Check out these very telling headlines in advance of President Obama’s 2015 State of the Union address. Hint: It ain’t pretty!
Some date the advent of the tea party to 2007, when then-presidential candidate Ron Paul held a “tax day tea party” fundraiser to fill his campaign coffers. But the broader movement began five years ago last week — shortly after Barack Obama was…
The following is an excerpt from The Heritage Foundation’s “Federal Spending by the Numbers 2013”
Read the full report at Heritage.org.
The Federal Budget
- Washington will spend nearly $3.5 trillion in 2013 while collecting $2.8 trillion in revenues, resulting in a deficit of $642 billion.
- Over the past 20 years, federal spending grew 63 percent faster than inflation.
- Mandatory spending, including Social Security and means-tested entitlements, doubled after adjusting for inflation. Discretionary spending grew by 49 percent.
- Despite publicly held debt surging to three-fourths the size of the economy (as measured by GDP), net interest costs have fallen as interest rates have dropped to historic lows.
- In 1963, defense spending was 9 percent of GDP and mandatory spending on entitlement programs was 6.1 percent of GDP, one-third lower.
- In 2013, spending on defense is at about 4 percent of GDP and falling, while mandatory spending (including net interest) is reaching 14.5 percent of GDP and growing.
Where Did All the Money Go?
- 31 cents of every dollar Washington spent in 2012 was borrowed, resulting in a $1.1 trillion deficit.
- 45 percent, or almost half of all spending ,went toward paying for Social Security and health care entitlements (primarily Medicare and Medicaid). In 2002, that was only 25 percent. Without reform of these massive and growing programs, Washington will have to borrow increasing amounts of money, piling debt onto younger generations and putting the nation on a dangerous economic course.
- Social Security is the largest federal spending program and has held this position since surpassing defense in 1993.
- Medicare is one of the largest and fastest-growing programs in the entire federal budget.
- The U.S. Postal Service has been losing money for several years and is drawing down reserves to cover losses. Congress should allow the USPS to restructure and meet the needs of today’s marketplace. Otherwise, taxpayers will be on the hook when reserves run out.
- Energy spending has exploded, yet the increases in oil and gas production have happened on state and private lands.
- Total federal spending will grow by 69 percent over the next 10 years, even with sequestration cuts. Without sequestration it would grow by 74 percent.
- Total annual spending will increase by $2.4 trillion, growing from $3.5 trillion in 2013 to $5.9 trillion in 2023.
- Net interest costs are projected to grow the most by far. They will more than triple over the next decade, exploding from $223 billion in 2013 to $823 billion in 2023. This growth assumes today’s abnormally low interest rates increase only modestly.
- Mandatory spending, the part of the budget that grows on autopilot, excluding net interest will grow by 79 percent over 10 years.
- Social Security, Medicare, and Medicaid are 82 percent of mandatory program spending today and have no budget limits.
- Discretionary spending, the part of the budget that Congress budgets each year, will increase by 17 percent over 10 years, but only if lawmakers enforce sequestration.
- Discretionary spending as a share of the budget will fall from two-thirds in 1963 to less than one-quarter in 2023 as entitlements grow uncontrolled.
- Mandatory spending will grow from one-quarter of the budget in 1963 to 62 percent by 2023. When net interest is added, this spending would consume three-fourths of the budget.
Chronic Deficits Continue
- Budget deficits occur any year that Congress spends more than it collects in taxes.
- In 2013, Congress will borrow 19 cents of every dollar it spends.
- Deficits will fall in 2013 because of higher revenues from an improving economy, higher taxes passed with the fiscal cliff deal, and spending cuts from the Budget Control Act caps and sequestration.
- Sequestration cuts largely keep entitlements untouched, so they do little to prevent a return to trillion-dollar deficits.
- Deficits fall below a half trillion dollars once in 2015 but begin growing immediately, reaching trillion-dollar levels by 2022, as entitlement spending continues unabated.
- The deficit is projected to grow from $642 billion in 2013 to $1.078 trillion by 2023, a 68 percent increase.
