Category Archives: spending out of control

The Sixty Six who resisted “Sugar-coated Satan Sandwich” Debt Deal (Part 21)

October 22, 2011 – 8:31 am

The Sixty Six who resisted “Sugar-coated Satan Sandwich” Debt Deal (Part 21)

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 from a liberal.

Rep. Emanuel Clever (D-Mo.) called the newly agreed-upon bipartisan compromise deal to raise the  debt limit “a sugar-coated satan sandwich.”

“This deal is a sugar-coated satan sandwich. If you lift the bun, you will not like what you see,” Clever tweeted on August 1, 2011.

Westmoreland Opposes Debt Ceiling Increase

 
 
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Washington, Aug 1 –

WASHINGTON, D.C. – After months of debate, tonight the House of Representatives passed S.365, the Budget Control Act of 2011, to raise the debt ceiling and enact some spending reforms.  Specifically, it would reduce deficits by $917 billion over ten years by capping spending levels and in return raise the debt ceiling $900 billion.  In addition, it requires a vote on a balanced budget amendment in both the House and the Senate after October 2, 2011 but before the end of the year.  It then establishes a commission tasked with finding an additional $1.2 to $1.5 trillion in spending cuts by November 23, 2011.  A second debt ceiling increase of $1.5 trillion would be permitted at the beginning of next year if the balanced budget amendment is sent to the states for ratification, or if the commission proposal includes cuts equal to or greater than $1.5 trillion and those cuts are passed into law.  If neither happens, a $1.2 trillion debt limit increase would be attached to across the board spending cuts that would equal the difference between $1.2 trillion and the cuts enacted by the commission’s proposal.  Congressman Westmoreland did not support the legislation.

“When these negotiations began in January, I made a promise that I would not vote for any legislation that didn’t include significant spending cuts and absolutely no tax increases.  Unfortunately, the final plan did not include significant enough cuts and left open the possibility for tax increases through this bipartisan commission.  In addition, it does not require a balanced budget amendment be sent to the states for ratification.  Without that constitutional restraint placed on this Congress and future Congresses, we can never guarantee real spending reforms will happen.

“House Republicans also made a promise to the American people that we would bring back an open process here in Congress.  Up until now, we have stuck with that promise.  We’ve posted legislation on the internet and given the American people and Members of Congress 72 hours to review it.  We’ve brought back open rules on appropriations bills, allowing Republican and Democrat members alike to offer amendments.  But now, after this deal was crafted behind closed doors with only a few members of leadership at the table, we were given less than 12 hours to read and review this extremely important legislation.  More time is needed to make an informed decision about legislation of this size and scope.  Unfortunately, once again, Congress has waited until the last minute to act, pushing us up against this artificial August 2nd deadline and forcing a decision on a bill it seems no one actually likes.

“I and other Republicans in the House stuck by our leadership in the hopes we could keep Cut, Cap and Balance alive and negotiate a deal we could support.  And while I know they worked hard to get the best deal possible, at the end of the day, it’s just not a deal I can support.  I commend their efforts though.  If you will recall, up until a few months ago, President Obama was still calling for a ‘clean’ debt ceiling increase and last night was still pushing for immediate tax increases on job creators.  So we came a long way during these negotiations.  Unfortunately, Senate Democrats and the White House stalled any attempt at real spending reform, resulting in this unpopular deal,” stated Westmoreland.

By Everette Hatcher III | Comments (0)

With Govt Spending at 41% of GDP should President Obama try to raise taxes?

October 21, 2011 – 3:07 pm

Cato Institute: Government spending is 41% of GDP

I love the Cato Institute because they give us the facts that liberals just can’t refute. Instead of trying to raise our taxes, President Obama should be cutting spending.

American Government Spending: 41% of GDP

Posted by Chris Edwards

My good friend Kathy Ruffing at CBPP takes me to task for testifying that government spending in the United States is 41 percent of GDP, which in my view is a very high and harmful level.

