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The Trouble with Romney

January 21, 2012 by Leave a Comment

Romney is a Mormon but he is also a pragmatist. The trouble with Romney is that he would actually balance the federal budget. There are a lot of citizens that don’t want the government to cut back spending, including wealthy people.

Unions wouldn’t like a Romney presidency, Federal workers wouldn’t like a Romney presidency, anyone receiving government assistance in any form would not like a Romney presidency. Companies that contract with the federal government would certainly not like a Romney presidency.

It is not about Mormonism but that many Americans want to keep on draining the blood out of Uncle Sam until this great country has no more life. Romney would put a stop to that.

And that is the trouble with Romney.

Filed Under: Election, Government, Spending Cuts ·

Occupy Wall Street should Occupy Congress

October 17, 2011 by Leave a Comment

Government handouts go to many people — rich, poor, deserving and undeserving. Most recipients do not tell the government to stop paying them. The banks and auto companies certainly didn’t object to their bailouts.

It appears that a major grievance of Occupy Wall Street is TARP. Occupy Wall Street should be protesting against the politicians that voted for TARP, just like the Tea Party did. The difference between Occupy Wall Street and the Tea Party is that the latter did something constructive about it.

The target of Occupy wall Street should be the politicians that allowed themselves to be influenced by corporate money. Corporations, just like most people, will take government money if it is handed out to them.

The solution then, is to be involved in the political process to change unjust laws, be involved in campaign reform, and adjust government budgets so that taxpayer money is spent wisely.

It may feel good to demonstrate but for lasting change you have to Occupy Congress — by helping elect politicians who want the change that you do.

Filed Under: Bailouts, Government, Politics ·

Occupy Wall Street – Unimaginative Squatters

October 10, 2011 by Leave a Comment

Occupy Wall Street is not a very sustainable demonstration. Squatting on private property, strangers providing showers, dependence on care packages, and using evil capitalist-produced laptops to communicate their “cause.”

I am not impressed. Why not align with the tea party, or promote a balance-budget amendment, or push for a law to ban bailouts, or form your own political party? How about a statement of purpose with a list of grievances with proposed solutions? In short, something constructive.

No wonder many of them are out of work. No imagination.

Filed Under: Protest ·

The Debt Ceiling

July 29, 2011 by Leave a Comment

It is obvious that by not raising the debt ceiling you are in effect simulating how a balanced budget amendment would work. Looking at a chart of the deficit you would see the dollar amount rising at an alarming rate. But now, for several weeks, the river of red ink has been stopped at $14.3 trillion. The line on the chart is holding steady.

This is how a balanced budget would work. You would not be able to borrow any more money. It would be like maxing out your credit cards. Or cutting them up. Now you have to work with the income that you have. And the government still has a lot of income continuously flowing into the treasury.

Now, with a balanced budget law you would have some way to temporarily borrow, perhaps with a super majority. The problem with the federal situation is they habitually do not balance their budget. So in a year that they suddenly have to balance, it is much more difficult. Hence the anxiety to raise the debt ceiling.

However, if you really want a balanced budget now, all you have to do is do nothing.

Filed Under: Deficit, Government ·

All You Have To Do Is Do Nothing

July 14, 2011 by Leave a Comment

Senate leader, Senator Mitch McConnell said yesterday his first choice was to reach a good compromise with Obama. He said that if people do not get their Social Security checks and military serving overseas don’t get paid that Republicans will likely get the blame.

McConnell looks like the statesman on this one. The Democrats sound somewhat silly by insisting that taxes have to be raised (though they could be right.)

People, all of you that want your taxes raised, take one step forward.

Of course spending cuts will cost someone money, so what’s the difference between a cut and a tax increase?

It seems like a short term deal for just a few months while Congress reaches an agreement would work. But Obama said no to that.

I saw an ad on the news last night that said to not cut the social security and medicare benefits we (retirees) have earned. They have a point on social security (solvent with a few tweaks) but not on medicare (not anywhere near solvent). The ad finished with retirees reminding Congress that there “are 50 million of us.” They have a really good point on that one.

Any politician who stops the name-calling and works to try to make a deal is going to look good. There is a lot of room to cut spending, especially as Congress is looking at cuts over 10 years. With that timeline you could phase in cuts for almost anything.

Of course if what you really want are cuts, then don’t raise the debt ceiling. All you have to do is do nothing.

