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Thursday, April 9, 2009

The Other (GOP) Federal Budget

The Other (GOP) Federal Budget

The Democrat Majority in the US House and US Senate passed the US Federal FY2010 budget, without one Republican member voting for it, and 20 “blue dog Democrats” voting against it.  $3.6 Trillion of largess, earmarks (8,500 of them), increased social spending and decreased military spending.   And a structural deficit in the US budget due to overspending by Congress of will be laid at the feet of our children and their children.    And, despite promises of only “taxing the rich”, over time the Congress will raise taxes on all American’s, just to cover the new government programs, spending and interest on debt.

So what was alternative budget to the massive Democrat Federal budget, as put forth by the Republicans?

Answering President Obama's challenge for critics to present alternatives, the House Republicans have offered a responsible budget blueprint that:

+Borrows $3.6 trillion less than the President's budget;

+Would create $23,000 less debt per household than the President's budget;

+Keeps federal spending just above 20 percent of the gross domestic product (GDP)—the same level as before the recession;

+Avoids all tax increases and even simplifies the overly complex tax code;

+Includes a temporary moratorium on earmarks; and

+Begins reforming the unsustainable costs of Social Security, Medicare, and Medicaid

The House Republican alternative rejects all tax increases. It would permanently extend the 2001 and 2003 tax cuts, as well as the AMT patch. It would also finally reform the complex income tax code by allowing individuals the choice of opting into a simplified tax system with a 10 percent marginal tax rate on incomes below $100,000 and a 25 percent marginal tax rate on incomes above $100,000. It would also encourage economic growth by reducing the corporate tax rate from 35 percent to 25 percent and suspending capital gains taxes through 2010.    From the Heritage Foundation

Let’s compare the sensible Republican alternative (that unfortunately was defeated by the Democrat majority in the US House in early April 2009) to what is being predicted by the Heritage Foundation of the US tax system in heading higher and by 2050 will be like the high tax countries in Europe:

According to the CBO’s long-run forecast in December 2005, federal taxes under current law will rise from 18.3 percent of GDP to nearly 19 percent within five years and reach almost 24 percent of GDP by 2050. This means that the federal tax burden on Americans, as a proportion of income, will increase by almost one-fourth. When state and local taxes are included, the U.S. tax burden will be comparable to the burden in today’s slow-growth Europe. 

From the Heritage Foundation:

So while the Dems in Congress are claming to be moving to Pay-Go (paying for government programs as you go), what is really happening with a $3.6 Trillion budget and projected $1 Trillion deficits per year is this:

         Expand US Government programs by spending money we don’t have, so we’ll borrow it from the rest of the world, to spend it on programs that expand the cost, scope and reach of government, which in turn will raise the public debt and desperate politicians in Congress looking to increase taxes on all Americans to pay for it.

Thus, we are heading towards being more like the country of Greece, whose debt as a country is forecast to exceed 100% of its Gross Domestic Product (the US public debt is $6.4 Trillion, which is about 42% of the US GDP).  Greece’s financial problem is that their biggest economic burden is interest on their public debt.    And Greece has been remanded by the European Commission to keep their continued deficit spending below 3% of GDP.      The US budget deficit (just from the official FY 2010 budget) is 1.2 Trillion, or 8% of the US GDP.   However, it is now projected at $1.8 Trillion, which is 12% of US GDP.  No wonder France and Germany are lecturing the US on overspending, deficits and reining in government spending.


So where is Greece today?   At a standstill, as a nationwide public strike over public sector pay and job losses has brought the country to a standstill  Wall Street Journal, Page A11, April 3, 2009   As for a public stimulus by the Greek government?     They can’t, as they ran out of money and the EU mandated “3% of GDP budget deficit spending cap” precludes the government from spending money.

Does the US want to become a permanent debtor nation, weakened by financial irresponsibility in Congress due to overspending, overreaching government programs and higher taxes?  Under Obama and the Democrats in Congress, the US becoming subject to those countries, banks and individuals who hold US debt and leverage over us.   Is that what a free, financially responsible and independent America should be doing?  For more and more Americans, the answer is No!

© 2009, Jasper Welch, Four Corners Media,  

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