no income tax to that of states with high rates. It’s like comparing Hong Kong with Greece… Every year for the past 40, the states without income taxes had faster output growth (measured on a decadal basis) than the states with the highest income taxes. In 1980, for example, there were 10 zero-income-tax states. Over the decade leading up to 1980, those states grew 32.3 percentage points faster than the 10 states with the highest tax rates. Job growth was also much higher in the zero-tax states. The states with the nine highest income tax rates had no net job growth at all, and seven of those nine managed to lose jobs.
Tax rates also lead people to “vote with their feet.” Laffer and Moore look at migration patterns.
Over the past decade, states without an income tax have seen 58% higher population growth than the national average, and more than double the growth of states with the highest income tax rates. …Illinois, Oregon and California are state practitioners of Obamanomics. All have passed soak-the-rich laws like the Buffett Rule (plus economically harmful regulations, like California’s cap-and-trade scheme), and all face big deficits because their economies continue to sink. Illinois has lost one resident every 10 minutes since hiking tax rates in January. California has 10.9% unemployment, having lost 4.8% of its jobs over the past decade. …Every time California, Illinois or New York raises taxes on millionaires, Florida, Texas and Tennessee see an influx of rich people who buy homes, start businesses and shop in the local economy.
Competition among the states is leading some states to make further improvements. Some are even trying to get rid of their income taxes.
Republican governors in Florida, Georgia, Idaho, North Dakota, South Carolina, Ohio, Tennessee, Wisconsin and even Michigan and New Jersey are cutting taxes to lure new businesses and jobs. Asked why he wants to reduce the cost of doing business in Wisconsin, Gov. Scott Walker replies: “I’ve never seen a store get more customers by raising its prices, but I’ve seen customers knock down the doors when they cut prices.” Georgia, Kansas, Missouri and Oklahoma are now racing to become America’s 10th state without an income tax.
I like the quote from Governor Walker. He seems to know what he’s talking about, so it will be interesting to see whether he survives the upcoming recall election. I guess it depends whether voters understand that big government and high tax rates is a recipe for continued decline.
Some states, such as Illinois and California, are filled with voters who refuse to recognize reality. Think of them as the Greece and Spain of America, perhaps because the number of tax-consumers is greater than the number of tax-producers.
Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your commitment as a father and a husband.
Sincerely,
Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733, lowcostsqueegees@yahoo.com
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Take a look at all the Milton Friedman clips that I have posted today. These liberals I mentioned above have truly forgotten how powerful the market is if not interferred with by the government.
Milton Friedman’s Free to Choose (1980), episode 1 – Power of the Market. part 2
Milton Friedman served as economic advisor for two American Presidents – Richard Nixon and Ronald Reagan. Although Friedman was inevitably drawn into the national political spotlight, he never held public office. Milton Friedman’s Free to Choose (1980), episode 1 – Power of the Market. part 1 Mike Huckabee recently moved to Florida? Why? The answer […]
Will Rogers has a great quote that I love. He noted, “Lord, the money we do spend on Government and it’s not one bit better than the government we got for one-third the money twenty years ago”(Paula McSpadden Love,The Will Rogers Book,(1972) p. 20.)
Senator Mark Pryor wants our ideas on how to cut federal spending. Take a look at this video clip below:
Senator Pryor has asked us to send our ideas to him at cutspending@pryor.senate.gov and I have done so in the past and will continue to do so in the future.
On May 11, 2011, I emailed to this above address and I got this email back from Senator Pryor’s office:
Please note, this is not a monitored email account. Due to the sheer volume of correspondence I receive, I ask that constituents please contact me via my website with any responses or additional concerns. If you would like a specific reply to your message, please visit http://pryor.senate.gov/contact. This system ensures that I will continue to keep Arkansas First by allowing me to better organize the thousands of emails I get from Arkansans each week and ensuring that I have all the information I need to respond to your particular communication in timely manner. I appreciate you writing. I always welcome your input and suggestions. Please do not hesitate to contact me on any issue of concern to you in the future.
