Kudlow on Solving US Debt

Kudlow on Solving US Debt

Finally the gridlock in Washington is slowing down the Democrat majority and their spend, tax and debt raising ways.   The spending binge that Obama and his Democrat “bigger government is better” allies in Congress have been on since January 2009 is beginning to slow, as recent elections (GOP governors in New Jersey and Virginia, plus the upset US Senate race victory in Massachusetts by Scott Brown) have changed the political landscape.   The Tea Party Movement, quickly dismissed by the Main Street Media (MSM) and Democratic operatives, is gaining traction, as the American people sense something is very wrong with Washington DC:  President Obama is proposing US Government overspending with no end in sight.

Well know supply-sider Lawrence Kudlow makes his case for a make over of the approach the Democrats are taking in Washington: Cut the spending, bring the deficit down to 2% or 3% of the GDP and bring taxes into line with pro-growth policies.

Here's the real problem: The Obama budget would take federal spending as a fraction of the economy to 25 percent, roughly a $1 trillion additional spending increase in the out-years. Publicly held federal debt would climb about $18.5 trillion by 2020, more than double what Obama inherited, rising to almost 80 percent of the economy.   (FCM blogger note:  Greece is on verge of default with 90% debt to GDP ratio). 

Rather than tax hikes, I say stop the spending. Outside of defense and entitlements, why not roll back the discretionary budget to 2008?

Or take a look at Harvard professor Martin Feldstein's idea of putting an end to all the new Obama refundable tax credits, which really are nothing more than new spending and government-transfer programs. Feldstein estimates that putting an end to the new "tax expenditures" could save $1 trillion by 2020.

And I would add in the need for a congressional law that sets strict spending-limit rules based on population and inflation.  And how about flat-tax reform -- ending all the unnecessary flotsam-and-jetsam tax credits and subsidies -- to broaden the tax base? Why not slash the top tax rate to 20 percent or less for a true flat tax?

Why not stop the multiple taxes on all forms of saving and investing, including capital gains, dividends and inheritances? And why not eliminate the business tax on profits in favor of a sales tax on net revenues that would deduct all investment expenses? That would leave us with a single-rate consumption-based income tax that would grow this economy by 7 percent to 8 percent in the years ahead, just as the economy should grow after a deep recession.

Going back to the debt-to-GDP ratio, I want to grow the denominator (the economy) and reduce the demand for the numerator (spending and borrowing). That means a combination of supply-side tax cuts and firm spending limits.

And we should add in some monetary reform for a stable King Dollar linked to gold or a commodity basket, along with an expansion of free trade, which itself is a tax cut.

In other words, I'm proposing a growth solution to the debt problem. Lower spending is pro-growth. So are lower tax rates. A program like this could get yearly budget deficits down to a manageable 2 percent to 3 percent in a couple of years. And getting the debt ratio back down to something like 50 percent also would be quite manageable.   Lawrence Kudlow, 2.20.2010 in www.rasmussenreports.com    

Some quick info, via www.wikipedia.com   Just search:  Lawrence Kudlow.   

©  2010, Jasper Welch, Four Corners Media, www.jasperwelch.org   

Tea Party Movement Gains Momentum

Tea Party Movement Gains Momentum

Of course, what’s interesting about the Tea Party movement, whatever its success, is that it is pretty much about what it says it is - lower taxes and less government spending. A lot of people, Republican and Democrat, are concerned about our escalating debt and what this might mean for future generations. This is clearly a serious subject for serious discussion from whatever side of the issue you fall out on, but… no matter… the moment something gains momentum out comes the derangement crowd. In a certain way, it’s a sign of success.    Roger Simon  http://pajamasmedia.com  

Taxed Enough Already (TEA) information can be found at http://taxdayteaparty.com    (Be patient with URL, as the server is getting double duty on US Tax deadline day!)   The web site has a state-by-state “find a tea party in your state” list of cities that the grassroots movement has sprung up in, and where the Tea Party (round 2) will be held.   In this blog, we posted about the original Rick Santelli (CNBC business reporter) on his ‘rant and rave’ about higher gov’t spending and too much government, and his call for a Chicago Tea Party (March 3^rd post).   On February 27^th, a number of 1^st round Tea Party protests and rallies were held.    Now the second round is planned for US Tax day:  the April 15^th deadline to pay your 2008 income taxes.

In Colorado, Tea Party events are to be held in Colorado Springs, Craig, Delta, Denver, Durango, Loveland, Montrose, Grand Junction, Fort Collins, Pueblo, Steamboat Springs, Walsenburg and Woodland Park.   (Blogger note:   Boulder and Aspen are absent from list.   Do the fine residents of these towns really think all is well, and taxes are too low?)

In New Mexico, Tea Party events are to be held on April 15^th in Artesia, Albuquerque, Alamogordo, Carlsbad, Clovis, Farmington, Hobbs, Las Cruces, Roswell, Ruidoso, Santa Fe, Silver City and Taos. 

Meanwhile the political left is trying their level best to discount, diminish and dumb down the Tea Party political movement.   In fact at the Huffington Post, “citizen journalists” can sign up to cover the Tea Parties:   “The Huffington Post wants to have citizen journalists at as many of these events as possible. If you think you'd be interested in attending one of the Tea Parties and reporting back to us with dispatches, photos, or video, click here to sign up. We'll contact you shortly with further instructions.” http://www.huffingtonpost.com 

We’ll contact you shortly with further instructions?      From whom?   To really cover the Tea Party events, or just try to discount this grass roots American movement?    

Back to the Tea Party movement.    Many Americans, from the political left and right, Republican & Democrat, independent and other political parties are alarmed as the massive US Government spending, expansion of Federal programs coming from Washington DC and the Congressional appetite for more spending, more taxes and more government “top down” solutions.    Thus the Tea Party movement. 

On April 14^th, at the National Press Club   http://npc.press.org    the Citizens Against Government Waste  http://www.cagw.org    gave their annual press conference on the 2009 Pig (pork) Book.   This well researched document (available from the web site) details wasteful US government spending and pork.     While it is disappointing for taxpayers to read, the annual Pig Book details the members of Congress and their pork spending ways.   You can find the “Porker of the Year” and the other details on the big spenders in the Congress.   

Let’s look at what the wasteful government spending leads to:  Higher taxes at the local, state and Federal level.   In 2008, the “Cost of Government Day” was July 16^th.  According to Citizens Against Government Waste, “Cost of Government Day for 2008 is July 16.  Americans now work more than half of the year 197 days to pay their share of the cost of government with 84 of those days due to federal spending alone.  This year, the average American will need to work an additional 16 days out of the year to pay off his or her cost of government compared to 2000 and four days compared to last year.”

Will the massive spending in 2009 push the “Cost of Government Day” into August?

If you are tired of more government programs, irresponsible spending and inevitable tax increases, we’ll see you tomorrow at the Tea Party event near you.

© 2009, Jasper Welch, Four Corners Media, www.jasperwelch.org