The Real Fiscal Problem
The problem with the federal budget is not too much spending. It is too little tax income.
Now I hate taxes as much as anyone. Also, being born in Texas, I am more skeptical of government rationales than most people.
And having worked many years for five federal agencies, I agree there is some wasteful spending, un-needed spending and even unnecessary agencies.
But facts are facts.
Our annual federal budget over the last five years has ranged from 3.5 to 3.8 trillion dollars in 2012. Not billions—trillions! The federal deficit each year, from 2009 to the present, has ranged from 1.4 to 1 trillion dollars in the 2012 fiscal year, according to www.usfederalbudget.us. Believe it or not, the annual federal deficit of more spending over less income has gone down most years during the Obama presidency!
The federal deficit for year 2013 is projected to be just 900 billion dollars. Yeah. No more trillion dollar annual borrowing events.
Pretty depressing when one can celebrate a slight drop in what is truly a massive shortage of federal income for the planned federal spending. Oh, and realize that a lot of that federal spending goes to the 50 states and territories in the form of grants and contracts.
The bottom line is that since the last year of the Bush presidency, this nation has been borrowing more than one trillion dollars a year just to run the programs that Congress has already approved. No new departments. No new agencies to speak of. And until this past January, no new taxes on any person or any corporation have occurred, thanks to the “No New Taxes!” pledge of the Republican Party, in Congress and in too many state legislatures.
What the national media do not tell you and me and our neighbors about the current standoff over the Sequestration spending cuts is that this federal borrowing avalanche was artificially created.
By Congress. And mainly by Republicans. Who then turn around and complain that “the problem in Washington is too much spending, not too little income” to paraphrase Senate Minority Leader Mitch McConnell of Kentucky. He’s a Republican, by the way.
In short, we are borrowing our way to national bankruptcy and growing “real” inflation for real people in the costs of food, utilities, education and housing thanks to two factors that changed America from running an annual federal budget surplus in 2001 to running years of federal budget deficits.
One factor is the “Bush tax cuts” which cut taxes for everyone, and especially for wealthy people and corporations, without growing much in the way of jobs, or drawing in new industries to the shores of our nation. The idea that “cutting taxes on the job creators causes new jobs for people” is a bankrupt idea that is disproven by the anemic job growth of the eight years that George W. Bush was the American president.
Those tax cuts have starved the American Treasury of an estimated $700 billion to one trillion dollars in tax revenue each year since Bush was president. That amounts to a lot of money not available to fund the budget. That lack of money led to the stupendous annual borrowing of money by the feds that we have seen in the last five years.
The second factor is the federal money spent on the wars in Iraq and Afghanistan. This nation has spent at least one trillion dollars on those two wars to date, according to most news accounts.
None of that spending was paid for by tax increases or budget cuts in other agencies with their money going to the Defense Department.
So how does America borrow less? How does America stop the increase in our national debt, currently at $17 trillion? And how do we encourage more jobs that pay a living wage for all our people?
Well, one answer is for President Obama and the Congress to reverse the recent Fiscal Cliff deal that made the Bush tax cuts permanent for everyone who earns less than $450,000 a year.
While Republicans paint that tax deal as a major tax increase, it was in fact a small, small return to the tax rates of the late 1990s, when America had both dynamic job growth and a shrinking federal deficit each year.
Those tax rates actually gave this nation two years of a “budget surplus” where annual tax and fees income exceeded annual federal spending on all agencies and programs.
Oh, and no Republican presidency or Congress has ever produced a balanced budget, let alone a budget that produced an income surplus.
Another answer is to selectively increase taxes on corporations and on the super rich making more than $1 million. Even upper middle income people who earn more than $113,000 a year need to pay more.
Such people pay zero Social Security and Medicare taxes on all the money they earn above $113,000. It’s called a payroll cap. But why cap this tax? Why should anyone not pay Social Security taxes on all of their income from any source?
Finally, we could impose an Alternative Minimum Tax on millionaires, billionaires and corporations so that none of them pay less taxes than their secretaries, or pay no taxes as is the case with more than 200 corporations.
Yes, we need a tax code overhaul. We need to overhaul taxes to ensure that the super-rich and the super-powerful multinational corporations, and even we folks in the middle class, are paying their fair share of taxes in order to keep this nation reigning as “America the Beautiful.”