Kathy says that recent U.S. spending data is “exaggerated” because of the recession, and indeed, spending has soared not only here, but in most major countries because of the unfortunate popularity of Keynesian pump-priming theories. My point was that the American smaller-government advantage eroded both during the Bush growth years and during the Obama recession years, as seen in Figure 2 of my testimony.  

Kathy noted that the OECD data I used are different than U.S. national income accounts data published by the Bureau of Economic Analysis. Well, that’s right. Every country has quirks in the way they do their national income data. The advantage of using OECD data is that the economists at the OECD adjust for these quirks and create spending data that is comparable across countries. If Kathy has more accurate international comparisons, I’d love to see them.

Finally, Kathy says that just because American government spending divided by GDP is about 40 percent, that “doesn’t mean that government controls about 40 percent of the U.S.economy.” I don’t agree. She means that government does not produce 40 percent of gross domestic product, which is true. The broader figure of 40 or 41 percent includes not just government production but government transfers. And transfers do entail government control over resources because both the taxing and spending activities involved in transfer programs distort private sector behavior. Thus, the government misallocates resources both when it “produces” useless solar power activities in its own labs and when it subsidizes failed private solar companies.   

Anyway, thanks to Kathy for raising the important issue of the overall size of government because it is something that the policy community should focus more attention on. For data geeks, the OECD has all kinds of cross-country comparison data here. Government spending is Table 25.

Federal Spending per Household Is Skyrocketing

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.

The federal government is spending more per household than ever before. Since 1965, spending per household has grown by nearly 162 percent, from $11,431 in 1965 to $29,401 in 2010. From 2010 to 2021, it is projected to rise to $35,773, a 22 percent increase.

INFLATION-ADJUSTED DOLLARS (2010)

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Federal Spending per Household Is Skyrocketing

Source: U.S. Census Bureau, White House Office of Management and Budget, and Congressional Budget Office.

Chart 1 of 42

In Depth

  • Policy Papers for Researchers

  • Technical Notes

    The charts in this book are based primarily on data available as of March 2011 from the Office of Management and Budget (OMB) and the Congressional Budget Office (CBO). The charts using OMB data display the historical growth of the federal government to 2010 while the charts using CBO data display both historical and projected growth from as early as 1940 to 2084. Projections based on OMB data are taken from the White House Fiscal Year 2012 budget. The charts provide data on an annual basis except… Read More

  • Authors

    Emily GoffResearch Assistant
    Thomas A. Roe Institute for Economic Policy StudiesKathryn NixPolicy Analyst
    Center for Health Policy StudiesJohn FlemingSenior Data Graphics Editor

By Everette Hatcher III | Also posted in Cato Institute, President Obama, Taxes | Tagged , , , , | Comments (0)

Obama’s Budget Worsens Debt Problem, but The Heritage Plan Solves It

October 21, 2011 – 11:30 am

Obama’s Budget Worsens Debt Problem, but The Heritage Plan Solves It

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.

Spending in the President’s budget proposal for 2012 would drive the debt to 87 percent of the economy by 2021. In contrast, Saving the American Dream: The Heritage Plan to Fix the Debt, Cut Spending, and Restore Prosperity solves the debt problem through strong budget reforms, lowering debt to 58 percent of GDP in just 10 years.

DEBT AS A PERCENTAGE OF GDP

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Obama's Budget Worsens Debt Problem, but The Heritage Plan Solves It

Source: President’s Budget: Congressional Budget Office and White House Office of Management and Budget; Heritage Plan: Calculations by the Center for Data Analysis based on current projections, data provided by the Peter G. Peterson Foundation, and CDA policy models.

Chart 23 of 42

In Depth

By Everette Hatcher III | Comments (0)

The Sixty Six who resisted “Sugar-coated Satan Sandwich” Debt Deal (Part 20)

October 21, 2011 – 8:29 am

The Sixty Six who resisted “Sugar-coated Satan Sandwich” Debt Deal (Part 20)

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 from a liberal.

