May 19, 2007


Another Washington spending fiction (The Washington DC Examiner Newspaper, 5/18/07)

Under their “Pay-Go” rules, congressional Democrats promised not to raise spending unless there was specific federal revenue available to pay for it. The Reserve Fund is their way of guaranteeing a funding increase when — wink, wink — at a later date they will have found the needed revenues. Call it the “Spend Now, Maybe Pay Later” approach to federal budgeting.

Today’s congressional Democrats aren’t unique in using a sleight of hand like the Reserve Fund to mask the fact they are spending more of our hard-earned tax dollars on another of their favored special interests.

When the Republicans were in the majority, they used fictions like counting projected budget savings in future years to make this year’s budget appear to be balanced or at least getting closer to being balanced.

The problem is that like all lies, Washington’s spending fictions are meant to obscure the truth about irresponsible budgets, bureaucratic waste, fraud and rampant conflicts of interest.

The question is how much longer voters will tolerate politicians in both parties telling such whoppers with straight faces.

The realkity is that the American tax burden is so low we'll tolerate a little finagling until the Earth crashes into the Sun. A political party that didn't recognize that wouldn't last long.

Posted by Orrin Judd at May 19, 2007 11:06 AM

Incorrect rationale, oj, albeit you were merely trying to be cute.

Voters respond rationally to the Tragedy Of The Commons that is tax & spend: they'll vote for a spender if spenders look to be in control and thereby at least try to get their own share; they'll vote for a cutter only if the cutters appear strong enough to take control in general and lower spending across the board.

A voter's worst strategy would be to elect a non-spender in a spender's world: all one would do is play the sap and subsidize other districts' pork while overall spending continued to rise.

This is also why presidents have to talk a more conservative economic line to get elected than do Congress Critters - it better represents what the people really prefer, absent incentive traps.

Posted by: ras at May 19, 2007 12:39 PM

Corporate America's tax burden is not low, the taxes are higher than frogistan's.

Posted by: Sandy P at May 19, 2007 2:41 PM

Voters will vote for tax cutters, not spending cutters.

Posted by: oj at May 19, 2007 4:25 PM

Yet congress and the presidency might remain (D) in '08.

and that'll be because of increased spending and increasing taxes.

Via Cap't Ed and the LA Times:
...The new budget resolution, the first to make its way through Congress since Democrats took control, anticipates almost $3 trillion in spending and just under $2.7 trillion in revenue, leaving a projected deficit of about $250 billion. ...


Via The Skeptical Optimist:

Kudlow: It looks like there’s a decent chance the budget could come into balance next year [2008]. If it ain’t broke, why fix it?

Conrad: Well, there's no chance it will come into balance next year. I don't know what numbers you're looking at.

Senator, if you found out that the budget would in fact come into balance next year without any help from Congress, what changes would you recommend to your current version of the budget?

He said neither the CBO or the OMB is forecasting balance by next year. I guess those offices aren't looking at the rolling-12mo trends, either.

The Stupid Party won't start using this to their advantage either.

UPDATE: And it gets worse. Take a look at page 50 of the Conference Report. The actual size of the budget is $2.965 trillion, which makes the year-on-year increase slightly higher than I said -- but that's not the real problem. Within four years, the Democrats want to push the budget to $3.274 trillion, an increase of 10% over their proposed spending for next year, and an an increase of almost 20% over this year.

It was just ten years ago that the budget was under $2 trillion. It has already grown 35% in ten years. By the time 2012 rolls around, it will have increased 44% in the previous ten-year cycle under this plan.

Posted by: Sandy P at May 19, 2007 4:47 PM

$250 billion on a $14 trillion GDP is a historically trivial deficit, as is $3 trillion in spending, which is why the whacko Right can't make anyone care.

Posted by: oj at May 19, 2007 4:53 PM

As David likes to say, there's no such thing as a corporation. We have the lowest level of federal tax revenue as a percentage of GDP since the '50s. Our taxes are too low to matter to anyone.

Posted by: oj at May 19, 2007 6:49 PM

While I won't go so far as David/OJ, I will state that the US has a LOT more deductions and write-offs for corporations than Frogistan ever will. I'd like to meet the corporation that pays the full stated tax rate and ask them if they plan on being in business much longer.

Posted by: Brad S at May 19, 2007 7:40 PM

Meet my husband.

BUT OJ - $250 billion sounds like a lot and since Bubba got it to -0- that's the goal, the dems keep hitting the pubbies over the head w/it.

So, doesn't matter proportionally.

Posted by: Sandy P at May 19, 2007 10:01 PM

Meet my husband.

BUT OJ - $250 billion sounds like a lot and since Bubba got it to -0- that's the goal, the dems keep hitting the pubbies over the head w/it.

So, doesn't matter proportionally.

Posted by: Sandy P at May 19, 2007 10:02 PM

Doesn't matter at all. Reagan and W have busted the bank for 16 years of the two greatest GOP presidencies. It has no political effect.

Posted by: oj at May 20, 2007 6:42 AM

Is it true I have to work for 40 quarters to be eligible for SS bennies and they only have to work 6 quarters???

Via HH commenter:

These next 2 years are vital to the future of this country. For 2007 we must make certain that McCain/Kennedy or whatever it's called this year does not pass the House. It will pass the Senate. The President will sign it, followed by the Totalization Treaty with Mexico, which qualifies former illegals with just 6 qtrs(18 mo) even if worked illegally, the benefits that we had to work 40 qtrs(10 yrs) to qualify for.

Posted by: Sandy P at May 20, 2007 6:02 PM