- Despite tax revenues returning to normal levels, the federal budget will have large deficits in each year because spending will continue to grow well beyond historical levels.
U.S. Representative Vern Buchanan (R-Fla) penned an editorial in Sunshine State News well worth reading. In it, Buchanan makes a digestible but pressing case for a fairer, flatter, simpler tax code and how it would level the playing field for taxpayers while eliminating loopholes for political players.
Here is part of the editorial:
Sunshine State News: Simpler. Fairer. Flatter.
“The U.S. tax code is complicated, unfair and punitive. And that’s putting it mildly
Consider these numbers:
— 74,000 – the number of pages in the tax code — five times as long as the Bible’s Old and New Testaments combined;
— 6.1 billion – the number of hours Americans spend trying to comply with the tax code;
— $168 billion – the annual cost of compliance to individuals and businesses.
As Florida’s only member of the tax-writing House Ways and Means Committee, I understand that any meaningful tax reform cannot be accomplished behind closed doors. Over the last two years, our committee has held 30 public hearings and round-tables with those who administer the tax code and all groups that are affected by it. From these discussions, the common refrain is that America needs a simpler, fairer, pro-growth tax code to help revitalize a sluggish economy.
The guiding principle of this effort must be tax simplification. Nearly 90 percent of taxpayers either hire a professional or buy commercial software to spare them the agony of figuring out what they owe the government. That’s not surprising when you consider that in the last decade there have been more than 4,000 changes to the tax code – more than one a day. Imagine if all this time, money, and energy were put into job creation and getting Americans back to work.
That means lowering corporate tax rates — currently the highest in the world — to encourage businesses to grow jobs at home and not watch them disappear overseas.
That means not taxing small business on Main Street at a higher rate than big business on Wall Street.
And that means reducing individual rates for all Americans to be paid for by stripping oil companies and other special interests of tax subsidies.
Read Rep Vern Buchanan’s entire editorial at Sunshine State News
With recent tsunami of Obama regulations on emissions and a renewed push for “climate change” legislation, many have sought truth in the causal relationship between human activity and climate change.
We have compiled a short list of favorite articles on the subject to offer some context for Drawnlines readers. Enjoy these little nuggets and prepare to have your mind blown:
Investors Business Daily: “President Obama is being lauded for his plans to restrict carbon dioxide emissions. But the scheme looks more like the last refuge of a desperate movement, because the speech he gave in its defense was… laden with myths, fables, distortions and outright lies.”
Think Progress: ‘The Dangerous Myth That Climate Change is Reversible’
National Post: ‘The Hockey Stick Myth’ – “Prof. Briffa kept reducing the number of trees from which he used results, so that after 1990, his calculations were based on just 10 trees from the whole of his sample of scores of trees. And after 1995, they were based on just five.”
National Affairs: ‘Climate Change Science Has Become an Expensive Smokescreen’
Columbia University Study: “The 5-year mean global temperature has been flat for a decade, which we interpret as a combination of natural variability and a slowdown in the growth rate of the net climate forcing.”
CNS News: “Global Warming? Temperature Up ‘Very Close to Zero’ Over 15 Years”
Forbes: “The past 17 years of flat global temperatures are creating a big chill for lots of global warming doom-premised industries. Those experiencing cold sweats must certainly include legions of climate scientists who have come to depend upon the many tens of billions of taxpayer bucks for studies that would have little demand without a big crisis for the public to worry about.”
London Daily Mail: “The world stopped getting warmer almost 16 years ago… [F]rom the beginning of 1997 until August 2012, there was no discernible rise in aggregate global temperatures.
“This means that the ‘plateau’ or ‘pause’ in global warming has now lasted for about the same time as the previous period when temperatures rose, 1980 to 1996. Before that, temperatures had been stable or declining for about 40 years.”
The Obama Plan
Sen. Joe Manchin D-WV: “The regulations the President wants to force on coal are not feasible. And if it’s not feasible, it’s not reasonable,” Manchin said in a statement. “It’s clear now that the President has declared a war on coal. It’s simply unacceptable…”
Washington Post: “Utilities will be forced to shutter aging coal plants to comply with the stricter pollution limits; in the short term, electricity prices will go up.”