Rep. Emanuel Clever (D-Mo.) called the newly agreed-upon bipartisan compromise deal to raise the  debt limit “a sugar-coated satan sandwich.”

“This deal is a sugar-coated satan sandwich. If you lift the bun, you will not like what you see,” Clever tweeted on August 1, 2011.

Scott Austin of Georgia:

“First, thank you to the hundreds of constituents who have called, e-mailed and posted comments on my Facebook and Twitter pages.  This was a difficult vote, but because of the comments and calls, I cast it with the confidence that it was the right vote for the eighth district of Georgia.  My constituents know, as well as I do, that we should do all that we can to keep from defaulting on our obligations.  However, a leader in the White House would have never allowed the discussion of a default to begin with and would have prioritized spending before this crisis came to a head.

“While this bill included some of the main principles of my preferred “Cut, Cap and Balance” bill it did not include enough of them.  As families across Georgia have realized – you can only spend as much as you take in.  “Cut, Cap and Balance” as well as the “Boehner Plan” required the passage of a Balanced Budget Amendment before allowing the President to raise the debt limit a second time.  Unfortunately, this requirement was left out of the compromise. Additionally, this bill includes cuts, insisted upon by the President, which would disproportionately fall in the area of defense, to the exclusion of other areas that are the true drivers of our national debt. The uncertainty surrounding these defense cuts could have a devastating impact on thousands of jobs in Middle Georgia –  a risk I’m not willing to take at a time when our unemployment rate continues to hover near double digits.

“Middle Georgians sent me here to fight for the personal freedoms, individual liberties and economic opportunities for our generation and the next.  I will never cease in that effort.  Unfortunately, this bill falls short of those goals and that is why I voted against it.”

By Everette Hatcher III | Comments (0)

Cato Institute:Spending is our problem Part 6

October 21, 2011 – 12:02 am

But we also know that it is difficult to convince politicians to do what’s right for the nation. And if they don’t change the course of fiscal policy, and we leave the federal government on autopilot, then America is doomed to become another Greece.

The combination of poorly designed entitlement programs (mostly Medicare and Medicaid) and an aging population will lead to America’s fiscal collapse.

People think that we need to raise more revenue but I say we need to cut spending. Take a look at a portion of this article from the Cato Institute:

The Damaging Rise in Federal Spending and Debt

by Chris Edwards

Joint Economic Committee
United States Congress

Joint Economic CommitteeUnited States Congress

Added to cato.org on September 20, 2011

This testimony was delivered on September 20, 2011.

Conclusions

Federal spending is soaring, and government debt is piling up at more than a trillion dollars a year. Official projections show rivers of red ink for years to come unless policymakers enact major budget reforms. Unless spending and deficits are cut, the United States is headed for economic ruin as growth falls and rising debt threatens further financial crises.

Policymakers should turn their full attention to long-run spending reforms. They should begin terminating the many unneeded and damaging federal programs that draw resources out of the private sector and sap the economy’s strength. The essays on Cato’s website http://www.DownsizingGovernment.org describe many federal programs that produce low or negative returns. Programs often create economic distortions, damage the environment, restrict individual freedom, or have high levels of fraud and abuse.

I’ve proposed a plan to cut spending on entitlements, defense, and discretionary spending over 10 years to balance the budget.25 Spending reforms should aim to revive constitutional federalism and reverse the expansion of the federal government into areas better left to state and local governments, businesses, charities, and individuals.

Some analysts worry that spending cuts would hurt the economy, but other high-income nations have cut spending with very positive results. In the mid-1990s, for example, Canada faced a debt crisis caused by runaway spending — similar to our current situation. But the Canadian government changed course and slashed total spending 10 percent in just two years — which would be like us chopping annual spending by $360 billion in two years.26 Total government spending in Canada was cut by more than 10 percentage points of GDP over a decade. The Canadian economy did not sink into a recession as Keynesian economists might fear, but instead was launched on a 15-year economic boom.