Government auditors spent the past five years examining all federal programs and found that 22 percent of them—costing taxpayers a total of $123 billion annually—fail to show any positive impact on the populations they serve.
Lawmakers diverted $13 million from Hurricane Katrina relief spending to build a museum celebrating the Army Corps of Engineers—the agency partially responsible for the failed levees that flooded New Orleans.
Unfortunately, logically this argument fails because although we all benefit from roads, police, fire departments and education, it is not clear that the rich benefit from all the social welfare programs that Warren wants to keep running. Also how does the rich benefit from Social Security?
Elizabeth Warren’s recent remarks on class warfare, made during a campaign stop in her quest for a Massachusetts U.S. Senate seat, provide a nice microcosm of the broader philosophical views behind much contemporary political debate.
The relevant bit that has her supporters so fired up goes like this:
I hear all this, oh this is class warfare, no! There is nobody in this country who got rich on his own. Nobody. You built a factory out there–good for you.
But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory.
Now look. You built a factory and it turned into something terrific or a great idea–God Bless! Keep a Big Hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.
Fully exploring the thinking behind Warren’s remarks would demand a book at least. We might point out that most of the rich got that way by creating value for others, meaning they gave back in the process of getting rich. Or we might wonder if her thinking implies that, because the state is responsible in part for the environment in which all of us earned what we have, the state is the actual owner of what we have.
To spare you having to read that book, however, I’m going to instead address just two points I find particularly interesting. First, we can tease out the theory of political obligation Warren advances and see if it holds up to scrutiny. Second, we can ask whether her argument, even if we accept it on its own terms, supports a tax increase on high income earners.
In a 1955 essay, H. L. A. Hart articulated what’s come to be known as the “fair play” principle of political obligation.
When a number of persons conduct any joint enterprise according to rules and thus restrict their liberty, those who have submitted to those restrictions when required have a right to a similar submission from those who have benefited by their submission.
Framed in Warren’s language, “the rest of us” restricted our liberty by paying taxes for the creation of roads, the formation of police forces, the funding of fire departments, and so on. And the rich benefited from our submission to taxes by getting rich (in part) because of the existence of roads, police, and fire departments. Therefore, we have a right to a similar submission from the rich in the form of them paying an increased amount in taxes to fund roads, police, and fire departments, too.
So by her account, this can’t be class warfare because it’s a simple matter of obligation. But is that true? Does the so-called “fair play” account of political obligation work?
Not really. Robert Nozick famously knocked it down in Anarchy, State, and Utopia with a thought experiment about a neighborhood public address system. And A. John Simmons went even further—and did so more persuasively—in his 1979 classic, Moral Principles and Political Obligations.
But the basic response to “fair play” is pretty simple: It seems awfully weird to demand that we repay benefits we never had a choice about accepting in the first place.
Nobody approached the rich before they were rich and said, “Hey, we’re all pitching in to pay for roads and police, which we all think are pretty valuable. If you’d like to benefit from those things like we would, we ask that you pay for them. Are you up for that?” A (pre-)rich person might very well say, “Yes, I’m game.” In that case the principle of fair play would apply. But it would only apply if he had a meaningful choice about the matter. On the other hand, he might say, “Yes, I think we do need roads and police, but I also think they’d be better provided by an alternative cooperative scheme (the market, a different government, a different voluntary group, etc.) to the one you’re offering.”
Simmons calls this the distinction between “receiving” benefits and “accepting” them. The fair play principle creates obligations when benefits are accepted, but not when merely received.
With that in mind, Warren would have a difficult time arguing that any of us genuinely accepted the particular roads and police provided by the particular scheme she supports. We’ve received them, yes, and may rather like what we received—but we were never presented with an actual choice.
There may, of course, be plenty of other good reasons to feel obligated to pay our taxes—or to even pay more taxes than our neighbors—but fair play, at least in the form Warren presents it, doesn’t quite get us there.
Still, let’s set such concerns aside and grant to Warren that, if the rich did benefit from the particular services paid for by the rest of us, they have a duty to pay (more) for them. Would that allow us to justify asking the rich to pay more taxes today?
