Federal Spending Out of Control

If you have read my columns, you know that the issue affecting our country is not a lack of revenue, it is excessive government spending, that has taken a substantial shift upward in the past four years.  We have a Federal Government that does not budget, so We the People have no visibility into planned expenditures.  We have an administration that is only focused on ideology and not interested in solving our fiscal problems.

In my attempt to continue to educate all on the disaster that is Federal Spending, here is another graphic clearly showing the issue.  As you will note, despite what the Administration claims, facts are a stubborn thing.  As Mitt Romney told the President - "While you are entitled to your own opinion, Mr. President, you are not entitled to your own facts.

Using data from the Office of Management and Budget, I prepared the chart below that clearly shows that Federal Spending is the real problem.

 

 Take a look at the last four years, clearly there has been a huge jump in expenses relative to other years.  While there was a drop in revenue, this is clearly due to the recession, as business and individuals all made significantly less than they had in prior years.  But clearly the increase in spending far exceeds the percentage decline in revenues.

In 2009, Federal Revenues were down 17.5%, but Federal Spending increased 46.8%!!  Federal Revenue only declined in 2009, since then, revenues have continued to rise, averaging an increase of 3.3% for the last three years.

While one could argue the additional Federal Spending might have been needed to help get us out of the Great Recession, it clearly should have come back down in subsequent years.  Clearly that did not happen, and as a matter of fact, the President's own plan shows Federal Spending continuing at the elevated levels and increasing every year for the next 10 years!! 

The orange bars show Federal Spending from 2013 to 2022, clearly there is no plan by the President to cut spending, in fact under the President's plan Federal Spending will increase from $3.5 trillion in 2012 to $5.8 trillion in 2022.  This equates to an average increase in spending of over 15% per year!!

 

Revenues are represented by the purple bars and they do show an increasing trend, but that assumes that the economy grows every year at a 5% pace or higher.  We are definitely not going to meet that target in 2012 and the plan for 2013 is less than 5% also, so we are already starting out in the hole.

The most disturbing part of this graph is the fact that this Administration plans to run deficit budgets for the next 10 years.  Under this plan, the Administration is projecting the we will spend another $6.8 trillion more than we collect in revenues over the next 10 years.  This is totally unacceptable and we deserve better.  Our children and grandchildren will be the ones to suffer if this becomes reality.  We will be the first generation in history to provide a economic reality that is worse for them than we had.  We should all be embarrassed by this.

Since the Democrats have failed to approve a budget the last 4 years, it is clear that this is probably the best case scenario and not the most likely.

You can effect the debate.  Write your elected officials and tell them to get spending under control!

 

We have a SPENDING problem

Back in July of 2011 I wrote about the Spending Problem facing our county.  It is amazing how similar the talking points of the President and Democrats are today compared to 16 months ago.  This should come as no surprise as this is the party that fails to create and pass a budget, so how could they possibly know what the financial condition of our country is.  If this was a public company the board and all of the senior management would be fired.  But we have people so clueless about the economy that they not only didn't fire these clowns, they put them all back in office. 

The definition of insanity is doing the same thing and expecting different results.  What does the public think is going to happen.  We have had four years where the Senate has failed to pass a budget and not surprisingly we have had four consecutive years with trillion dollar budget deficits.  Now we face a fiscal cliff and the President and the Democrats continue to spout the same campaign rhetoric we have heard for the past 2 years -Tax the Rich.  Well I, and others have shown that the proposal made by Obama to increase taxes on the rich will do nothing to reduce the deficit or fix our fiscal issues.  In fact, that tax on Millionaires, (those making more than $250,000), will only fund the Federal government for 8 days.

We need real expense reductions, not political reductions.  Politicians are famous for claiming that spending is decreased when the rate of increase from one year to the next is lower.  Most normal people would classify a decrease as actually spending less on a program in the current year than you did the prior year.

Now we hear from the President and top Democratic leaders that entitlement programs are off the table.  Well, when you consider that Defense, Social Security, Medicare & Medicaid and Welfare programs make up 74% of the Federal Expenditures and interest on our ever growing debt accounts for another 6%, not considering these programs leave you very little opportunity to cut costs.