A recent Joint Economic Committee report summarizes other international examples of spending cuts coinciding with strong economic growth.27 Thus, spending cuts should not be viewed as bad tasting medicine needed only to cure our debt disease, but as an opportunity to create positive and lasting benefits to the economy and society.

Thank you for holding these important hearings.

Notes:
.
25 http://www.DownsizingGovernment.org/balanced-budget-plan.
26 See http://www.cato-at-liberty.org/cutting-government-the-canadian-way and see http://www.cato-at-liberty.org/canadas-spending-cuts-and-economic-growth.
27 Joint Economic Committee, “Spend Less, Owe Less, Grow the Economy,” Republican Staff, March 15, 2011

By Everette Hatcher III | Also posted in Cato Institute | Tagged , , , , | Comments (0)

Federal Spending Is Growing Faster Than Federal Revenue

October 20, 2011 – 11:34 am

Federal Spending Is Growing Faster Than Federal Revenue

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.

Since 1965, spending has risen constantly. Federal revenues have dropped recently due to the economic recession, but spending has reached a record high.

INFLATION-ADJUSTED TRILLIONS OF DOLLARS (2010)

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Federal Spending Is Growing Faster Than Federal Revenue

Source: White House Office of Management and Budget.

Chart 2 of 42

In Depth

  • Policy Papers for Researchers

  • Technical Notes

    The charts in this book are based primarily on data available as of March 2011 from the Office of Management and Budget (OMB) and the Congressional Budget Office (CBO). The charts using OMB data display the historical growth of the federal government to 2010 while the charts using CBO data display both historical and projected growth from as early as 1940 to 2084. Projections based on OMB data are taken from the White House Fiscal Year 2012 budget. The charts provide data on an annual basis except… Read More

  • Authors

    Emily GoffResearch Assistant
    Thomas A. Roe Institute for Economic Policy StudiesKathryn NixPolicy Analyst
    Center for Health Policy StudiesJohn FlemingSenior Data Graphics Editor

By Everette Hatcher III | Comments (0)

The Sixty Six who resisted “Sugar-coated Satan Sandwich” Debt Deal (Part 19)

October 20, 2011 – 8:28 am

The Sixty Six who resisted “Sugar-coated Satan Sandwich” Debt Deal (Part 19)

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 from a liberal.

Rep. Emanuel Clever (D-Mo.) called the newly agreed-upon bipartisan compromise deal to raise the  debt limit “a sugar-coated satan sandwich.”

“This deal is a sugar-coated satan sandwich. If you lift the bun, you will not like what you see,” Clever tweeted on August 1, 2011.

 

Related DocumentsAUDIO: Kingston Opposes Debt Limit Increase
 
 
Washington, Aug 1-Congressman Jack Kingston (R-GA) released the following statement after casting his vote against a proposal to increase the nation’s statutory debt limit“I commend the Speaker for fighting the good fight.  We moved the debate from tax increases to spending caps and matched each dollar of debt limit increase to more than a dollar of spending cuts.  But as far as we came, the deck was stacked against us.  Controlling one-half of one-third of government limits the ability of small government conservatives to change the direction of our country overnight.

It is clear America has a long struggle ahead of her as we continue to rein in spending and get our fiscal house in order.  I intend to continue the fight and work for the reforms and spending cuts we need so badly in America.”

By Everette Hatcher III | Comments (0)

Dear Senator Pryor, why not pass the Balanced Budget Amendment? (Part 12 Thirsty Thursday, Open letter to Senator Pryor)

October 20, 2011 – 12:35 am

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 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.

____________

(CNSNews.com) – Rep. Louie Gohmert (R-Texas) will not vote for a balanced budget amendment proposal unless it includes a cap on federal spending. However, he is undecided whether the amendment absolutely must require a supermajority of Congress to approve a tax hike for him to support it.

