Tag Archives: budget deficit

All Posts, deficit, donald trump, economy

WEAR THE PATRIOT’S MASK

How should we deal with people who make our national crisis worse by refusing to adopt effective safety practices?  Over six million Americans have been diagnosed with the Covid -19.  More than 180,000 have died.  Millions more have lost jobs and the ability to support themselves.  The national debt that we must repay will soon be more than the total value of everything the nation produces in a year for the first time since the end of WWII.

Our most effective weapons in a war against the virus are:

  1. Wear a mask in public places
  2. Maintain social distance.
  3. Don’t congregate in large groups.

We lack leadership and enforcement of those practices, especially at the national level, where our President routinely denies the facts and refuses to personally adopt safe practices.  As a result, we are among the hardest hit nations in the world.

Why do we passively accept anti-social behavior from people who endanger our families and livelihoods?  Safety practices can become behavior standards for our communities and our nation when enough of us speak up directly to those who misbehave.  That won’t be a pleasant task but it is not nearly as difficult as allowing a virus to rule our lives.

Some retail clerks and managers say they fear abusive behavior and threats by anti-maskers; and that is why they don’t enforce their own rules.  Anti-maskers are getting their way through noisy intimidation and bullying.  They are impeding our war effort and allowing the virus to linger; and they will continue until responsible citizens stand up to them.  I’ve seen a few folks publicly confront those who are not doing their part.  It is uncomfortable, but I am learning to do it too.  We are at war with a virus.  Those who do not follow safety practices endanger us all.  Their traitorous behavior is unacceptable.

The death toll, economic damage, inability to operate schools normally, and other consequences of not masking, not distancing, and allowing unsafe mass gatherings is a burden that good citizens should not have to bear.  The nations in the chart above are home to freedom loving people that are succeeding against the virus.  They all have leaders who are educating the public and pushing voluntary compliance. Many also have penalties for non-compliance. Germany,

A picture of presidential leadership – the vast majority of Donald Trump’s audience was unmasked on the White House lawn to hear him accept the Republican presidential nomination.

France, Australia, South Korea, Japan, UK, and Canada have all used fines or other penalties at times when voluntary compliance didn’t work.

It’s difficult to fathom why police and prosecutors are resistant to enforcement, when laws or emergency orders are in place.  One common explanation is lack of resources, but that doesn’t stand up to close examination.  The virus is the most dangerous and immediate threat to our public safety.  Consider that police do have resources to monitor speed limit violations by radar.  Some of that time could be reallocated to routine checks of masking compliance at high risk locations.  Masking compliance could also become part of routine patrols.  If someone calls to report a mask or distancing violation, it can be triaged in the same way as other calls.  A violent crime in progress is a high priority.  Taking an in-person report of a stolen lawn mower is a lower priority.  Police make triage decisions every day and they generally do it well.

Many Americans are masking, distancing and avoiding crowds because they have believed CDC advice, because they care for others and because it’s the right thing to do.  But now the Trump administration is manipulating information from CDC and other sources to sow doubt about scientific facts.  They are misleading rather than leading their loyalists.

Americans have been watching a microscopic virus take away our schools, churches, businesses, friends and families.  The non-performance of our government at the national and local level leaves the work to individuals and private groups.  That’s why we need to have plain-talk conversations with anyone who doesn’t mask or distance; and refuse to passively accept the deaths and damage that they are causing.  Patriotic Americans do not sit idle while the nation is losing a war.  We’re running out of time and resources to fight the virus.  Think about it.  How will you help?

Click Here to see current world wide virus statistics

All Posts, American Foreign Policy, budget, Congress, Constitution, donald trump, immigration

THE WALL IS INSIGNIFICANT

originally published 1/16/2019

Benjamin Franklin supposedly described our new form of government to a citizen as “a republic, if you can keep it”.  A republic is a sovereign nation where power resides in elected individuals representing citizens, and where government leaders exercise power according to the rule of law.  The debate over whether to build a wall along our border with Mexico is no longer about the wall.  It is about whether we are still a republic. Continue reading THE WALL IS INSIGNIFICANT →