Filed Under: Government, Social Security, Spending Cuts, Taxes ·

Federal Spending Cuts – Farm Subsidies

July 8, 2011 by Leave a Comment

The Federal Government greatly exceeds its budget each year and has a debt of over $14 trillion. It is obvious that spending cuts are essential. This series offers suggestions to help balance the budget.

Farm subsidies transfer the earnings of taxpayers to a small group of fairly well-off farm businesses and landowners. Farm programs result in overproduction, overuse of marginal farmland with the resulting damage to the environment, and land price inflation, which results from subsidies being capitalized into land values.

These programs are subject to bureaucratic inefficiencies, recipient fraud, and congressional pork-barrel politics. U.S. farm subsidies and agricultural import barriers are a serious hurdle to making progress in global trade agreements.

If farm subsidies were ended, and agriculture markets deregulated and open to entrepreneurs, a stronger and more innovative industry would likely emerge having greater resilience to shocks and downturns.

Types of Farm Subsidy

According to the Cato Institute there are eight types of farm subsidy, along with their average annual cost to the government:

  1. Direct Payments ($5 billion.) Intended to be transitional. In most years are the largest source of subsidies.
  2. Marketing Loans ($3.5 billion.) Originally a short-term loan program, today it provides large subsidies by paying guaranteed minimum prices for crops.
  3. Countercyclical Payments ($2 billion.) Provides larger subsidies when market prices are lower. Stimulates excess farm production.
  4. Conservation Subsidies ($3 billion.) Farmers, including those that are retired, are paid not to grow crops.
  5. Insurance ($4 billion.) Federal crop insurance policies are sold and serviced by 16 private insurance companies, acting like a cartel, which receive large federal subsidies for their administrative costs and insurance risks.
  6. Disaster Aid ($1.6 billion.) Farmers often get paid twice by the government, once in subsidized insurance and then again in disaster assistance.
  7. Export Subsidies ($235 million.) A range of programs to aid farmers and food companies in their foreign sales.
  8. Agricultural Research and Statistics ($3 billion.) Most American industries fund their own research and development programs but the agriculture industry is a notable exception.

These eight subsidies total on avaerage $22.3 billion per year but in some years can be as low as $10 billion or as high as $30 billion. Therefore, as soon as possible, all farm subsidies will be eliminated.

Federal Spending Cuts Table

The First Year of implementation may not be the same as a Full Year if cuts are phased in over time. The average saved per year is shown as a 5 Year Average. The 5 Year Total is the amount saved in five years with all cuts implemented.

The table has been updated to reflect the latest posts in the series. Click on the table links to access prior and future posts.

Click ONCE on column headers to sort.

Spending Cuts ($billions) First Year Full Year 5 Year Av. 5 Year Total
TOTALS 334.4 567.6 432.0 2,838.0
Wars in Afghanistan and Iraq 159.3 159.3 159.3 796.5
Mortgage Interest Deduction 13.0 131.0 53.0 655.0
Health Insurance Benefits 28.8 144.0 86.4 720.0
Charitable Contributions 37.0 37.0 37.0 185.0
State and Local Taxes 74.0 74.0 74.0 370.0
Farm Subsidies 22.3 22.3 22.3 111.5

 
After the spending cuts phase in periods are over, the savings over ten years would be $5.7 trillion.

Filed Under: Agriculture, Government, Spending Cuts ·

Federal Spending Cuts – State and Local Taxes

June 23, 2011 by Leave a Comment

The Federal Government greatly exceeds its budget each year and has a debt of over $14 trillion. It is obvious that spending cuts are essential. This series offers suggestions to help balance the budget.

Deductions for state and local taxes, for example income and property taxes, cost the Federal government $74 billion a year, according to the Office of Management and Budget. The plan is to immediately eliminate any deductions for state and local taxes.

Now, with all these deductions going away, it would be wise to offer some temporary relief. This can be done in various ways. A reduction in Federal income taxes is one way, configured so that the maximum relief is offered in the first year that state and local tax deductions end. The Federal rates that are reduced would then rise back to their original levels within five years.

With the debt of the Federal government in such a severe state, my preference is to not offer any relief. However, once most deductions are no more, the possibility of introducing a flat income tax becomes much easier.