 

We heard from several Democrats today, that the Republicans need to present a plan on what expenses they would cut.  Well, that was done long before we were in this crisis state.  Remember, Paul Ryan presented a plan last year to fundamentally deal with this fiscal crisis and all the President did was call him names.  The President was also presented with another plan prepared by Simpson-Bowles that presented yet another bi-partisan approach to dealing with the fiscal crisis.  And what did our President do with the plan -NOTHING!!  So far he has yet to produce any credible plan in writing that attempts to deal with the fiscal crisis.

It is now the President's turn to present the American people with his solution on how we stop spending $1.5 trillion more than we create in revenue each year and how he plans to bring down the massive Federal Debt that has grown by $5 trillion since he has been in office.  This country needs leadership on this issue and publicly criticizing the Republicans and others who want to see real reform is unacceptable.  This President needs to lead.

He wanted a second term, well now he got it.  The question is, what will he do with the opportunity?  Based on his past performance, I am not optimistic that any real progress will be made to deal with this fiscal crisis.  We might avoid the fiscal cliff for now, but we will continue to spend and continue to claim the rich don't pay enough.  

As I stated in the beginning of this post, expecting this President and these politicians in Washington to do anything else would be insane.

Federal Spending - No Decline in Sight

I have spent the last two columns talking about the inadequacy of the “tax the rich” plan of the President. As I have stated numerous times, we do not have a revenue problem, we have a spending problem. To that point, look at the graph below, showing total federal receipts since 1980.

While we did see a drop in revenues in 2008, due to the financial crisis, we are now back to pre-crisis receipt levels. In fact, federal receipts in fiscal 2011 were actually more than 2005 and just shy of 2006 levels. Not bad for an economy that is coming out of a severe recession and operating in an anti-business environment.


Now if we flip to the other side of the ledger, you will see, that despite declining revenues, there was no corresponding decline in Federal spending. In fact, spending in 2008 increased to $3.5 trillion and has stayed there and based on the President’s own budget it is only going to continue to climb from there. In fact, by end of the President’s next term, spending is expected to exceed $4.5 trillion, $1 trillion more than we are already overspending today.

As you can clearly see, from the table below, the President intends to continue spending more they we can afford, which will put the government in debt by an additional $4 trillion by the time Obama leaves office. This is clearly a President who is not serious about solving our problems.

The only way we can solve our fiscal problems is to stop spending money we don’t have. Unless and until our elected leaders acknowledge this, there is no hope for this country.

Presidential Math

The President has made it pretty clear that he wants to solve the fiscal crisis by increasing taxes on the rich.  In my last post I clearly showed that millionaires (people making $250,000 or more), pay over 50% of all personal taxes.  While I totally agree that we definitely are going to need more revenue, more importantly, we need REAL expense reduction.  The government has grown far beyond our ability to pay.  But that will have to wait for another column.

Today's post is to expose the ridiculousness of the President's proposal to raise taxes on the rich.  Again, please remember that if your household makes more than $250,000 a year you are a "millionaire", according to the President.

So the President has proposed raising tax rates on "millionaires" from the current top rate of 36% to 39.6%.  This combined with other changes to the tax code would result in $849 billion in new revenues over 10 years.  What the President and media fail to mention when they quote these figures is that the budget deficit just last year was $1.1 trillion.  So $849 billion over the next 10 years doesn't even cover the deficit this administration created just last year alone.

So instead of playing governmental games with these figures let's look at what this means annually.  The President's own budget for 2013 shows that the government will spend $3.8 trillion and plans to collect $2.9 trillion in revenues.  So much for a balanced budget.  If we stay on budget we will add another $900 billion to the deficit.  So the extra $84 billion that we plan to get from the "rich" in 2013 will only cover a very small portion of the planned deficit.

In fact, in October, the first month of the new fiscal year for the government, the deficit is already $120 billion!!  So we have already exceeded the amount we would have collected from the rich.

We have a spending problem, not a revenue problem.  Until politicians are willing to accept this reality we have no hope of solving our fiscal issues.