All Posts, budget, deficit, economy

FUNDING SOCIAL SECURITY

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It’s time for honest consideration of the problems facing Social Security but first, the good news.  The Social Security Trust Fund, from which benefits are paid, has a balance of $2.9 trillion.  The money that was deducted from our paychecks and the matching contributions from our employers built that bala Continue reading FUNDING SOCIAL SECURITY →

All Posts, Christianity, economy, ethics, justice, poverty, public education, religion, taxes

THE ECONOMY MUST SERVE PEOPLE

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“The economy must serve people, not the other way around.”  That is the opening sentence of the US Conference of Catholic Bishops’ statement “The Dignity of Work and the Rights of Workers“.  Regardless of your religious beliefs, I encourage readers to look it up on the internet.  It’s easy to understand the values being taught but challenging to apply them in our lives, businesses and government. Continue reading THE ECONOMY MUST SERVE PEOPLE →

All Posts, budget, Congress, deficit, donald trump, economy, taxes

IS THE FINANCIAL END NEAR?

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The cartoon made me laugh. Maybe it’s funny because it’s based in truth.   Although I hope that our national litany of mini-crises and scandals will end soon, I don’t expect it.  These stormy times are distracting us from more important issues, particularly our national financial situation. Continue reading IS THE FINANCIAL END NEAR? →

All Posts, budget, Congress, deficit, economy, taxes

THE COMING FISCAL CRISIS

The caller was a friend that I haven’t seen for too long.  She’s up in years, older even than me, but as quick-witted and engaging as I remembered.  “Why”, she wanted to know, “haven’t you written about Republicans’ plan to take away deductions for medical expenses?”  Then she told me her story.  I had promised myself a respite from the tax law controversy, but it’s too important to be left alone.

Karen and her husband Jim (not their real names) are neither poor nor wealthy.  They saved and managed their money well in preparation for retirement but Jim is now ill, disabled, and in need of daily assistance in just about all of his activities.  With Karen’s help, he doesn’t have to go to a nursing home, but she can’t meet all of his needs so she pays for daily help.  Medicare and insurance don’t cover the cost.  The budget is tight but they make it work.

Under current tax law Karen can deduct medical expenses that exceed 10 percent of their income.  So, if their taxable income is $50,000 and the medical expenses not covered by insurance are $20,000, here’s how it works.  They pay an amount equal to 10 percent of income, $5000 in this case.  That leaves another $15,000 of expenses that she can deduct from their income.  So they will pay income tax on $35,000 rather than $50,000.  If they are in the 15 percent tax bracket, the deduction would save them $2250.  That’s a lot of money when you’re on a tight budget.

The fate of their deductions will be decided behind closed doors in a House-Senate Conference Committee.   The Senate version of the Republican bill will allow the deduction.  If the House version passes, Karen and Jim will be spared the trouble of keeping records because the expenses won’t be deductible.

“What can we do?” Karen asked me.  I stuttered a lot trying to find an answer.  She wrote and called congressmen.  She never got to talk to one and her perception is that their minds are made up to pass a bill quickly without considering who will be hurt.  She’ll try again anyway because neither of us knows an alternative.

The fates of Karen, Jim and millions of other Americans are in the hands of congressional Republicans who seem intent on passing a law before public opposition rises to an insurmountable level.  There have been no public hearings with expert testimony, no people like Karen explaining their concerns and few, if any, town hall meetings where legislators face voter questions. Republicans seem desperate to pass something – anything – rather than face economists, experts and angry constituents.

It’s easy to get lost in lists of tax bill losers: the sick, graduate students, the middle class, residents of high tax states, on and on.  Hundreds of issues are up for grabs.  They’re all important but to focus on any one of them is to miss the fact that we have no financial plan for our national future.  Either version of the Republican bill will add somewhere between $1 trillion and $1.5 trillion to our budget deficits in ten years, and deficits will continue after that at a similar rate.  That borrowed money will be given to corporations and the wealthiest 1 percent of Americans in the form of tax cuts.  Every American will be obligated to repay the debt.

There’s no way to make a sensible budget from the revenue that will remain after the tax cuts.  Social Security is self-funded by employee and employer contributions.  It will remain totally self-sufficient through 2036.  It needs a bit more revenue or lower expenses to be solvent past that date but its problems seem minor.   The crisis is in the rest of the budget.

