budget

“Let’s Flatten This Joint”

One suspects that the above title might be the new slogan for the Republican Party, with the joint being the Internal Revenue Service’s buildings. Why? Because now Gov. Perry has unveiled a flat tax plan:

 

The code that Perry is proposing would feature a 20% personal income and corporate tax, the elimination of Social Security and capital gains taxes, and the preservation of popular deductions for mortgage interest and charitable giving. Under the “cut, balance, and grow” plan, tax loopholes for corporations would be phased out while the standard exemption for those earning $500,000 or less would be increased to $12,500.

His economic team believes that those changes, combined with deep spending cuts and entitlement reforms including a gradual increase in the retirement age, will encourage so much growth and save families and corporations so much in compliance costs that the budget could be balanced by 2020.

One thing I am glad Perry’s team admits is that the tax, by itself, will not fix our problems. They say “combined with deep spending cuts and entitlement reforms”. That is what we need to fix our problems; however, if we need to have a discussion about tax policy first to get there, then so be it.

Perry’s “Flat” Tax: Good Policy or Hail Mary?

Rick Perry has found himself at the bottom of the second tier after what seemed like a cake walk to the presidency.  But the Rick Perry bankroll has pundits on the ready for the next move upward.  On Monday, Perry tickled the media with a preview of his 20/20 Flat tax.  His overall plan which is named “Cut, Balance and Grow” seems much less catchy, especially if he has his eye on a primetime ABC host slot.

If one were going to summarize the plan, they might suggest that Perry believes in “caps”.  His 20% flat tax is optional, so essentially everyone paying more than 20% currently can move to 20% while everyone paying less can still pay their current rate. It also moves the corporate rate to 20%, kills the death tax, and removes taxes from qualified dividends and capital gains.  The plan also includes capping spending at 18%.  I believe talking about caps on spending as a percentage of GDP are a mistake for the simple fact that if you do this, what are the odds that congress will ever spend less than this amount?  Then again, after what we’ve seen in the last three years, it doesn’t sound half bad.

James Pethokoukis breaks down Perry’s plan over at The American:

—A choice between a new, flat tax rate of 20 percent or their current income tax rate.

—The new flat tax preserves mortgage interest, charitable and state and local tax exemptions for families earning less than $500,000 annually, and it increases the standard deduction to $12,500 for individuals and dependents.

—Abolishes the death tax once and for all, providing needed certainty to American family farms and small businesses.

—Lowers the corporate tax rate to 20 percent—along with a tax holiday for foreign earnings—and moves toward territorial taxation.

Club for Growth on Rick Perry

Just like in 2008, the Club for Growth is putting together a series of white papers on candidates running for the Republican Party’s presidential nomination. We’ve already covered their reports on the records of Newt Gingrich, Tim Pawlenty, Herman Cain, Mitt Romney, Jon Huntsman, Ron Paul and Gary Johnson. Next under the knife is Rick Perry, who has served as Governor of Texas since 2000.

Perry has certainly shaken up the race for the GOP nomination for president and dominated media coverage during his first week on the campaign trail. His campaign is being driven by conservatives and tea partyers wary of Mitt Romney, who they see as a flip-flopper and someone who laid the blueprint for ObamaCare. But does Perry have the fiscal record for conservatives and libertarians to get behind? You be the judge.

August 2nd: A Day That Won’t Live In Infamy

If a deal hasn’t been reached by the time this is posted (the agreement reached by congressional leaders and the White House over the weekend is pending caucus approval), then tomorrow will be a day of infamy. According to public consensus, our credit rating will be downgraded, our borrowing rates will skyrocket, Social Security checks won’t go out, we’ll have to lay off millions of government workers (oh hyperbole), China will get mad, and our cost of living will sharply increase while the quality of living decreases dramatically. The sky will fall, the world economy will collapse, unemployment will make what we have now look like a cakewalk. It will be Disaster;.

Except it will be none of these things.