Again, probably not. Just look at the beneficial services Warren draws our attention to.
Roads
Police
Fire departments
Education
She tacks an “and so on” to the list, but there’s something striking about the concrete examples she does give. Namely, they’re all the kinds of things you’d expect even from a much smaller state than the one we have today.
In other words, the need to raise taxes at the present moment (if such a need exists) is precisely not to pay for roads, police, fire departments, and education. We had those—and they were functioning quite nicely—for a good while before the explosion of federal spending under the last two administrations.
If Warren’s claim is that the rich got rich because of certain benefits they received from government and so should pay more to provide those benefits to others, then the overwhelming bulk of government spending is completely outside the scope of her argument.
It’s not obvious that many rich people got to be rich because of Medicare, Medicaid, Social Security, or military expenses. (Those who got rich because of subsidies are another matter, but she doesn’t draw that distinction, nor is she calling for an end to government handouts to the wealthy and politically connected.) But those are where we’ve seen so much of the spending increases that now demand, according to Warren and her peers, that all of us pony up more cash to the federal government.
This means that an easy response to Warren is to grant her general philosophical point but then add that what it leads to is not increased taxes but cutting government back to those programs that do make people rich and only then worry about how much of what remains the rich should pay for.
Of course we might also point out that, even with the bloated leviathan we have in Washington—one that does far more than provide roads, police, fire departments, and schools (which are, after all, chiefly state and local matters)—the rich still pay for most of it. Certainly more than “the rest of us” pay. As the Wall Street Journal pointed out back in May, “the highest-earning 10% of the U.S. population paid the largest share among 24 countries examined, even after adjusting for their relatively higher incomes.” The top 20% of American income earners pay over half the federal taxes. Which means that “the next kid who comes along” already is getting his federal benefits from the rich. To Warren and her supporters, I ask, “How much is enough?”
If Warren’s moral case for increasing the tax burden of the rich doesn’t hold up, can she still maintain her claim that this isn’t class warfare? Probably not. By her arguments, the rich are not obligated to pay more than they already are. Nor will their paying more do much of anything to ameliorate America’s fiscal woes. That means it’s rather difficult to see her speech as anything but a ploy to fire up her base by attacking a disfavored minority.
If that’s not class warfare, I don’t know what is.
Update: I just finished a podcast on the subject of this post with Caleb Brown.
What are our choices here in the USA with our huge budget deficit? We could head to Greece or cut our budget until we have it balanced. You would never even consider getting close to a balanced budget while Paul would put in the spending cuts that we need to get the job done.
Senator Paul and his colleagues are highlighting the fact that the plan generates a balanced budget in just five years. That’s a good outcome, but it should be a secondary selling point. All the good results in the plan – including the reduction in red ink and the flat tax – are made possible because the overall burden of federal spending is lowered.
Not surprising, one of the columnists at the Washington Post has a different perspective. In his hyperventilating column today, Dana Milbank says that Senator’s Paul’s proposal is “monstrous” and “nasty” for reining in the federal government.
The tea party darling’s plan would, among other things, cut the average Social Security recipient’s benefits by nearly 40 percent, reduce defense spending by nearly $100 billion below a level the Pentagon calls “devastating,” and end the current Medicare program in two years — even for current recipients, according to the Senate Budget Committee staff. It would eliminate the education, energy, housing and commerce departments, decimate homeland security, eviscerate programs for the poor, and give the wealthy a bonanza by reducing tax rates to 17 percent and eliminating taxes on capital gains and dividends. It is, all in all, quite a nasty piece of work.
Setting aside some of the inaccuracies (Social Security benefits would rise, for instance, but not as fast as they would under current law), I have two reactions to Milbank’s screed.
2. More amusingly, what does he think about the fact that the Senate voted against Obama’s tax-and-spend budget by a stunning margin of 99-0? That’s even worse than the 97-0 vote against the budget Obama proposed last year. The 16 votes for Rand Paul’s budget may not sound like much, but 16 is a lot more than zero.
Setting aside the snarky comments, all that Rand Paul is proposing is to limit the growth of government so that the federal budget grows by an average of about 2 percent annually.
Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your commitment as a father and a husband.
Sincerely,
Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733, lowcostsqueegees@yahoo.com
In the latest example of the so-called “Tea Party Class” of House Republicans not living up to the hype, GOP freshmen on the House Agriculture Committee voted overwhelmingly to approve a bloated $957 billion farm subsidy/welfare bill.
The overall vote was 35-11. Only 4 Republicans voted against it – the rest appear to be Democrats who weren’t happy that the bill doesn’t spend more money on food stamps. Republican freshmen occupy 16 of the 25 GOP seats on the committee. Only 3 out of the 16 voted against the bill.
Bob Gibbs (Ohio)
Tim Huelskamp (Kansas)
Marlin Stutzman (Indiana)
Here are the names of the 13 GOP freshmen who supported it:
Austin Scott (Georgia)
Scott Tipton (Colorado)
Steve Southerland (Florida)
Rick Crawford (Arkansas)
Martha Roby (Alabama)
Scott DeJarlais (Tennessee)
Renee Ellmers (North Carolina)
Chris Gibson (New York)
Randy Hultgren (Illinois)
Vicky Hartzler (MO)
Robert Schilling (Illinois)
Reid Ribble (Wisconsin)
Kristi Noem (South Dakota)
The question now is whether the House Republican leadership will allow the bill to come to the floor. According to the Washington Post, Speaker Boehner hasn’t decided:
Agriculture Chairman Frank Lucas, R-Okla., feels the committee did “an awful lot of good work,” Boehner said at a weekly news conference. But “no decisions about it coming to the floor at this point,” Boehner said…“There are some good reforms in this bill. There are other parts of the farm bill that I have concerns with,” Boehner said. He referred to what he said was “a Soviet-style dairy program in America today and one of the proposals in this farm bill would actually make it worse.”
Boehner has voted against farm bills in the past so he’s probably not eager to get this one to the floor, especially since advocates for free markets and limited government rightly consider the bill to be a disaster. But Boehner helped create this dilemma for himself when his Steering Committee gave Frank Lucas the chairman’s gavel after the 2010 elections. As Chris Edwards and I noted in a recent op-ed, Lucas is a big supporter of farm subsidies and takes pride in having been named a “Wheat Champion” by the National Association of Wheat Growers.
Back in December 2010, I wrote that “An indicator of the incoming House Republican majority’s seriousness about cutting spending will be which members the party selects to head the various committees.” Lucas’s chairmanship indicated that when it comes to bloated farm bills, the House leadership wasn’t serious. If this bill is allowed to reach the floor, any doubts will have been erased.
The fundamental problem with incrementalism is that you can never win the argument, because you never set out to have a debate on principle.
Instead, the debate is always about making some federal program run a little better or cost a little less. It is never about the underlying benefit or activity being fundamentally inconsistent with a limited government or the Constitution. No matter how common sense the reform, the Left immediately demonizes the effort as a “cut,” either scaring the reformers to the sidelines or sparking the same ideological firefight that the reformers were trying to avoid. The reformers get caught unprepared to argue on principle, and the proposed reform itself then proves to be well south of the herculean political effort needed to get it signed into law.
Consider the “farm” bill just passed out of the House Agriculture Committee.
This is not the approach that you would take if you were, say, trying to drastically roll back the welfare state. You would take a much harder line. You would break up the food stamp portion from the commodity portion. You would go back to pre-Obama or pre-Bush levels and block grant the program (surely the nation can exist on the same food stamp levels enjoyed by the Clinton Administration, no?). You would be proposing a work requirement for the food stamp program. You might bring back the paper stamps and discontinue the EBT system. In other words, you would force a real debate about food stamps and dependency in America—about what we can afford given our fiscal situation and how to get people off of welfare for their and our benefit.