“The most important element is the cap on spending,” Gohmert told CNSNews.com. “If there is no cap on spending, then the balanced budget amendment is a formula for ever- increasing spending and ever-increasing taxing that will just spiral upward and upward again. So there’s got to be included a cap on spending, and best if it’s related to a percentage of GDP. But, absolutely, if there is no cap on spending, I could not vote for it.”

The actual language of the balanced budget amendment that Congress will vote on before the end of the year has not yet been determined. However, many conservatives fear that Republican leaders may agree to vote on a stripped down amendment that requires Congress to balance the budget but does not cap spending as a percentage of GDP or require supermajorities to raise taxes. They fear that an amendment of that nature–which might win the backing of some incumbent congressional liberals–would become a constitutional lever for sustaining big government via ever-escalating federal taxation.

When the Republican-controlled-House approved the cut, cap and balance plan last on July 19 in 234-190 vote, it included a version of the balanced budget amendment to cap federal spending at 19.9 percent of GDP. The GOP originally sought to hold federal spending to 18 percent of GDP.

The version of the balanced budget amendment in the cut, cap and balance plan also required two-thirds majorities in both houses to approve a tax increase. The amendment also would have prohibited deficit spending unless there was a national security emergency or a supermajority of Congress voted for it. On July 22, the Senate voted 51-46 to approve a procedural motion that blocked substantive consideration of the cut, cap and balance bill in that body.

The debt-limit deal reached by President Barack Obama, House Speaker John Boehner (R-Ohio) and Senate Majority Leader Harry Reid (D-Nev.) requires that both houses of Congress give an up or down vote to a balanced budget amendment before the end of the year. However, it does not specify what the language of the amendment would be.

If two-thirds of Congress votes to approve a balanced budget amendment, it would then have to be ratified by 38 states, or three-fourths.

The House passed that debt-limit deal by a 269-161 vote on Aug. 1. Gohmert was one of 66 Republicans who voted against it.

“As far as the supermajority to raise taxes, that’s our preference, but the key element, the most important element is the cap on spending,” Gohmert said. “If there is no supermajority to raise taxes then I’d just have to look at it more closely to see what all was there to see if it was something I could vote for or not.”

Gohmert believes this is a winning issue for Republicans.

“Well, I think it’s like this: We either have a legitimate Balanced Budget Amendment pass with a cap on spending, or I really believe if it does not pass, you will see many of those who voted against it turned out both in the House and Senate in the next election,” Gohmert said. “So I think it’s an either/or. Either people vote for it and it passes, or we have a significant change in the people that are in the House and Senate that voted against it.”

By Everette Hatcher III | Tagged , , , | Comments (0)

Cato Institute:Spending is our problem Part 5

October 20, 2011 – 12:00 am

Uploaded by on Feb 15, 2011

Dan Mitchell, Senior Fellow at the Cato Institute, speaks at Moving Forward on Entitlements: Practical Steps to Reform, NTUF’s entitlement reform event at CPAC, on Feb. 11, 2011.

People think that we need to raise more revenue but I say we need to cut spending. Take a look at a portion of this article from the Cato Institute:

The Damaging Rise in Federal Spending and Debt

by Chris Edwards

Joint Economic Committee
United States Congress

Joint Economic CommitteeUnited States Congress

Added to cato.org on September 20, 2011

This testimony was delivered on September 20, 2011.

Rising Spending Reduces Growth

Let’s take a look at how federal spending damages the economy over the long-run. Federal spending is financed by extracting resources from current and future taxpayers. The resources consumed by the government cannot be used to produce goods in the private marketplace. For example, the engineers needed to build a $10 billion government high-speed rail project are taken away from building other products in the economy. The $10 billion rail project creates government-connected jobs, but it also kills $10 billion worth of private activities.

Indeed, the private sector would actually lose more than $10 billion in this example. That is because government spending and taxing creates “deadweight losses,” which result from distortions to working, investment, and other activities. The CBO says that deadweight loss estimates “range from 20 cents to 60 cents over and above the revenue raised.”19 Harvard University’s Martin Feldstein thinks that deadweight losses “may exceed one dollar per dollar of revenue raised, making the cost of incremental governmental spending more than two dollars for each dollar of government spending.”20 Thus, a $10 billion high-speed rail line would cost the private economy $20 billion or more.