Republicans have pledged to increase spending or hold it steady for defense, Medicare, and Medicaid/Health programs.  Their tax bill does not produce enough non-social security revenue to pay for anything else after keeping those promises and paying interest on the national debt.   Yes, you read it right.  They have promised to spend all federal tax revenue on defense, Medicare, Medicaid/Health and interest expense.  Did they do the math before they made the promises?

The Republican plan cuts taxes so much that there is no sensible financial path forward, just a mountain of debt.  The light that they claim to see at the end of the tunnel is a train; and it’s headed our way.

TO DOWNLOAD CHART CLICK HERE

IF REPUBLICAN TAX PLAN HAD BEEN LAW IN 2016
REVENUE
BILLIONS SOURCE
2016 FEDERAL REVENUE $3300 CONGRESSIONAL BUDGET OFFICE
LESS SOCIAL SECURITY REVENUE ($958) SOCIAL SECURITY TRUSTEES REPORT
NON SOCIAL SECURITY REVENUE $2342
LESS TAX CUT ($100) MEDIAN OF ESTIMATES
FUTURE PROJECTED REVENUE $2242
SPENDING
MEDICARE $593  

DERIVED FROM PEW RESEARCH CENTER

CLICK LINK FOR SPECIFICS
MEDICAID/HEALTH $514
DEFENSE AND VA $790
INTEREST ON DEBT $237
SUBTOTAL $2134
PROPOSED DEFENSE INCREASE $116 ESTIMATE BASED ON SENATE PROPOSAL
SPENDING PROTECTED BY REPUBLICAN PROMISES $2250
ALL OTHER 2016 SPENDING $869
PROJECTED DEFICIT $877
All Posts, budget, Congress, Constitution, taxes

It’s time to balance budgets

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Although our election decided who will hold public offices, the issues that divide Americans remain unsettled.  Our political battlefield is strewn with social, economic, religious and geographic landmines ready to explode.  And it’s too early to know what a Trump-led Republican administration will be like.  Besides, election “winners” achieve mostly temporary victories because the “losing” side returns to fight another day.

In that unfortunate climate, vital responsibilities of government often go unattended.  Perhaps the best example is our decades-long and increasingly urgent need to balance federal budgets.  The last time we balanced our budget for more than two consecutive years was the eleven year period from 1920 through 1930.

If both conservative and liberal voters push for it, this might be a time when we could pass a constitutional amendment requiring a balanced budget.  With that in mind, here’s my Balanced Budget Amendment idea.  It would force decisions on some issues that divide us, most notably taxes, health care and defense spending – maybe even uniting conservatives and liberals in support of practical ideas.  Here is the concept:

IDEAS FOR A BALANCED BUDGET AMENDMENT

The President must propose a balanced budget to the congress at least five months before the beginning of each fiscal year.

  1. Congress must pass a balanced budget and send it to the President for signature at least three months prior to the beginning of each fiscal year.
  2. If the President vetoes a budget approved by the congress, the president and the congress must confer, agree to and sign a budget at least 30 days prior to the beginning of each fiscal year.
  3. Failure of a President to meet the responsibilities described above on a timely basis constitutes voluntary resignation from the office of the presidency.
  4. Failure of the Congress to meet its responsibilities described above on a timely basis constitutes ninety day notice of resignation from office by all members of the congress. Each state will elect new members of congress within 60 days to take office 30 days later.
  5. A balanced budget must include all projected expenses plus any unplanned deficit from the prior year and retirement of at least one percent of existing national debt.  It must also include projection of sufficient tax revenue to fund the budget.
  6. An unbalanced budget with expenses exceeding revenue is permissible during a  time of war or other national emergency declared by the congress and approved by the President.  An unbalanced budget requires approval by sixty percent of the members of each house of congress.
  7. Trust Fund programs operated by the Federal Government which have their own dedicated revenue streams may accumulate surpluses and loan them to the Federal Budget at the discretion of the Congress and the President.  Timely repayment of such debt is the highest priority claim on federal revenue.  (Social Security is the main program of this kind.)

The specific language and content of constitutional amendments requires extreme care and scrutiny.  I’ve only tried to describe principles for an amendment, not the exacting language that would be needed.

My prediction is that it will be difficult to get legislators from either political party to consider an amendment because few, if any, are willing to make the decisions required to balance budgets. Facing a deficit, legislators from both parties are generally more willing to raise the debt ceiling than to raise taxes or cut spending.

