Archive for the ‘Spending’ Category

Did you know you pay more in taxes than for all your basic necessities combined?

Friday, April 8th, 2016

Originally published at Rare

It’s that time of year again: Tax Day is just around the corner! And while some will get a small portion of their money back in the form of a refund, taxes will, for most of us, be the biggest expense we pay this year.

According to the non-partisan Tax Foundation, “Americans will collectively spend more on taxes in 2016 than they will on food, clothing, and housing combined.” This is a good reminder that middle- and working-class Americans bear the brunt of providing governments with their revenue.

The myth that we can simply “tax the rich” to fund government operations at their current level is just that: a myth.

So just how big are these tax bills? “Americans will pay $3.3 trillion in federal taxes and $1.6 trillion in state and local taxes, for a total bill of almost $5.0 trillion,” explains the Tax Foundation.

That amounts to 31 percent of the entire nation’s income!

Of course, our friends on the left believe that taxation is the price we pay for a civil society. And as a limited government-supporting libertarian, I agree with this, albeit to a very small extent. But right now, it doesn’t seem like taxpayers are getting much of a return on our investment.

Given the pervasiveness of corporate welfare—politicians giving their cronies special favors at our expense—the tax burden middle- and working-class Americans bear seems disproportionate and unfair.

And that’s in addition to the basic fact that competition in a market economy almost universally yields better products and results for people compared to what we get from government monopolies.

As this graphic created by the Tax Foundation shows, we really do pay a lot in taxes. And because middle-class wages have stagnated for over a decade, taxation has become ever-more burdensome:

So as Tax Day approaches and you get your refund (unless you’re an independent contractor and you get to write a check), remember that you’re getting back a tiny portion of what the government took—and it’s more than you’ll pay for the basics you need.

Doesn’t that kind of make you want to throw some tea into a harbor?

This report confirms that our national debt is unsustainable and politicians can no longer ignore it

Sunday, April 3rd, 2016

Originally published at Rare

In an election cycle dominated by talk of Donald Trump’s yuge wall, it seems the last thing on many voters’ minds is fiscal responsibility.

Yet whether or not our national debt is at the forefront of political discussion, the federal gravy train chugs on and the consequences pile up. Unfortunately, the situation is bad enough that it’s not just staunch budget hawks concerned about the fiscal cliff the U.S. is careening toward.

Writing at the Wall Street Journal, David Wessel of the Brookings Institution – hardly a bastion of right-wing extremism – said, “[T]he trajectory of the debt is worrisome for one inescapable reason: When you owe a lot of money and interest rates rise, your interest tab mounts.” As he explained, current interest payments on our $19 trillion-and-counting national debt amount to slightly more than 6% of federal expenditures.

And while 6 percent isn’t an eye-popping number on its face, bigger trouble is brewing on the horizon. As Wessel explained:

“[The] latest Congressional Budget Office [CBO] baseline projections suggest that, without new tax or spending legislation, interest will account for more than 13 percent of all federal outlays in 2026.”

This will occur in part, says Wessel, because interest rates, which have been kept artificially low for some time as a result of Federal Reserve policy, are expected to rise in the future.

“CBO expects the average yield on 10-year Treasury notes, now around 1.9%, to climb to 4.1% over the next decade,” he noted. “There will also be more debt on which to pay interest because the government will be borrowing each year to cover the deficit.”

This is a problem because, as Wessel noted, “The federal debt … is huge by historical standards: bigger as a share of the economy than at any time in U.S. history except for World War II.”

But post-World War II, after an obviously chaotic period, the government did manage to get its act together as far as spending was concerned.

“In 1944, government spending at all levels accounted for 55 percent of gross domestic product (GDP),” wrote The Mercatus Center’s Cecil Bohanon. “By 1947, government spending had dropped 75 percent in real terms, or from 55 percent of GDP to just over 16 percent of GDP.”

Today, the political will to enact reforms that would yield a similar outcome appears to be severely lacking.

What does this all mean for the future?

As Wessel explained, “Congress and the president … or his successor … could raise taxes or cut spending. That would mean less debt and thus lower interest payments.”

That could work, right? Not so fast.

“[T]he latest CBO scoring of President Obama’s budget suggests that even if Congress accepts each of his tax and spending proposals, interest in 2026 still would account for 12% of federal spending.”

Ouch.

“That’s a lot of money,” added Wessel. “[M]ore than the White House projects for annually appropriated spending in 2026 by all government agencies combined outside of the Pentagon.”

Talk about unsustainable! And the way this presidential election is going, it’s difficult to believe the next occupant of the White House will prioritize balancing the budget.

Sadly, like much about the current state of politics, this is liable to make a fiscal conservative miss Senator Rand Paul’s contribution to the presidential discourse. Paul, and to his credit, Ohio Governor John Kasich, have truly been the only two candidates this cycle to focus on balancing the federal budget.

