Friday, January 28, 2011

Blow-Hard Republicans and Federal Budget Facts


It's quite a treat to watch Republicans (sorry, Tea Party-ers) this year. The first big win of course came last year when the Democrat-controlled Congress voted to extend all tax cuts from 2001, including approx. $700 billion for tax brackets above $250K.

Low and behold, here come the deficit numbers for 2011, and estimated $1.4 trillion! How did this happen? Had Democrats stood there ground and only extended the tax cuts for middle and lower incomes, one could presume the deficit would only be about $700 billion. Better yet, let all the tax cuts expire (with the exception of a few credits) and voila virtually no deficit.

Blame it on health care reform and Social Security...


Because people have an attention span of about 43 seconds, Republicans are able to convince a large number of people that the health care reform passed last year is an overbearing burden on the federal budget. In fact, as reported by every news outlet, over 10 years the health care reform legislation actually lowers the deficit. I don't really care for how it does it, but it does (barring any changes that will most likely come).

And what is with all the Social Security defecit crap. Social Security is a completely separate budget item. It currently runs a modest surplus and is not counted in general deficit numbers. As such, Social Security reform would not change the deficit projections for this year or any year. Is reform necessary? Sure, but using the current budget deficit as a catalyst is deceptive.

Now for the truth...


Medicare and Defense spending...

Together, Medicare and Defense eat up approximately 42% of the budget. Medicare more or less pays for itself although it does run deficits. Defense spending while necessary, should not be this large. Veterans affairs is a separate budget item in case you were curious.

Defense contracts for Cold War technology is probably the dumbest thing we could spend money on. Our current military conflicts are close contact, ground operations that need specialized field equipment, not long-range bombers. Spend money on homegrown forces and not Xe (AKA Blackwater) mercenaries.

Tax Increases...

Nobody wants to say it, but working people in this country don't pay enough taxes. For industrial western democracies, citizens of the United States has an inordinately low tax burden. Partly because of tradition, but mostly because of political flaccidity. Federal expenses (not all good mind you) have consistently gone up from year to year, but actual tax rates have decreased. Not that we haven't had a few tax hikes in the last 30 years, but not enough to offset. Real tax reform should minimally include more/higher tax brackets, elimination of corporate taxes, increase in dividend taxes, and removal of the Social Security cap. It's a painful pill to swallow, but it's been coming for years.

Drug War...

It's not a huge budget item, but the cost of the "War on Drugs" is more than just outlays for DEA agents. There is a human cost that we cannot possibly put a price on, not to mention the burden on state and local governments.

Summary...

The Federal Budget is out of control... actually it's out of balance. We need to sort out our priorities and raise revenues to meet our needs. The Tea Party notion of lower taxation and more minimal government is a noble one, but really impractical when taken line by line. We need common sense and reasonable discord, two things we won't see from the current Congress.