After all the partisan shouting is done, the necessary compromises usually involve increasing our debt.  The burden is borne by voters and taxpayers.  With this amendment, if officeholders fail, they lose their jobs to someone who is willing to actually do the work.  Holding new elections to replace a failing legislature is not a radical idea. Numerous parliamentary democracies do exactly that.

This column lays out an ambitious vision for solving an urgent national problem.  It’s a good first step toward more effective government because it will also force more responsible decisions on all other federal priorities.

Is it unrealistic to think that our congress, president and voters would actually do this?  Maybe…  But if congress is unable to balance a budget, how can they expect to find success on other contentious questions like immigration, health care, war and civil rights that sit atop their agenda?

If we can’t make such decisions, our future as a viable nation is in doubt.  Let’s get started.

All Posts, budget, Congress, deficit, taxes

NEW IDEAS FOR A BALANCED BUDGET AMENDMENT

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Our elected officials in Washington congratulate themselves for avoiding a government shutdown and argue about which non-budgetary legislation to tack onto “must-pass” short term spending bills while we limp from month to month with no long range financial plan .  This column is my attempt to persuade readers of all political stripes that we should pass a constitutional amendment requiring a balanced budget – not because I like the idea but because nothing else seems to work.

First, a dose of reality – Social Security is not the problem.  In 66 of its 77 years Social Security has brought in more money than it spent. That includes the most recent 34 consecutive years.  Because we are living longer and have the large baby-boom generation retiring, Social Security will need some combination of delayed retirement, increased taxes, and reduced benefits; but if congress will act soon, the changes will not be massive.

The real problems are in other areas of the budget.  Our deficit for 2015 was $439 billion despite a $19 billion surplus by Social Security.  Historical data from the US Office of Management and Budget show only two recent balanced budgets: 1999 and 2000 (President Bill Clinton’s last two years).  Prior to that it was 1960, the last year of President Eisenhower’s term.  We have had budget deficits for 53 of the last 55 years and our Congress seems more interested in cutting taxes and increasing spending than in balancing budgets.

Federal spending prior to WWII was typically 10% or less of the value of all the goods and services produced in the nation (GDP).  Since then the US has emerged as a world military power and has developed our social safety net.  As a result, Federal spending has been about 17-20% of GDP since 1975.    Data from the Federal Reserve Bank demonstrate that our serious debt problems emerged in the early 1980s when the Reagan Administration began cutting taxes for corporations and the wealthy without cutting spending.  Historical data from the Office of Management and Budget show that deficits became consistently large around the same time.  Total tax collections have actually remained fairly stable at 17-19% of GDP but the corporate share has been cut in half and capital gains taxes have been reduced while payroll taxes increased.

That is the background information.  Here are some ideas for a constitutional amendment:

  1. Congress is required to pass a budget and establish taxes to fund the budget for periods of time that are not less than one year.  The budget and taxes must be passed and sent to the President at least three months prior to the effective date.
  2. If the congress fails to pass a budget on time there will be a new election 90 days later to replace the entire congress.  The prior year’s budget and taxes will be automatically extended for one year or until they are changed by the new congress.
  3. The debt of the nation is limited to the sum of values of trust funds established by the congress (Social Security for example).
  4. The requirement to balance each budget may be waived during a state of emergency declared by a 60 percent majority of both houses of Congress.  The declaration is valid for not more than one year but can be renewed as many times as the Congress thinks necessary.
  5. At any time when there is no declared state of emergency, 2% of non-trust fund tax revenues will be set aside for reduction of excess debt.

The amendment will:

  1. Force the Congress to do its job.
  2. Protect Social Security and other trust funds that provide pre-paid benefits.
  3. Allow enough flexibility to deal with genuine emergencies and wars.
  4. Gradually pay down existing debt.

The amendment would force serious debate about priorities.  We will be less likely to go to war if we have to raise taxes for it.  There will be more pressure to eliminate wasteful spending and tax loopholes.  There will be pressure to raise taxes for infrastructure, research, and human services.

I was taught in high school that “Economics is the science of meeting unlimited human wants with the limited resources available.”  A balanced budget amendment will require our government to help us do exactly that.