Charles Krauthammer: “Net effect: tens of thousands of jobs killed, entire states impoverished. This at a time of chronically and crushingly high unemployment, slow growth, jittery markets, and deep economic uncertainty.
“But that’s not the worst of it. This massive self-sacrifice might be worthwhile if it did actually stop global warming and save the planet. What makes the whole idea nuts is that it won’t. This massive self-inflicted economic wound will have no effect on climate change.”
Whatever one’s political viewpoint, one easy takeaway from the Solyndra mess is that the government is awful at picking winners and losers. At best, government’s hand distorts markets and erects barriers to entrance. At worst, it wastes loads of taxpayer money while lining the pockets of already-powerful special interests.
As bad as the Solyndras of the left already are, it may be altogether worse for Republicans to try their hand at picking our own winners and losers. But that is exactly what is happening in Florida, where legislators have bet heavily on natural gas.
There are lots of great reasons that Florida should be a Nat Gas leader. It is both cheaper and greener than traditional fuel. Plus, Florida has lots of it. There is no need for Tallahassee bureaucrats to rush to our rescue.
Get a load of this news bit:
A bill (HB 579) passed by the Legislature this session employs the former method. It offers rebates to cities or companies that convert gas-powered fleets to natural gas, and makes natural gas sales tax-exempt for five years under a newly minted tax structure.
“What we really want to do is incentivize people to make the conversion,” said state Rep. Lake Ray, R-Jacksonville, the House sponsor of the bill.
It gets rid of the current natural gas fee structure, which requires owners of natural gas vehicles to pay an annual fee. It replaces it with a structure that taxes each “motor fuel equivalent” of natural gas. The tax structure will not be implemented until 2019, making natural gas sales tax-free over that time.
The bill also creates a program that uses $6 million annually over the next five years to pay up to 50 percent of the cost of converting a gas-powered vehicle to one that runs on natural gas. It has the support of state environmental groups.
With respect to Rep. Ray, that’s a horrifying mentality. It fundamentally implies that government has both the authority and the mandate to play Jiminy Cricket.
The best way forward in America’s energy future is an all of the above approach, where markets drive innovation while driving down prices. Neither Florida nor the federal government should press their heavy thumb on the scales to make the people’s choices for them. In energy as in other things, politicians should resist the urge to help by intervening in the natural course of innovation.
Texas Governor Rick Perry is serious about attracting business to his state, and he’s going on offense to prove it.
In a new radio ad blitz, Mr. Perry has hit the California airwaves appealing directly to Californians to consider relocating their business to Texas. The Lonestar state regularly ranks first in the nation in business friendliness and is renowned for its low taxes, streamlined regulations and junk lawsuit reforms.
Here is how Governor Perry puts it in the ad: “Building a business is tough, but I hear building a business in California is next to impossible.”
He ain’t just whistlin’ Dixie neither!
According to the blog HotAir, “Texas and California are often compared as polar opposites in terms of their business-friendly policies; i.e., Texas is reliably ranked number one and California usually comes in around dead last. There are plenty of traditional and cultural factors that keep California an attractive place for venture capital investment, but an incoming raft of even more onerous regulations and higher taxes planned by the Californian government might mean that any businesses on the fence will reexamine their location options — and hey, just throwing this out there — Texas just wants them to know that the Lone Star state is a pretty great place.”
But California Governor Jerry Brown shot back against Perry’s plan to pilfer his producers… sort of. He scoffed at the ad blitz, dismissing it as “barely a fart.” Yes, you read that right.
Whether nor not Mr. Brown is shaking in his boots, the Wall Street Journal suggests that maybe he should be: “[S]tates are hoping to capture the attention of Silicon Valley venture capitalists as well as California’s large number of entrepreneurs and CEOs, and to make sure they are on the shortlist for any expansions or relocations. Arizona opened its first two domestic out-of-state offices in October—one near Los Angeles, the other in Silicon Valley. Tennessee in November posted an ad for a new government position looking for California businesses to poach. Nevada hired its own representatives in California two years ago.”