August 2nd, if a deal is not reached, will not spell the end of the world. Even if S&P and Moody’s try and downgrade the United States. Why? Three reasons: One, if the markets thought we were going to be screwed, they would have done it before. Second, the credit rating agencies are utterly superfluous and worthless when it come to US debt. Third, even if we hit the debt ceiling, Turbo Tax Geithner will be permitted to prioritize interest payments on the debt and send out Social Security checks, meaning we won’t have a default (and Grandma can still buy the ingredients for her damned fruitcake.)

Taken together, these three things illustrate a picture where August 2nd isn’t the end of the world, and that we should really slow down, take a deep breath, and then have a shot of whiskey. Preferably rye, but that’s just me.

Article the First: The market was supposed to explode under the debt ceiling, showing how urgent and necessary it is to raise it, according to John Carney:

The Imperial Presidency, Round #43917

So Senator Mitch McConnell has released a “solution” to the debt ceiling crisis. Jason has already jumped on this topic, but I feel the need to add my own two cents. For me, the crucial portion of this non-solution is that it gives additional power to the White House, and perpetuates a seeming tradition of Congress abdicating responsibility that we’ve seen over the past decade.

The entire deal punts the debt and spending over to the President. Essentially, he decides to raise the debt limit. While Congress can pass a “bill of disapproval” with a two-thirds majority, the President can simply veto, which would then require a 2/3 vote to override. The plan would also require the President to make spending cuts roughly equal to the increase in the debt limit (as I understand it.) Yet there is no enforcement mechanism that I can see to ensure he does so. What would Congress do if he raised the debt limit with no corresponding cut in spending? Stamp their feet? It might be all they can do.

Haven’t we seen enough power consolidated in the Oval Office yet?

I mean, the President can assassinate people with a drone without so much as a whoopsie-daisy; have anyone imprisoned on suspicion of terrorism and interrogated; can have a lovely jaunt off to war and only send Congress a politely-worded letter; formulate budgets and tax policy while merely requesting Congressional approval; through executive agencies and department make and enforce law without a vote; and now we’re going to give him the power to unilaterally raise the debt limit with requirements that are so wishy-washy they make Natty Light look good?

Mr. President, Think of the Children

In his press conference, President Barack Obama said that we must close the deficit by tackling everything—naturally, with as many contradictions as possible—including entitlements, though we must still “keep faith with seniors and children with disabilities.”

It sounds grand and noble, but the problem is that if Obama decides to “keep faith” with seniors, he’s going to have to do that by vigorously screwing over the next generation. As Professor Lawrence J. Kotlikoff of Boston University points out in a recent Bloomberg column, we’re broke. (Yes, I know that’s his schtick. But he’s absolutely right.)

How big is the fiscal gap? By my own calculations using the CBO data, it now stands at $211 trillion — a huge sum equaling 14 times the country’s economic output. To arrive at that figure, I assumed that annual noninterest spending, as well as taxes, would grow indefinitely by 2 percent a year beyond 2075, the point at which the CBO’s estimates end.

Most of that comes from entitlement spending, which was where Cato policy analyst Michael Tanner came up with the $119.5 trillion in the hole figure just a few months ago. Obviously, it’s getting worse all the time.

Cut Europe

With all this talk of isolationism in the GOP, namely over our “kinetic military action” in Libya and the wearying, ongoing wars in Afghanistan and Iraq, there’s an atmosphere that Republicans will be more willing to cut defense spending and reorganize our military to better fit in with the rest of the world. No more Dubya’s and silly foreign expeditions, more or less. But there’s one area that I see missing: Europe. I think it should be front and center.

When we Americans start arguing over welfare spending, it almost inevitably comes to be that those on the “left” say “Well, we’re spending billions and billions of dollars on bombing people in foreign countries, maybe we should cut that first, huh?” Naturally, conservatives balk at cutting military spending (while libertarians agree and then continue arguing to cut welfare anyways), but in terms of Europe, this is an area where they can make a great tactical manuever. I say this because, also almost inevitably, some liberal or progressive will then cite Europe as a great example of their welfare state ideal, saying “See, they can do it! Why can’t we, with the #1 economy in the world, do the same?” This was almost always brought up in the healthcare debate, focusing on the United Kingdom’s NHS, Germany’s social insurance policies, and infant mortality. And what else can conservatives and libertarians say? Europe sucks? Only in some limited aspects, and that’s simply not a respectable argument anyway.