Federal Spending Cuts Table

The First Year of implementation may not be the same as a Full Year if cuts are phased in over time. The average saved per year is shown as a 5 Year Average. The 5 Year Total is the amount saved in five years with all cuts implemented.

The table has been updated to reflect the latest posts in the series. Click on the table links to access prior and future posts.

Click ONCE on column headers to sort.

Spending Cuts ($billions) First Year Full Year 5 Year Av. 5 Year Total
TOTALS 334.4 567.6 432.0 2,838.0
Wars in Afghanistan and Iraq 159.3 159.3 159.3 796.5
Mortgage Interest Deduction 13.0 131.0 53.0 655.0
Health Insurance Benefits 28.8 144.0 86.4 720.0
Charitable Contributions 37.0 37.0 37.0 185.0
State and Local Taxes 74.0 74.0 74.0 370.0
Farm Subsidies 22.3 22.3 22.3 111.5

 
After the spending cuts phase in periods are over, the savings over ten years would be $5.7 trillion.

Filed Under: Government, Spending Cuts ·

Federal Spending Cuts – Charitable Contributions

June 16, 2011 by 4 Comments

The Federal Government greatly exceeds its budget each year and has a debt of over $14 trillion. It is obvious that spending cuts are essential. This series offers suggestions to help balance the budget.

Allowing a deduction for charitable contributions costs the Federal government $37 billion a year. This is one of the most useful subsidies the government allows and I am reluctant to suggest that it be eliminated. However, it is one of the few areas that a citizen truly has an option. One is not forced to be charitable.

The plan is to remove all subsidies for charitable contributions in the first year of implementation.

As we work through the ending of all the various tax deductions we can see that the government will realize a great increase in revenue. There is the possibility of using some of the savings realized from the reduction in deductions to lower tax rates.

Federal Spending Cuts Table

The First Year of implementation may not be the same as a Full Year if cuts are phased in over time. The average saved per year is shown as a 5 Year Average. The 5 Year Total is the amount saved in five years with all cuts implemented.

The table has been updated to reflect the latest posts in the series. Click on the table links to access prior and future posts.

Click ONCE on column headers to sort.

Spending Cuts ($billions) First Year Full Year 5 Year Av. 5 Year Total
TOTALS 334.4 567.6 432.0 2,838.0
Wars in Afghanistan and Iraq 159.3 159.3 159.3 796.5
Mortgage Interest Deduction 13.0 131.0 53.0 655.0
Health Insurance Benefits 28.8 144.0 86.4 720.0
Charitable Contributions 37.0 37.0 37.0 185.0
State and Local Taxes 74.0 74.0 74.0 370.0
Farm Subsidies 22.3 22.3 22.3 111.5

 
After the spending cuts phase in periods are over, the savings over ten years would be $5.7 trillion.

Filed Under: Government, Spending Cuts ·

Federal Spending Cuts – Health Insurance Benefits

June 9, 2011 by Leave a Comment

The Federal Government greatly exceeds its budget each year and has a debt of over $14 trillion. It is obvious that spending cuts are essential. This series offers suggestions to help balance the budget.

The Federal government spends $144 billion a year subsidizing health care benefits. For example, employer-provided health care is not taxed. Also, if you have self-employment income, you can take a deduction for health insurance expenses.

My proposal is to end these subsidies, phasing them out over five years. To lessen the initial cost to employees, some of the savings could be used temporally to offset the increase in taxes that will have to paid. I would prefer not to have any temporary subsidies but nevertheless leave it as an option.

This is how the phase out would work:

  • 2012: 20% of health care benefits will now be taxed.
  • 2013: 40% of health care benefits taxed.
  • 2014: 60% of health care benefits taxed.
  • 2015: 80% of health care benefits taxed.
  • 2016: 100% of health care benefits taxed.

In the table are columns to show the savings in the first year of implementation and savings for a full year when all spending cuts are in force. Also the average saved per year calculated as an average over five years, and the amount saved in the first five years.

Federal Spending Cuts Table

The First Year of implementation may not be the same as a Full Year if cuts are phased in over time. The average saved per year is shown as a 5 Year Average. The 5 Year Total is the amount saved in five years with all cuts implemented.

The table has been updated to reflect the latest posts in the series. Click on the table links to access prior and future posts.

Click ONCE on column headers to sort.