Governor Perry himself might be wise to keep an eye on his rear view mirror.
Florida Governor Rick Scott has been equally aggressive in attracting businesses to his state — often working the phones with business owners and traveling on trade missions. Florida isn’t content to be outdone by Texas and Mr. Scott regularly reminds the Texas governor that he is coming after Perry’s number one status. With a laser focus on making a more business friendly environment in the Sunshine State, Perry may soon face the prospect of someone else taking the air out of his proverbial tires.
The small government brooms have begun their revolt against sorcerer Mickey Mouse.
Since the fiscal cliff negotiations came to a head, conservative activists have turned Speaker Boehner into their own fire hydrant and used him in kind. With fingerprints on the Tax Relief Extension Act and his vote for the bill, Republicans have done more than balk — they’ve started calling for Boehner’s head.
But why did Speaker Boehner really support the negotiated Fiscal Cliff bill, and what does it accomplish? Have the wheels really come off the wagon?
More Than Half of a Loaf
According to tax hawk Grover Norquist, the deal counts as a tax cut. Imprimis, it protects most taxpayers from a hike that was coming anyway. It also came after the country had already gone over the cliff. If a conservative is presented the chance to shield most Americans from tax hikes or the alternative of shielding no one, the choice is clear.
Conservative Chris Ruddy, chairman of the popular Newsmax magazine called the deal acceptable, lamenting, “The old proverb that ‘perfect is the enemy of the good’ applies here.” It was, after all, a negotiation.
Sacrifice a Rook, Take a Queen
By negotiating in good faith and giving President Obama many concessions in the Fiscal Cliff talks, Republicans have greatly increased their own leverage in upcoming Debt Ceiling negotiations. With tax hikes off the table for most Americans, the GOP is in strong negotiating position to demand deep cuts before they agree to raise the limit on Congress’s credit card.
Change The Conversation
With tax rates negotiated and codified long term, the entire conversation can now focus on spending cuts. Sure, Republicans will have to wheel and deal — cut a trillion out of entitlements, give half a trillion in defense — for example. But at least we’re all reading out of the spending cuts hymnal. That is much safer political ground for Republicans and a much needed dose of tough love for the country.
Later today, the U.S. House elects a new speaker. John Boehner’s political legacy hinges on whether the Republican caucus sticks by the man who threaded an impossible needle or whether they toss him hastily overboard for the sake of moving on.
Somebody has to say it out loud: John Boehner is a good conservative, a good Republican, and a good leader. On behalf of all those great leaders who’ve taken incredible heat in the name of doing what’s right, I sincerely hope that he retains his position. A good leader focuses his eye on the distant horizon and mutes his ear to the screams of the shortsighted. That’s what Speaker Boehner has done.
To those fellow fiscal hawks seriously considering a mutiny against your captain in stormy seas, I urge you to channel those immortal words of Bon Qui Qui, “[Y}ou can have it your way, but don’t get crazy.”
Here’s a scary thought. What if over-taxed, over-regulated, over-burdened residents and businesses were stuck where they are? Some 200,000 people flee California in favor of pro growth states like Nevada and Arizona. The flow of expats from New York to Florida is regarded as one of the greatest migrations in human history. But as those cash strapped blue states run out of taxpayers to squeeze, they just might start hitting escapees with a parting gift — exit taxes! Think it can’t happen? It already has.
Mayors and governors of most tax-and-spend, heavily unionized, low-growth cities and states are both desperate for revenue and tired of watching disgruntled citizens vote with their feet. Think how politically attractive it would be for them to make “economic deserters” pay their “fair share” of old debts. I can see the arguments already: “You can’t move away from credit card debt or commercial debt, so why should government debt be so easy to dodge?” Politicians could easily win kudos from both public employee unions and the overtaxed residents left behind, for the mere cost of enraging emigrants who won’t be around to exact retribution at the next election.
Read it here: http://www.realclearmarkets.com/articles/2012/12/17/when_will_death_spiral_states_impose_taxes_on_fleeing_citizens_100047.html