Budget Balancing Exercise Shows Need For Mindset Change

"There's nothing in the Constitution that says the federal government has anything to do with most of the stuff we do."  SC Congressman James Clyburn (Case in point - the fiscal year 2013 federal budget breakdown – see table @ right below except for Defense, Interest, & Congressional Salaries.)

 

"I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents."  James Madison writing in 1794 disapprovingly of a $15,000 appropriation for French refugees who fled from insurrection in San Domingo to Baltimore & Philadelphia

 

"We must not permit our respect for the dead or our sympathy for the living to lead us into an act of injustice to the balance of the living. I will not attempt to prove that Congress has no power to appropriate this money as an act of charity. Every member upon this floor knows it. We have the right as individuals, to give away as much of our own money as we please in charity; but as members of Congress we have no right to appropriate a dollar of the public money."  Tennessee Congressman Davy Crockett speaking on the House Floor in 1827 regarding a $10,000 relief bill for the widow of a naval officer that had been proposed & was expected to pass unanimously.  Following Davy's words the measure failed with only a few votes in support of it. Colonel Crockett, one of the poorest members of the House at that time, was the only House member to contribute substantially to a private charitable fund for the widow.

 

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In July 1994 former NJ Congressman Dick Zimmer invited Carol & me to attend a "Debt Busters" program @ Brookdale Community College in Lincroft NJ that the congressman was sponsoring in cooperation with the Concord Coalition (co-founders former Senators Tsongas & Rudman).  The purpose of the program was for the attendees to personally tackle the deficit to see how they would bring it under control.  We broke off into small working groups armed with facts & figures & then all of the groups met to compare notes concerning how to write a balanced federal budget.

 

It was a very intensive session so I have had some personal experience with the questions from the last post regarding how readers of RTE would participate in such an assignment today.

 

I must say that in the twenty years since Congressman Zimmer's program the only things that have changed are that we are deeper in debt & of course that much closer to it really meaning something detrimental to our freedom & prosperity that we all feel. 

 

With regard to the last post our SC businessman observed from the top right table ". . . you could zero out either military, social security or health care and still not balance the budget," while TLG was the only responder who pointed out that Defense was the only line item from the top right table that was constitutional in his or her opinion – I point out you have to add interest & unfortunately congressional salaries (see Compensation Clause – Article I, Section 6, Claus 1 & 27th Amendment) also.  TLG wrote "What line items to cut from the chart? Ask the Founding Fathers - they would say all of them except Defense."

 

We know from the partial sequester cuts of the past two years that there will be squealing no matter what or how little federal government spending is reduced – even when the reductions are from projected increases & not really cuts @ all.  For fiscal year 2013 you could cut everything except Defense, Social Security, Health Care, Interest, & Congressional Salaries & just miss balance by a smidgen (popular word). 

 

Steve Moore writes "The Founders did not create a Department of Commerce, a Department of Education, or a Department of Housing & Urban Development.  This was no oversight: they simply never imagined that government would take an active role in such activities" so constitutionally you could cut many of the above categories to obtain significant deficit reduction even if you didn't eliminate the entire deficit in one year.  The enumerated powers of Congress to spend money are defined in the Constitution under Article I, Section 8.

 

We should take a more gradual approach to bring Social Security & Medicare under control because virtually all of our current & soon to be senior citizens are way too dependent on these two programs to eliminate them cold turkey. 

 

Indexing the Social Security initial benefit amount to the CPI instead of the wage index will result in preserving the purchasing power of all contributions made over the years & will eliminate the government guaranteeing a real positive return on Social Security taxes withheld for the average person – a guarantee no other investor has.

 

With regard to Medicare, if today's seniors 55 and over will dare great enough to understand premium support will not affect them & people under 55 will start to adapt to the new system we have a chance to solve the current seemingly intractable Medicare entitlement problem that by itself will overwhelm America if nothing is done to correct it.

 

Sound-money policies & the reduction of the size of government & its claims on earned income are what fuels economic growth when coupled with the enactment of the FairTax – a tax plan that does not tax our productivity like the income tax does but rather our consumption.   It doesn't tax what goes into the economy but rather what comes out of it.  The FairTax reverses the idea that our earnings first belong to the government & then to us after withholding.  Earnings belong first to the citizen - this turns every consumer into a concerned taxpaying stake holder.  If you work, save, or invest you do not pay the FairTax – only the final consumer or user pays the FairTax meaning essentially it taxes retail sales & government consumption. 

 

The FairTax, along with the other measures described above, not only offers a solution to our economic problems that when implemented will bring fairness & prosperity through growth back to our country & its citizens but constitutes the mindset change needed to turn the country around.  When you find a politician talking this language back him to the hilt.

 

The changes in mindset in the country throughout the years are illustrated in the quotes @ the very top of this post.  From our founding until the Civil War our elected leaders followed the principles of the Madison & Crockett quotes – this was the time America was in the liberty to abundance stage of our history.  The Clyburn quote is representative of the thinking that started over eighty years ago under FDR & except for a brief portion of President Reagan's terms in office not only continues to this day but is expanding – this is the apathy to dependence stage.  Judge for yourself how close we are to the dependence back into bondage final stage.

 

BO is trying his hardest to put the final nail in the country's coffin by promoting class warfare & envy, income inequality, a false war on women by Republicans, minimum wage hikes, & extending unemployment benefits – all programs designed to keep people losers while looking to bring successful people down simultaneously through raising tax rates by whatever method he can.  A wealth tax or outright confiscation of bank accounts & IRAs like was done in Argentina has been endorsed by Pelosi specifically in November 2008 right after BO's first election – it was a little too much too soon then, but how about now?

 

BO loves to twist taxpayer statistics by talking about millionaires & billionaires not paying their fair shares.  See cartoon below for his nonsensical position that far too many people believe.

 

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The National Taxpayers Union has reported for years that 50% of income earners don't pay any income taxes & another 25% don't pay enough that the issue is important to them.  This leaves 25% of income earners who may care about income tax reform.  For many years people have barely been able to wait for their income tax refunds every spring – forgetting that the refunds are really their money they could have had access to all year long – in essence they made interest free loans.  But this is old hat – people have now convinced themselves that since they have paid Social Security & Medicare payroll taxes over their working lifetimes, without wanting to know how much of the costs of their benefits are subsidized by the government, that they deserve these entitlements.  In fact I recently pointed out in a post that the level of sophistication is so low in this regard that even many people who take the initiative to subscribe to the Heritage Foundation newsletter take offense @ the Heritage writer who correctly called Social Security & Medicare entitlements.  None of this is good breeding ground for passage of the FairTax either.

 

The top left graph shows a similar top-heavy profile as the income tax for the distribution of the total federal tax burden. 

 

The income tax, permitted by the Sixteenth Amendment in 1913, was the first major tax that was not levied on a proportional or uniform basis as required by the original Constitution.  Accordingly it is ripe for the class warfare penalties whereby higher earners pay for welfare benefits for lower earners putting all the incentives opposite to where they were during our founding.  As late as 1930 federal spending was equal to an insignificant 3% of our national output.  Today federal spending totals trillions of dollars – most of which is in violation of the Constitution as described above.  A hundred & one years later you can see that the income tax has been one of the pillars of the destructive path the country is on & even with its abuses the government still cannot balance the federal budget.