Spending Cuts ($billions) First Year Full Year 5 Year Av. 5 Year Total
TOTALS 334.4 567.6 432.0 2,838.0
Wars in Afghanistan and Iraq 159.3 159.3 159.3 796.5
Mortgage Interest Deduction 13.0 131.0 53.0 655.0
Health Insurance Benefits 28.8 144.0 86.4 720.0
Charitable Contributions 37.0 37.0 37.0 185.0
State and Local Taxes 74.0 74.0 74.0 370.0
Farm Subsidies 22.3 22.3 22.3 111.5

 
After the spending cuts phase in periods are over, the savings over ten years would be $5.7 trillion.

Filed Under: Government, Spending Cuts ·

Federal Spending Cuts – Mortgage Interest Deduction

June 6, 2011 by 1 Comment

The Federal Government greatly exceeds its budget each year and has a debt of over $14 trillion. It is obvious that spending cuts are essential. This series offers suggestions to help balance the budget.

The Office of Management and Budget (OMB), estimates that the mortgage interest deduction cost the government $79 billion in 2010 and will cost $131 billion in 2012. People can also claim deductions on interest they pay on a second home or a home equity loan.

There are several proposals to reform the mortgage interest deduction:

  • Change the deduction to a tax credit, capping eligible mortgages at $500,000.
  • Place some limits on the deductions claimed by families making more than $250,000 a year.
  • Replace with a tax credit for a fixed percentage of all interest paid.
  • Replace with a tax credit for 100 percent of a fixed dollar amount of interest paid.
  • Mortgage interest deduction only for principal residences.

I propose eliminating all mortgage interest, starting in 2012, with a phase out period of 10 years. The last year that deductions can be taken would be 2021.

I argue that the government should not subsidize homeownership. The mortgage interest deduction encourages taxpayers to purchase larger homes and to take out bigger mortgages. The tax deduction encourages debt and inflates prices.

Australia, Canada and England do not have tax deductions on mortgage interest and they have higher homeownership rates than the United States. With no tax deduction there would be less mortgage demand and lower mortgage rates.

This is how the Mortgage Interest Deduction Reduction would work:

  • 2012: Deductions for home equity loans eliminated. 100% of mortgage deduction allowed for first home and second home. In other words, as it is now.
  • 2013: 90% of mortgage deduction allowed for first home and 80% on second home.
  • 2014: 80% of mortgage deduction allowed for first home and 60% on second home.
  • 2015: 70% of mortgage deduction allowed for first home and 40% on second home.
  • 2016: 60% of mortgage deduction allowed for first home and 20% on second home.
  • 2017: 50% of mortgage deduction allowed for first home and entirely eliminated on second home.
  • 2018: 40% of mortgage deduction allowed for first home.
  • 2019: 30% of mortgage deduction allowed for first home.
  • 2020: 20% of mortgage deduction allowed for first home.
  • 2021: 10% of mortgage deduction allowed for first home.
  • 2022: Mortgage interest deduction entirely eliminated.

Using a figure of $130 billion for 2012, the savings would be small in the first year ($13 billion with the elimination of the home equity loans) but then would rapidly increase. The average savings to the government over the ten year phase out is estimated to be $70 billion per year.

For my second entry in the Federal Spending Cuts Table I can submit $13 billion. However, the five year total is a more respectable $215 billion.

Federal Spending Cuts Table

The First Year of implementation may not be the same as a Full Year if cuts are phased in over time. The average saved per year is shown as a 5 Year Average. The 5 Year Total is the amount saved in five years with all cuts implemented.

The table has been updated to reflect the latest posts in the series. Click on the table links to access prior and future posts.

Click ONCE on column headers to sort.

Spending Cuts ($billions) First Year Full Year 5 Year Av. 5 Year Total
TOTALS 334.4 567.6 432.0 2,838.0
Wars in Afghanistan and Iraq 159.3 159.3 159.3 796.5
Mortgage Interest Deduction 13.0 131.0 53.0 655.0
Health Insurance Benefits 28.8 144.0 86.4 720.0
Charitable Contributions 37.0 37.0 37.0 185.0
State and Local Taxes 74.0 74.0 74.0 370.0
Farm Subsidies 22.3 22.3 22.3 111.5

 
After the spending cuts phase in periods are over, the savings over ten years would be $5.7 trillion.

Filed Under: Government, Spending Cuts ·
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