Tax the Rich - They Need to Pay their Fair Share

The President and the accomplice media continue to say the solution to all of our fiscal problems is to simply tax the rich.  The President claims the the rich need to pay their fair share.  What the President fails to provide is any facts when he reads from his teleprompter and the media is no better.  There was a time when the media was the great equalizer in this country, they actually investigated stories, dug into details and presented their findings relative to what was being claimed. 

Alas those days are long gone and now it is up to us to do the homework and point out the facts.  While everyone is entitled to their own opinion, they are not entitled to their own facts.

Let's start by examining the constant cry from the President for the rich to pay their fair share.  So first we have to agree on what is considered rich?  If you listen to the President that is hard to tell because in his first campaign, and his first years in office, the rich were considered those making over $1 million a year.  Now it appears as though the definition of millionaires has been changed to those making $250,000 or more.  Just listen to the President, he constantly says millionaires need to pay more in taxes and then you see what he proposes and it is clearly aimed at those making $250,000 or more.  So are we talking about millionaires or not?

Despite the rhetoric of the President, for purposes of this column we are going to assume the rich are defined as those individuals making at least $250,000 per year.  So, how much in taxes does this group pay?  To find this out one simply needs to go to IRS.GOV.  There are a number of tables you can view that show detailed tax data.

In 2009, the last year for which detailed data is available, people with Adjusted Gross Income of $250,000 or more paid $434 billion in taxes.  In total the government collected $865 billion in tax revenues from individuals.  So the group that we are so worried about paying their fair share actually provided over 50% of the total tax revenue from individuals. 

Below is a break down of the information by each income group.

As you can clearly see from the tables above, people earning over $250,000 made up less than 2% of the total tax returns in 2009, but they paid 50% of all the taxes.  So, if this isn't fair what should this be - 75%, 90%?  Also notice that people earning over $1 million are paying on average, just under $750,000 in taxes, while those earning $250,000 or more are paying nearly $100,000 in taxes on average.  Plus, the effective tax rates for those earning over $250,000 are significantly higher than those making less than $250,000.

You would never know this from the media.  They always conveniently forget to mention facts such as theses as they fail to fit the liberal narrative.  This is not about paying your fair share, it is clear from the data that the more you make the higher percentage of tax you pay.  If there is an argument if should be from those making $250,000 -$499,999 as they have the highest effective tax rates and now Obama wants to make them pay even more. 

Remember also, that this only shows individual income tax, not state, local, sales, social security or medicare taxes.  When those are added in these high income tax payers are nearly 50% in taxes already. 

We need to stop playing politics and start solving the problems in this country.  The only way we do this is if we are honest about what is really going on.  The only way we do this is by sharing the FACTS.

Photo ID - OK in Madison for Bus Passes, but not Voting

Our dear friends in Madison have been very vocal about their opposition to voter id, because they claim it disenfranchises the poor and elderly who don't have a driver's license.  They claim that to require someone to show a photo id in order to vote is a huge burden to a large segment of the population, despite the fact that free photo ids are provided in the voter id bill passed and signed into law.

So isn't ironic that these same liberals who can't stand the thought of showing an id to vote have no problem requiring that you show a photo id to use a bus pass.  Talk about hypocrites!!  So the exact population that they say would be disenfranchised by requiring an id to vote, now need to get a photo id just to use a bus pass.  But in the case of Madison, they don't offer to pay for the photo id if you don't have one.  You can't make this stuff up.

So why do they want to require a photo id for using a bus pass?  To stem the fraudulent use of bus passes.  Wow, what a concept, actually validate you say who you are before you use the bus pass.  Kinda like asking you to validate who you actually are before your vote.  If the photo id is such a great way to ensure the bus pass is only used by the rightful owner, than why the fuss over showing a photo id to vote?

You can answer that question yourselves.  By their own actions, the liberals in Madison have shown that the photo id is an effective deterrent to fraudulent bus pass use and therefore, would be an equally effective deterrent to voter fraud.  And since they are requiring people who ride the bus, who presumably don't have licenses, to show an id, it is no more of a burden for these people to show that same id they use for their bus pass when they vote.