Eight Reasons Why Big Government Hurts Economic Growth __________________ We got to cut spending and we must first start with food stamp program and we need some Senators that are willing to make the tough cuts. Food Stamp Republicans Posted by Chris Edwards Newt Gingrich had fun calling President Obama the “food stamp president,” but […]
Milton Friedman’s negative income tax explained by Friedman in 1968: We need to cut back on the Food Stamp program and not try to increase it. What really upsets me is that when the government gets involved in welfare there is a welfare trap created for those who become dependent on the program. Once they […]
More Than Half of the President’s Budget Would Be Spent on Entitlement Programs Everyone wants to know more about the budget and here is some key information with a chart from the Heritage Foundation and a video from the Cato Institute. In combination with other entitlements, such as food stamps, unemployment, and housing assistance,Medicare, Medicaid, and Social Security constitute the lion’s share […]
Government Spending Doesn’t Create Jobs Uploaded by catoinstitutevideo on Sep 7, 2011 Share this on Facebook: http://on.fb.me/qnjkn9 Tweet it: http://tiny.cc/o9v9t In the debate of job creation and how best to pursue it as a policy goal, one point is forgotten: Government doesn’t create jobs. Government only diverts resources from one use to another, which doesn’t […]
Uploaded by oversightandreform on Mar 6, 2012 Learn More at http://oversight.house.gov The Oversight Committee is examining reports of food stamp merchants previously disqualified who continue to defraud the program. According to a Scripps Howard News Service report, food stamp fraud costs taxpayers hundreds of millions every year. Watch the Oversight hearing live tomorrow at 930 […]
1,000 Days Without A Budget Uploaded by HeritageFoundation on Jan 24, 2012 http://blog.heritage.org | Today marks the 1,000th day since the United States Senate has passed a budget. While the House has put forth (and passed) its own budget, the Senate has failed to do the same. To help illustrate how extraordinary this failure has […]
We have spent over 19 trillion on welfare since LBJ started the war on poverty and it has only brought us several generations who are dependent on the government. Welfare: Tackling the Fastest-Growing Part of Government Spending Rachel Sheffield April 20, 2012 at 2:45 pm Multiple reports of welfare abuse have hit the headlines in […]
Welfare Can And Must Be Reformed Uploaded by HeritageFoundation on Jun 29, 2010 If America does not get welfare reform under control, it will bankrupt America. But the Heritage Foundation’s Robert Rector has a five-step plan to reform welfare while protecting our most vulnerable. ______________ I don’t understand why liberals do not see that they […]
This excessive spending by Washington today is not responsible government in action. Obama’s Comments: A Gift that Keeps on Giving Posted by Roger Pilon Today POLITICO Arena asks: Does Senator Grassley’s tweet, that the American people “r not stupid as this x prof of con law,” make an important point or was it disrespectful? Is this […]
Welfare Can And Must Be Reformed Uploaded by HeritageFoundation on Jun 29, 2010 If America does not get welfare reform under control, it will bankrupt America. But the Heritage Foundation’s Robert Rector has a five-step plan to reform welfare while protecting our most vulnerable. __________________________ If welfare increases as much as it has in the […]
Why not pass the Balanced Budget Amendment? As you know that federal deficit is at all time high (1.6 trillion deficit with revenues of 2.2 trillion and spending at 3.8 trillion).
On my blog www.HaltingArkansasLiberalswithTruth.com I took you at your word and sent you over 100 emails with specific spending cut ideas. However, I did not see any of them in the recent debt deal that Congress adopted. Now I am trying another approach. Every week from now on I will send you an email explaining different reasons why we need the Balanced Budget Amendment. It will appear on my blog on “Thirsty Thursday” because the government is always thirsty for more money to spend.
In this paper below you will read:
America cannot raise taxes to continue overspending, because tax hikes shrink our economy and grow our government. America cannot borrow more to continue overspending, because borrowing puts an enormous financial burden on the American children of tomorrow. A BBA will help address this long-term problem because, after the multi-year process for securing ratification of the BBA by three-quarters of the states, the BBA will keep federal spending under control in subsequent years.
Washington has not been able to cut spending so the BBA is needed to force Washington to do the right thing. Your father David Pryor was the governor of Arkansas and he knew what it meant to have a balanced budget by mandate.
Thank you again for this opportunity to share my ideas with you.