How Newt Gingrich screwed over the 2012 GOP nominee

Does Newt Gingrich know what he believes? It’s a serious question. The guy that is often seen as a leading intellectual behind the conservative movement and is hoping to be the Republican presidential nominee is sure making some big mistakes in his first week as a candidate.

Over the weekend, Gingrich slammed the budget plan presented by Rep. Paul Ryan (R-WI) for “right-wing social engineering”:

Newt Gingrich’s appearance on “Meet the Press” today could leave some wondering which party’s nomination he is running for. The former speaker had some harsh words for Paul Ryan’s (and by extension, nearly every House Republican’s) plan to reform Medicare, calling it “radical.”

“I don’t think right-wing social engineering is any more desirable than left-wing social engineering,” he said when asked about Ryan’s plan to transition to a “premium support” model for Medicare. “I don’t think imposing radical change from the right or the left is a very good way for a free society to operate.”

As far as an alternative, Gingrich trotted out the same appeal employed by Obama/Reid/Pelosi — for a “national conversation” on how to “improve” Medicare, and promised to eliminate ‘waste, fraud and abuse,’ etc.

“I think what you want to have is a system where people voluntarily migrate to better outcomes, better solutions, better options,” Gingrich said. Ryan’s plan was simply “too big a jump.”

George Pataki Launches New Website “No American Debt”

Congressman Tom McClintock stated many times recently that America is headed towards a “sovereign debt crisis” that our only hope is to make serious budget cuts or the “Titanic will hit the iceberg”. Congressman Ron Paul says that the collapse of the dollar is “imminent” if Washington doesn’t drastically change. A group called No American Debt was officially launched last night by their Chairman George Pataki. They say that they will address these serious issues and brings them to the foreground of discussion.

According to their website, No American Debt is a group dedicated to holding elected officials accountable for our debt crisis. Their purpose is to educate the public about the debt and they will focus their efforts to persuade President Obama and Republican candidates for President to propose real solutions to the number one issue facing our country today.

Former Governor of New York George Pataki is the Chairman of No American Debt. Speculation has arisen that Pataki would be running for President, although he has recently stated that he will not be running for President in 2012. He did say, however, “but I’ve been around politics long enough to know you never say never”.

George Pataki announced No American Debt on April 20th on the Sean Hannity Show (See Below). Since then the Wall Street Journal has also featured them in an Article.

Visit their website at www.NoAmericanDebt.com and their FaceBook page for more information on their campaign.

President Pyro and the Field of Straw Men

Eight hundred and fourteen days. That is how long it has taken me to lose my last shred of respect for the current President of the United States. Erupting onto the national political stage at the 2004 Democratic National Convention, Barack Obama was immediately praised as a rising star. A charismatic, well-spoken young politician, he clearly had a future in politics. A tall, lanky senator from Illinois, he drew comparisons to Abraham Lincoln. A black man that avoided being characterized as a black politician (as opposed to a politician who happens to be black), he avoided bombastic speeches about racism and reparations. He gave white Americans still harboring guilt over our ancestors’ participation in the evil of the human slave trade the chance to prove they were no longer racist by voting for him. His entire campaign was a nebulous celebration of “Hope and Change”. He was the post-racial, post-partisan candidate that as president would heal the divide between black and white, Republican and Democrat.

That was then, this is now.

Last month, having given speech after speech decrying the need for fiscal responsibility and the need to rein in the deficits and get the debt under control, President Obama unveiled a $3.7 trillion dollar federal budget that increased federal spending and projected (based on unrealistically optimistic growth rates for the next few years) $1.6 trillion in deficits for the year, with annual deficits averaging around $1 trillion over the next decade. It increased spending. It did nothing to control the largest contributors to the deficit and long term debt (Social Security, Medicare, Medicaid and interest on the $14.2 trillion national debt). In short, the serious discussion he claimed to want regarding fiscal responsibility was nowhere to be found in his budget.


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