Paul is fond of saying, “The greatest threat to our national security is our debt.” The Congressional Budget Office is, if indirectly, acknowledging this point. When debt payments crowd out other priorities, national security, along with countless other functions, could also be crowded out.

It’s time for Washington politicians to heed this CBO report, harness their latent common sense, and get serious on spending. Our nation’s future depends on it.

Former U.S. comptroller says national debt is three times higher than we’re told

Wednesday, November 11th, 2015

Originally published at Rare

Dave Walker, who served as the U.S. comptroller general under presidents Bill Clinton and George W. Bush, explained recently that our national debt is actually three times higher than the generally cited $18 trillion figure.

As reported by The Hill, Walker joined “The Cats Roundtable,” a radio show hosted by John Catsimatidis on New York’s AM-970, for an interview that touched on the outrageous nature of our government’s spending problem.

“If you end up adding to that $18.5 trillion the unfunded civilian and military pensions and retiree healthcare, the additional underfunding for Social Security, the additional underfunding for Medicare, various commitments and contingencies that the federal government has, the real number is about $65 trillion rather than $18 trillion,” said Walker.

“And it’s growing automatically absent reforms,” he added.

Walker’s comments were made in the wake of a controversial budget deal that was squeezed through Congress in the early morning hours of October 30th. The deal, which received little congressional opposition absent an attempt to block it by Rand Paul, ultimately passed the Senate 63-35. It had previously passed the House 114-74.

The bill, called The Bipartisan Budget Act (BBA) of 2015, busted through the spending caps known as the sequester, which were put in place as part of a deal to raise the debt ceiling in 2011. According to an analysis of the legislation conducted by the Heritage Foundation, the BBA’s repeal of sequestration leads to an increase of $50 billion in the 2016 fiscal year and $30 billion in 2017.

The BBA, which also raised the debt ceiling until March of 2017, alleges that it will offset $75 billion to pay for the new spending, but 44 percent of that will not occur until the 2025 fiscal year. This essentially means, given Congress’s record, that most of the increases will not in fact be offset by cuts elsewhere. After all, we’ve already abandoned ship on the 2011 sequester a mere four years later.

It’s this very insanity that led Rand Paul to the senate floor several times, including as late as 2 AM before the deal was about to pass, to express his dismay. “The establishment in Washington is completely and utterly tone deaf to the way America feels about this,” said a visibly fired-up Paul. Paul’s speech, which was shared on Facebook by Senator Mike Lee, has been viewed by over 25 million people.

“I defy you to drive outside the Beltway, stop at a gas station, stop at a supermarket, and ask the first person you see, ‘Do you think we should increase the debt and increase spending at the same time? Do you think we should increase the debt and increase the debt ceiling with an unspecified amount?’” Paul of course, concluded that any average person, regardless of party affiliation, would find the proposition absurd.

Paul admonished his colleagues saying, “Right and left, you’re all guilty of it. You’re going to take money out of the Social Security fund and you’re going to spend it on an immediate fix. And by fix I mean not fixing the program, I mean what a junkie does. A junkie that’s addicted to spending. That’s the problem here, we’re addicted to spending.”

John Boehner, who has since resigned from Congress, referred to the BBA as a “barn clearing,” leaving his successor House Speaker Paul Ryan to run the ship in a way he sees fit moving forward. A big first test for Ryan will be how he deals with the ongoing appropriations process, with yet another deadline to avoid a government shutdown coming up on December 11th.

The craziness of jumping from one bungled “continuing resolution” to the next, constantly inviting a government shutdown, is another congressional spending process Rand Paul has taken to the Senate floor to criticize. Last month, surrounding controversy over whether Republicans would try to defund Planned Parenthood, Paul said:

“All spending is set to expire automatically. This is the perfect time to turn the tables; to tell the other side that they will need sixty votes to affirmatively spend any money. It doesn’t have to be sixty votes to stop things; all spending will expire. And only those programs for which we can get sixty votes should go forward.”

Whether Paul Ryan will push to normalize the process in the House and Mitch McConnell will follow in the Senate remains to be seen. Fiscal conservatives such as Senators Paul and Lee however, will undoubtedly continue to clamor for change in both the appropriations and spending control processes.

Marco Rubio’s push to ban online gambling reeks of cronyism

Wednesday, October 28th, 2015

Originally published at Rare

Marco Rubio has seen a slight boost in the presidential polls recently, leading or tying Jeb Bush in several key states. The senator is increasingly seen as a potential consensus candidate for Republican establishment forces to unite around if Bush continues to fail in his attempt at pushing Trump and Carson out of their current frontrunner limelight.

In fact, one of the Republican Party’s most prolific donors is reportedly courting Rubio. Sheldon Adelson, the casino magnate with a net worth of $25 billion, recently met with Rubio and was said to be favorable toward lending his support. As Politico’s Alex Isenstadt noted, an endorsement from the billionaire could come at any moment now.