Two key principles should govern congressional consideration of an amendment to the U.S. Constitution that requires the federal government to balance its budget:
First Principle: A Balanced Budget Amendment (BBA) is important to help bring long-term fiscal responsibility to America’s future when the BBA takes effect after ratification by three-quarters of the state legislatures; it is equally important for Congress to cut spending nowto address the current overspending crisis.
Second Principle: An effective BBA will include three elements to: (a) control spending, taxation, and borrowing, (b) ensure the defense of America, and (c) enforce the requirement to balance the budget.
Cuts for the Future, Cuts for the Present
Federal spending is out of control—both obligations for the future and spending right now.
Congress must get spending under control in the long term. America cannot raise taxes to continue overspending, because tax hikes shrink our economy and grow our government. America cannot borrow more to continue overspending, because borrowing puts an enormous financial burden on the American children of tomorrow. A BBA will help address this long-term problem because, after the multi-year process for securing ratification of the BBA by three-quarters of the states, the BBA will keep federal spending under control in subsequent years.
Congress also must get spending under control in theshort term. Federal overspending is not simply about the future, but also about the present. Under the President’s Fiscal Year 2012 Budget Submission, measured by the Congressional Budget Office, the federal government will spend $1.2 trillion more than it will take in, a gargantuan burden of additional debt forced on future generations to pay current bills.
Thus, America needs both a Balanced Budget Amendment for the long term and deep cuts in federal spending starting right now, without waiting for a BBA to take effect. As Congress considers budget resolutions, appropriations bills, appropriations continuing resolutions, and debt limit bills, Congress should take every opportunity now to cut federal spending, including for the biggest overspending problem: the ever-growing entitlement programs.
Congress should recognize that the best way to encourage state legislatures to ratify a BBA is to demonstrate, through consistent congressional cuts in spending, that the American people have the will to accept spending cuts to balance the budget.
Elements of a Successful Balanced Budget Amendment
A successful BBA will:
Control spending, taxing, and borrowing through a requirement to balance the budget.The BBA should cap annual spending at a level not exceeding either: (a) a specified percentage of the value of goods and services the economy produces in a year (known as gross domestic product, or GDP), or (b) the level of revenues. To ensure that Congress cannot simply balance the budget by continually raising taxes instead of cutting overspending, the BBA should require Congress to act by supermajority votes if Members wish to raise taxes. Any authority the BBA grants Congress to deal with economic slowdowns, by waiving temporarily the requirement that spending not exceed the GDP percentage or revenue level, should specify the amount of above-revenue spending allowed and require supermajority votes.
Defend America. The BBA should allow Congress by supermajority votes to waive temporarily compliance with the balanced budget requirement when waiver is essential to pay for the defense of Americans from attack.
Enforce the balanced budget requirement. The BBA should provide for its own enforcement, but must specifically exclude courts from any enforcement of the BBA, so unelected judges do not make policy decisions such as determining the appropriate level of funding for federal programs. A government that spends money in excess of its revenues must borrow to cover the difference. Therefore, to enforce the requirement to balance the budget, the BBA should prohibit government issuance of debt, except when necessary to finance a temporary deficit resulting from congressional supermajority votes discussed above.
America is in a fiscal crisis. Our government spends too much. Overspending must stop immediately. Overspending will stop only if Congress cuts spending now, including with respect to the ever-expanding entitlement programs. For the future, Congress and three-quarters of state legislatures can adopt and ratify a Balanced Budget Amendment to the U.S. Constitution to anchor the American willingness to live within a balanced budget.
David S. Addington is Vice President for Domestic and Economic Policy, and J. D. Foster, Ph.D., is Norman B. Ture Senior Fellow in the Economics of Fiscal Policy, at The Heritage Foundation.
In order to balance the budget we must make deep cuts. Take a look at the study refers to below by Dan Mitchell of the Cato Institute in his fine article on the French mess. Raising taxes has not worked in the thirty countries studied. As President it is your job to make sure we don’t continue to head down this pass of trying to raise taxes on the job creators.
Though, to be fair, France hasn’t gotten to the point where it’s being bailed out (it’s probably just a matter of time).
