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randomhero97
04-07-2008, 05:47 PM
source link: http://www.acuf.org/issues/issue104/080323gov.asp


$3,000 Tax Increase
by Brian M. Riedl
Issue 104 - March 26, 2008

Despite healthy tax revenues and federal spending that tops $25,000 per household, the House Democratic majority has proposed a fiscal year (FY) 2009 federal budget that:

Raises taxes by $1.265 trillion over five years and $3.911 trillion over 10 years, or more than $3,135per household annually;
Includes 17 reserve funds that could be used to raise taxes by hundreds of billions more;
Increases discretionary spending by 8 percent and does not terminate a single wasteful program; and
Completely ignores the impending explosion of Social Security, Medicare, and Medicaid costs.
The White House has responsibly pledged to veto legislation with tax and spending increases that would follow from these proposals. Congress should start over and write a budget that does not raise taxes on American families or businesses, is in line with the President's spending proposals, and addresses the coming entitlement tsunami. Anything less would likely worsen the economic downturn, make it more difficult for families to make ends meet, and kick serious budget challenges further down the road.

The Democratic congressional majority promised Pay-As-You-Go (PAYGO) budgeting that would prevent new deficit spending. Yet, last year, they used blatant accounting gimmicks, such as fake sunsets and shifting payment dates, to pass:

SCHIP legislation adding $55 billion to the budget deficit;
A farm bill adding $7 billion to the budget deficit despite record-high farm incomes;
A student loan bill with $15 billion in new deficit spending; and
Terrorism risk insurance legislation adding $8.4 billion to the budget deficit.
Gimmicks such as abusing the "emergency" designation also helped Congress eventually to secure White House acceptance of most of its proposed 9.4 percent increase in discretionary spending. Despite pledges of fiscal restraint and deficit reduction, FY 2008 was a year of large new deficit spending. There is little indication that this year will be markedly different.

The FY 2009 House budget resolution assumes $15.973 trillion in tax revenues over the next five years, which exactly matches the Congressional Budget Office (CBO) baseline. The CBO's baseline, however, assumes tax increases of $1.265 trillion over five years and $3.911 trillion over 10 years, or $3,135 per household annually. Taxes on American workers and businesses would rise by an average of 12 percent. Revenues would rise from 18.8 percent of GDP to a near-record 20.3 percent of GDP by 2018.

And that may not even be all. The House budget also includes 17 more reserve funds, which effectively gives lawmakers a blank check to hike taxes even more to finance additional spending.

The baseline tax increase of $3.911 trillion assumes the expiration of all 2001 and 2003 tax relief, including the expanded child tax credit, marriage penalty relief, and lower 10 percent tax bracket. It also assumes the expiration of all other temporary tax relief and allowing the alternative minimum tax (AMT) to hit an additional 20 million taxpayers. True, lawmakers may choose to keep some of the current tax cuts by raising other taxes instead. For example, the House is planning to avoid the AMT hike by raising other taxes through the reconciliation process, and the budget includes language pledging to retain some of the 2001 and 2003 tax cuts. However, increasing some tax rates as the price of maintaining other tax policies at current levels is still a tax increase. Taxpayers will still pay trillions of dollars more, regardless of which pocket lawmakers take it from.

Some lawmakers have even declared that, because it is already written into current law, allowing the tax cuts to expire does not constitute a tax increase. However, a tax increase is a tax increase, even if lawmakers schedule it years in advance. Under the House budget, millions of Americans would see their marginal income tax rates leap from 25 percent to 28 percent; the estate tax would surge from zero to 55 percent. It would be difficult for taxpayers to believe that their taxes have not been raised.

While there is never a good time to raise taxes, pledging $4 trillion in tax increases during a time of economic uncertainty is especially worrisome. Raising tax rates on every taxpayer and business would reduce incentives to work, save, and invest and therefore significantly reduce the economy's long-term capacity to grow and raise living standards. The same Congress that distributed a one-time $1,200-per-household tax rebate in hopes of helping the economy would now turn around and raise taxes by $3,135 per household annually. Even though the budget delays most of the tax increases until 2011, businesses and investors might begin pulling back long-term investment plans in anticipation of higher investment taxes and the resulting slower economic growth.

Federal spending now tops $25,000 per household annually, and the coming Social Security, Medicare, and Medicaid costs of 77 million retiring baby boomers could eventually add another $12,000 per household to the taxpayers' annual tab. Rather than address escalating federal spending and the coming entitlement tsunami, the House budget irresponsibly piles on even more spending and debt.

The House budget would boost FY 2009 discretionary spending (excluding emergencies) by $74 billion, or 8 percent, above this year's level. That amount is also $23 billion over the President's proposed $992 billion. If Congress's larger budget becomes part of the spending baseline, it will translate into approximately $283 billion in new spending over 10 years above the President's requested level. That does not include the extra spending that could result from the 17 reserve funds mentioned above.