Adelson is known for his extremely hawkish national security views that line-up well with Rubio’s. But their relationship goes beyond affection forneoconservative foreign policy, extending into territory that can be rightfully criticized as cronyism.

As Rare previously reported, Adelson has long pushed a bill called the Restore America’s Wire Act (RAWA), aimed at banning online gambling. This bill, which would be a boon to Adelson’s posh casinos, was introduced in Congress by two presidential candidates who have earned financial support from Adelson in the past: Lindsey Graham and Rubio.

On Wednesday, just hours before the third Republican presidential debate, a hearing was held on Capitol Hill in support of RAWA. As a press release sent by the Coalition to Stop Internet Gambling explained, the group aims to institute a federal prohibition on an activity that conservative critics believe should be left to states.

Given that a hearing on a bill he has sponsored was held on was held the same day as a Republican debate, perhaps Rubio should be asked tonight why he wants a federal ban on online gambling—something a majority of Americans opposes?

Perhaps Rubio should be asked to address the fact that he’s engaged in an act of cronyism disguised as a pro-family measure?

After all, Adelson and his primary business ventures don’t exactly represent paragons of virtue from the perspective of social conservatives, who typically oppose gambling across the board. Conservatives who are interested in promoting free market measures ought to think twice about Rubio’s alleged commitment to their interests.

In addition to doing what appears to be Adelson’s bidding with RAWA, Rubio has long supported sugar subsidies, based on the absurd premise that they’re necessary for “national security.” Yes, really.

As Windsor Mann explained at National Review:

“If we eliminate our sugar subsidies first, Rubio warned, ‘other countries will capture the market share, our agricultural capacity will be developed into real estate, you know, housing and so forth, and then we lose the capacity to produce our own food, at which point we’re at the mercy of a foreign country for food security.’ Let’s try to untangle this. If we get rid of sugar subsidies, Americans will turn their sugar farms into condominium lots and start buying sugar from foreigners, who will starve us until we surrender to ISIS. Or something like that.”

If Rubio continues to rise in the polls, his record (and chronic absenteeism in the Senate) ought to be further scrutinized, particularly by fiscal conservatives who value individual freedom. After all, Rubio’s willingness to do the bidding of the casino and sugar lobbies represents the kind of cronyism the tea party was originally founded to fight.

This one-time tea partier is now fighting for crony capitalism alongside Nancy Pelosi

Tuesday, October 6th, 2015

Originally published at Rare

Remember the Export-Import Bank? It’s long been a federally funded, New Deal relic that subsidizes giant businesses on the taxpayers’ dime.

In a feat that’s rare in Washington, Ex-Im hasn’t been reauthorized in the approximately three months since its doors were closed as a result of a congressional failure to renew its charter thanks to tea party opposition.

Despite its erstwhile status, the specter of this corporate welfare boondoggle looms large—particularly over K Street’s lobbying firms, which would like nothing more than to see it resurrected. This is why they’ve lavished House Financial Services Committee member Stephen Fincher with donations to fuel his reelection. In fact, according to data from the Federal Election Commission, 99 percent of his campaign money comes from corporate political action committees.

And Fincher, despite being swept into Congress on the anti-corporatist tea party wave of 2010, has obliged. As the Washington Examiner’s Tim Carney reports:

Fincher, once an opponent of the Export-Import Bank —a federal agency that subsidizes foreign buyers of U.S.-made goods — now is trying to undermine his party’s leadership by teaming up with Nancy Pelosi and her party in order to reauthorize Ex-Im Bank as President Obama and his big donors in the business lobby have demanded.

This is quite a turnaround for Fincher, who said during his first run for Congress:

I may not be a polished politician, but as a lifelong farmer I know that most problems can be solved with a little common sense. When I’m elected, I’ll put that common sense to work for everyday Tennesseans, not the special interests. Trillion-dollar bailouts, bloated budgets and boondoggle spending packages aren’t working, at least for my friends and neighbors.

Fincher was right about one thing: trillion-dollar bailouts aren’t working for his friends and neighbors. But neither is he. He’s only pulled in two donations, totaling a mere $750, from his home district in west Tennessee. His 148 other donations have been from lobbying firms and big companies that leverage corporate welfare to keep their competitors out of the market.

This just goes to show how easy it is for power to corrupt. The tea party swept over Congress just six years ago, but it didn’t take Fincher long to sell out. The incentives our representatives face in Washington not only encourage this behavior; they make it virtually irresistible.

Hopefully, Fincher and Pelosi will fail in their quest to reauthorize a federally funded bank that doles out favors to the politically connected, but it will likely take the kind of organized grassroots pressure that stopped Ex-Im’s usually automatic reauthorization in the first place. Although many Republicans support Ex-Im, past leadership compromised with more conservative members on this matter. The bank’s fate under a new House speakership, the details of which are playing out this week, remains to be seen.