If you want some good analysis of the situation in Europe, Veronique de Rugy of the Mercatus Center hits the nail on the head in her column in today’s Washington Examiner.
France has yet to cut spending. In fact, to the extent that the French are frustrated with “budget cuts,” it’s only because the increase in future spending won’t be as large as they had planned. The same can be said about the United Kingdom. Spain, Italy and Greece have had no choice to cut some spending. However, in the case of these particular countries, the cuts were implemented alongside large tax increases. …This approach to austerity, also known in the United States as the “balanced approach,” has unfortunately proven a recipe for disaster. In a 2009 paper, Harvard University’s Alberto Alesina and Silvia Ardagna looked at 107 attempts to reduce the ratio of debt to gross domestic product over 30 years in countries in the Organisation for Economic Co-operation and Development. They found fiscal adjustments consisting of both tax increases and spending cuts generally failed to stabilize the debt and were also more likely to cause economic contractions. On the other hand, successful austerity packages resulted from making spending cuts without tax increases. They also found this form of austerity is more likely associated with economic expansion rather than with recession. …While the debate over austerity continues, the evidence seems to point to the conclusion that austerity can be successful, if it isn’t modeled after the “balanced approach.” It’s a lesson for the French and other European countries, as well as for American lawmakers who often seem tempted by the lure of closing budget gaps with higher taxes.
There are obvious lessons from Europe for the United States. If politicians don’t reform entitlement programs, we’re doomed to have our own fiscal crisis at some point in the not-too-distant future.
Only there won’t be anybody there to bail us out.
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Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your commitment as a father and a husband.
Sincerely,
Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733, lowcostsqueegees@yahoo.com
U.S. Tax revenue: $2,170,000,000,000
Fed budget: $3,820,000,000,000
New debt: $1,650,000,000,000
National debt: $14,271,000,000,000
Recent budget cut: $38,500,000,000
Now, remove 8 zeros and pretend it’s a household budget
Annual family income: $21,700
Money the family spent: $38,200
New debt on the credit card: $16,500
Outstanding balance on credit card: $142,710
Total budget cuts: $385
Tea Party Conservative Senator Mike Lee interview Here is an excellent interview above with Senator Lee with a fine article below from the Heritage Foundation. Sen. Mike Lee (R-UT) came to Washington as the a tea-party conservative with the goal of fixing the economy, addressing the debt crisis and curbing the growth of the federal […]
Dear Senator Pryor, Why not pass the Balanced Budget Amendment? As you know that federal deficit is at all time high (1.6 trillion deficit with revenues of 2.2 trillion and spending at 3.8 trillion). On my blog http://www.HaltingArkansasLiberalswithTruth.com I took you at your word and sent you over 100 emails with specific spending cut ideas. However, […]
Sixty Six who resisted “Sugar-coated Satan Sandwich” Debt Deal (Part 48) This post today is a part of a series I am doing on the 66 Republican Tea Party favorites that resisted eating the “Sugar-coated Satan Sandwich” Debt Deal. Actually that name did not originate from a representative who agrees with the Tea Party, but […]
Sixty Six who resisted “Sugar-coated Satan Sandwich” Debt Deal (Part 46) This post today is a part of a series I am doing on the 66 Republican Tea Party favorites that resisted eating the “Sugar-coated Satan Sandwich” Debt Deal. Actually that name did not originate from a representative who agrees with the Tea Party, […]
Sixty Six who resisted “Sugar-coated Satan Sandwich” Debt Deal (Part 44) This post today is a part of a series I am doing on the 66 Republican Tea Party favorites that resisted eating the “Sugar-coated Satan Sandwich” Debt Deal. Actually that name did not originate from a representative who agrees with the Tea Party, but […]
Dear Senator Pryor, Why not pass the Balanced Budget Amendment? As you know that federal deficit is at all time high (1.6 trillion deficit with revenues of 2.2 trillion and spending at 3.8 trillion). On my blog http://www.HaltingArkansasLiberalswithTruth.com I took you at your word and sent you over 100 emails with specific spending cut ideas. However, […]
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