Discretionary spending has already expanded by 45 percent (after inflation) since 2001. While defense spending has received large increases, even non-defense programs have increased by 28 percent under President Bush--at an annual rate that is nearly twice as fast as under President Clinton. Yet the House would provide an additional 8 percent increase.

Regrettably, the House budget does not propose any significant offsets for this new spending. Nor does it propose eliminating a single wasteful federal program. Not even wasteful and unnecessary programs like the Advanced Technology Program, which spends much of its $70 million budget subsidizing Fortune 500 companies, would be reduced. In failing to offer spending reductions, congressional budget writers ignored:

At least $55 billion in annual program overpayments;
$60 billion in corporate welfare;
$123 billion for programs for which government auditors cannot find any evidence of success;
$140 billion in potential budget savings identified in the CBO's "Budget Options" books; and
Massive program duplication, such as the 342 economic development programs, the 130 programs serving the disabled, the 130 programs serving at-risk youth, and the 90 early childhood development programs.
By a party-line vote, Democrats on the House Budget Committee also rejected an amendment offered by Representatives Jeb Hensarling (R-TX) and John Campbell (R-CA) to impose a one-year moratorium on earmarks so that a new bipartisan select committee can make recommendations on how to reform the earmark process. The continuation of earmarking-as-usual will likely create more upward pressure on program budgets while also pressuring lawmakers to support large, wasteful spending bills in order to preserve their pork. This is certainly not the change the American people voted for in 2006.

The coming collision of 77 million retiring baby boomers with Social Security, Medicare, and Medicaid represents the greatest economic challenge of the present era. What Federal Reserve Chairman Ben Bernanke has recently called the "calm before the storm" ended on January 1, 2008, when the first baby boomers became eligible for early Social Security benefits. In just three years, they will become eligible for Medicare. In the coming decades, the cost of these programs will leap from 8.4 percent of GDP to 18.6 percent of GDP. Without reform, this 10.2 percent of GDP cost increase would require either raising taxes by the current equivalent of $12,072 per household or eliminating every other government program.

The budget resolution simply ignores the entitlement problem. Worse, it rejects the President's common-sense proposal to save $8 trillion by reducing Medicare Part B and Part D subsidies for the wealthiest seniors and adjusting payment formulas. The President offered this and other recommendations in response to the Medicare trustees' recent warning that a record 45 percent of Medicare's budget will soon be subsidized out of general tax revenues, leaving just 55 percent funded by payroll taxes and user premiums. The Democratic congressional leadership has thus far chosen to ignore the trustees' warning.

This abdication of responsibility will have negative consequences for nearly every American. For every year that Congress chooses to ignore the problem, the nation's 77 million baby boomers move a year closer to retirement, and the price tag of the inevitable reforms

The House budget resolution pledges to raise taxes by an average of $3,135 per household. This classic tax-and-spend budget pushes up discretionary spending and leaves the nation woefully unprepared to face the coming retirement of 77 million baby boomers. The White House has rightly drawn a veto line in the sand for any budget bills that emerge from this budget resolution. Lawmakers should go back to the drawing board and write a budget that contains no tax increases, meets the President's spending targets, and deals realistically with coming entitlement costs. If they do not, the President should keep his veto pen ready.

paolo59
04-07-2008, 05:53 PM
That's the Dems for ya! They know better how to spend your money than you do! And you should be glad to give them that opportunity! LMAO

CHANGE!!!!!!!!!!

Nagalfar
04-07-2008, 07:10 PM
That's the Dems for ya! They know better how to spend your money than you do! And you should be glad to give them that opportunity! LMAO

CHANGE!!!!!!!!!!

Exactly.. when they get done with out wallets.. thats all we will have is change.

AhkTed Kenajhad
04-07-2008, 07:15 PM
it baffles my mind how people can be so stupid. i can't describe in words the contempt i have for these democrats.

Inev
04-07-2008, 07:17 PM
makes me sick

Ibanez
04-07-2008, 07:18 PM
It's funny. You only hear poor people complaining about taxes.

leafs43
04-07-2008, 07:22 PM
It is to accomodate the cluster f*ck that is known as social security and medicare.


I say we just line up the baby boomers in the street and let them have a grand battle to the death and whoever survives is entitled to the benefits of said programs. Probably would be more humane that way then some of our parents and grandparents eating cat food for dinner the next 20 years.

AhkTed Kenajhad
04-07-2008, 07:24 PM
we could just not spend money we don't have, that would be a novel idea.

leafs43
04-07-2008, 07:27 PM
we could just not spend money we don't have, that would be a novel idea.

This is only the first of many tax hikes to come because of SS and medicare.

In 10-15 years it is going to be 2 people supporting 1 person on retirement, thats how bad it is going to get.

TheJuicedchase
04-07-2008, 07:29 PM
CHANGE!!!!!!!!!!