The government uses a “leaky bucket” when it tries to help the economy. Stanford University’s Michael Boskin, explains: “The cost to the economy of each additional tax dollar is about $1.40 to $1.50. Now that tax dollar … is put into a bucket. Some of it leaks out in overhead, waste, and so on. In a well-managed program, the government may spend 80 or 90 cents of that dollar on achieving its goals. Inefficient programs would be much lower, $.30 or $.40 on the dollar.”21 Texas A&M University’s Edgar Browning comes to similar conclusions about the magnitude of the government’s leaky bucket: “It costs taxpayers $3 to provide a benefit worth $1 to recipients.”22

The larger the government grows, the leakier the bucket becomes. On the revenue side, tax distortions rise rapidly as marginal tax rates rise.23 On the spending side, funding is allocated to activities with ever lower returns as the government expands. Figure 4 illustrates the consequences of the leaky bucket. On the left-hand side, tax rates are low and the government delivers useful public goods such as crime reduction. Those activities create high returns, so per-capita income initially rises as the government grows.

As the government expands further, it engages in less productive activities. The marginal return from government spending falls and then turns negative. On the right-hand side of the figure, average income falls as the government expands. Government in the United States — at 41 percent of GDP — is almost certainly on the right-hand side of this figure. In a 2008 book on federal fiscal policy, Professor Browning concludes that today’s welfare state reduces GDP — or average U.S. incomes — by about 25 percent.24 That would place us substantially to the right in Figure 4, and it suggests that major federal spending cuts would boost incomes over time.

19 Congressional Budget Office, “Budget Options,” February 2001, p. 381.
20 Martin Feldstein, “How Big Should Government Be?” National Tax Journal, vol. 50, no. 2, June 1997, pp. 197-213.
21 Michael Boskin, “A Framework for the Tax Reform Debate,” in Frontiers of Tax Reform, ed. Michael Boskin (Stanford: Hoover Institution, 1996), p. 14.
22 Edgar K. Browning, Stealing From Ourselves: How the Welfare State Robs Americans of Money and Spirit (Westport, CT: Praeger Publishers, 2008), p. 179.
23 Deadweight losses rise more than proportionally as tax rates rise.
24 See Edgar K. Browning, Stealing From Ourselves: How the Welfare State Robs Americans of Money and Spirit (Westport, CT: Praeger Publishers, 2008), p. 188

By Everette Hatcher III | Also posted in Cato Institute | Tagged , , , , | Comments (0)

Obama’s Budget Would Reduce National Defense Spending

October 19, 2011 – 11:42 am

Obama’s Budget Would Reduce National Defense Spending

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.

Adequate funding for the core defense program is crucial for the military to fulfill its constitutional duty to provide for the common defense. Yet defense spending has fallen below its 45-year historical average despite ongoing operations in Iraq and Afghanistan.

DEFENSE SPENDING AS A PERCENTAGE OF GDP

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Obama's Budget Would Reduce National Defense Spending

Source: White House Office of Management and Budget.

Chart 8 of 42

In Depth

  • Policy Papers for Researchers

  • Technical Notes

    The charts in this book are based primarily on data available as of March 2011 from the Office of Management and Budget (OMB) and the Congressional Budget Office (CBO). The charts using OMB data display the historical growth of the federal government to 2010 while the charts using CBO data display both historical and projected growth from as early as 1940 to 2084. Projections based on OMB data are taken from the White House Fiscal Year 2012 budget. The charts provide data on an annual basis except… Read More

  • Authors

    Emily GoffResearch Assistant
    Thomas A. Roe Institute for Economic Policy StudiesKathryn NixPolicy Analyst
    Center for Health Policy StudiesJohn FlemingSenior Data Graphics Editor

By Everette Hatcher III | Comments (0)