We'll all be on the street asking for it soon :D

gympunk
04-07-2008, 07:39 PM
Everyone IS aware the the GOP almost doubled the national debt between 2001 & 2007, from $5 Trillion to $9 trillion?? Right?? They "cut your taxes" by borrowing shortfall from China, England & the Saudis. Plus the 2004 Prescription Drug Bill was the biggest expansion of Welfare in 40 years...Our taxes are going to skyrocket just to cover those 7 years of irresponsible financial gluttony.

frankenstein
04-07-2008, 08:00 PM
It's funny. You only hear poor people complaining about taxes.
Most of the people I know who individually make under $150K complain about taxes being so high. I know several over that amount who complain about capital gains tax instead of regular income tax.

Even after all my write offs, the $10K I paid directly to the feds this past year wasn't enough I guess. WTF!!!

Did anyone else catch the $992 Billion in discretionary spending?? Dude, let's just call that $1 Trillion. $1 Trillion in discretionary spending.

Medicare and Social Security. David Walker began warning us a few years ago. Hide your money any which way you can.

frankenstein
04-07-2008, 08:04 PM
Everyone IS aware the the GOP almost doubled the national debt between 2001 & 2007, from $5 Trillion to $9 trillion?? Right?? They "cut your taxes" by borrowing shortfall from China, England & the Saudis. Plus the 2004 Prescription Drug Bill was the biggest expansion of Welfare in 40 years...Our taxes are going to skyrocket just to cover those 7 years of irresponsible financial gluttony.

Damn skippy. We voted in one big spending party for another. Difference between the two (besides gays and guns)?
The GOP does deserve to have fingers pointed at them. Absolutely. Now let's move beyond the partisan **** and talk about protests. Not kidding. I live 4 hours from DC.

Ibanez
04-07-2008, 08:12 PM
Most of the people I know who individually make under $150K complain about taxes being so high. I know several over that amount who complain about capital gains tax instead of regular income tax.

Even after all my write offs, the $10K I paid directly to the feds this past year wasn't enough I guess. WTF!!!

Did anyone else catch the $992 Billion in discretionary spending?? Dude, let's just call that $1 Trillion. $1 Trillion in discretionary spending.

Medicare and Social Security. David Walker began warning us a few years ago. Hide your money any which way you can.
Well, America is a claimed meritocratic society. That's what you hear, work hard and be smart and you'll get somewhere. So if a person can't move up the tax bracket it's probably because they lack the will and intelligence to do so.

skinny buckeye
04-07-2008, 08:29 PM
i love taxes. i cant wait to pay more! this is gonna be great!

curtis999
04-07-2008, 08:58 PM
Damn skippy. We voted in one big spending party for another. Difference between the two (besides gays and guns)?


I'd rather have tax and spend , then borrow and spend.

Also those numbers in the OP are misleading. You can claim an average in crease of @$3500 for every family but, that is not an ACTUAL figure to be taken from your check. It's not a flat tax. It's the total tax divided by the number of families. Those very rich will pay most of it.(like they always do)

JabCross
04-07-2008, 09:06 PM
That's the Dems for ya! They know better how to spend your money than you do! And you should be glad to give them that opportunity! LMAO

CHANGE!!!!!!!!!!

http://home.att.net/~mwhodges/federal-debt-dollars.gif

The debt will go up to about 10 trillion dollars this year. We only have a yearly GDP of 14 trillion dollars.

It's sad that the democrats have to do this but after years of irresponsible government fiscal policy under Reagan, Bush Sr, and Bush Jr, this needs to be done or the entire government will go bankrupt we'll have to monetize the debt. That will make our currency plummet and it will also make all US assets completely worthless.

We desperately NEED expansionary fiscal policy (higher taxes or lower government spending, or a combo of both; not lower taxes and increase government spending like Reagan and both Bushes) or this country will go the way of Germany under hyperinflation during the 20s when they had to monetize their WWI debt.

The democrats in congress need to do this for us because, as you said, you've been so dumb with your money that you've been electing people that are ruining your national credit.

drjjg
04-07-2008, 09:59 PM
Everyone IS aware the the GOP almost doubled the national debt between 2001 & 2007, from $5 Trillion to $9 trillion?? Right?? They "cut your taxes" by borrowing shortfall from China, England & the Saudis. Plus the 2004 Prescription Drug Bill was the biggest expansion of Welfare in 40 years...Our taxes are going to skyrocket just to cover those 7 years of irresponsible financial gluttony.

PRECISELY!!!!!

drjjg
04-07-2008, 10:03 PM
I agree completely that they are beholden to the same interests. However, the dems are better in this regard.
Raising taxes by 4 trillion is cheaper than going 4 trillion in debt and then paying the interest costs on top of it(presuming you want a big spending government, heh)

JabCross
04-08-2008, 12:49 PM
ttt

nonAtlas
04-08-2008, 12:54 PM
Arm yourself while you still can.

nonAtlas
04-08-2008, 12:56 PM
I agree completely that they are beholden to the same interests. However, the dems are better in this regard.
Raising taxes by 4 trillion is cheaper than going 4 trillion in debt and then paying the interest costs on top of it(presuming you want a big spending government, heh)

Too bad they don't know how to raise tax revenue. You do that by cutting the rates of confiscation; it works every time, and raising those rates cuts revenue while putting people out of work.

:(