Tag Archives: Federal Budget

The Entitlement Lie.

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For many years, Republicans have been determined to privatize Medicare and Social Security or get rid of the programs altogether. So whenever Republicans talk about federal spending, they usually show a chart that looks something like this:

Notice that the two largest slices of the budget represent Social Security, Medicare and Medicaid, or what is often called “mandatory” federal spending. Thus, the chart would seem to indicate that most of the tax revenue goes toward healthcare and retirement for the elderly and the poor. Is it any wonder, then, that so many young people believe that the federal government is being “bankrupted” by payments to senior citizens?

However, most of the costs for Medicare and Social Security are not part of the general budget.

Medicare and Social Security are, in fact, insurance programs similar to your auto, health and household insurance policies. And, like your other insurance policies, the premiums for Medicare and Social Security are collected each year of your working career so the benefits will be there when you need them. The premiums are deducted from our paychecks – you know, the ones that are labeled FICA (Federal Insurance Contributions Act) and Medicare. As a result, Medicare and Social Security are “entitlements” only in the sense that once you have paid the premiums, you are entitled to the benefits in much the same way you’re entitled to benefit from claims against your Allstate, GEICO, Progressive or State Farm policies.

Since the programs pay for themselves, their budgets should be kept entirely separate from the general budget. To more accurately reflect reality, the federal spending chart should look like this:

This chart represents the spending controlled by Congress and paid for through taxation. As you can see, in this chart, the majority of that spending is for our military ($824.6 billion, up more than 13 percent since Republicans have taken the reins of government) and veteran’s benefits ($78.9 billion). When Congress spends more on these items than it collects in taxes, it results in deficit-spending. The shortfalls result in borrowing from other sources – from other countries and from the Medicare and Social Security trust funds.

Despite their claims to the contrary, Republicans have been particularly good at deficit spending. Reagan nearly doubled the federal debt, increasing it by $1.9 trillion. George W. Bush increased the debt by $5.8 trillion. He also left his successor with two wars and the Great Recession resulting in more than $8.5 trillion of additional borrowing. And, in his first two years in office, Donald J. Trump has already doubled the deficit, increasing the debt by more than $1.2 trillion. And the 10-year cost of the Trump tax cuts will add an estimated $2.3 trillion more to the federal debt.

In order to reduce the debt, Senate Majority Leader Mitch McConnell says he wants to balance the federal budget by cutting payments to “entitlements,” aka Social Security, Medicaid and Medicare.

Say what????!!!!

That would be akin to embezzling money from your employer to pay for your own spending excesses. The Social Security and Medicare trust funds are not Congress’s money!

None of this is to say that Medicare and Social Security don’t have their own problems. If changes are not made, it’s expected that Medicare will exhaust its reserves by 2028. Likewise, it’s expected that Social Security will not be able to meet its full obligations after 2034. But that does not mean that there will be no money left for the programs’ beneficiaries. It simply means that the payouts will be less.

And both programs could meet their obligations with a few tweaks.

Like all insurance programs, they should be governed by actuarial tables. When the costs go up, so should the premiums. Unfortunately, Congress has put limits on the amount of money the programs can charge for premiums. For example, FICA deductions only apply to the first $128,400 of an individual’s income. Social Security could be fixed by simply removing the cap. It’s that simple.

Similarly, Medicare’s impending problems could be solved by increasing the payroll deductions, by negotiating for better prices with pharmaceutical companies, or, better yet, we could improve outcomes while saving our government and our citizens trillions of dollars by moving toward universal health care.

And, here’s a radical idea: Maybe we could find additional money for these programs in the general budget by holding government contractors accountable. For example, the F-35 fighter jet program was $163 billion over budget as of 2014. A figure that continues to climb faster than the plane.

How Much Is Enough?

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In 2014, the US spent $612.5 billion on defense. Although numerous sources have reported that this number exceeds the military budgets of the next 12 biggest spenders combined, I find that most people still have trouble getting their minds around the number and even more difficulty putting it into perspective.

So let’s look at it another way. In 2014, the US and its closest known allies spent an astonishing $1.15 trillion on defense.

Meanwhile our known “enemy” nation states of North Korea and Iran spent a total of $13.8 billion. If we add Pakistan, which is home to many extreme jihadists, and our one-time enemies who are now close trading partners (China and Russia), our potential adversaries (at least theoretically) spent a grand total of $223.4 billion on defense. Combined, that is little more than one-third of the US defense budget alone, and roughly one-fifth of the combined military budgets of the US and its close allies.

The US and its allies not only spend more money than the so-called rogue nations and the former communist bloc. They have more weapons of every kind; more sophisticated weaponry; and the financial means to build ever newer and better weapons. This is, of course, great comfort to our military-industrial complex consisting of Boeing, Halliburton, General Dynamics, General Electric, Lockheed-Martin, Raytheon and more.

It is, however, small comfort to US taxpayers who are expected to pay for this ever-growing budget item, especially since the only real threats to our homeland appear to come from relatively small groups of terrorists whose weaponry consists of handguns, AK47s, IEDs and captured weaponry that we previously sold to corrupt or failed governments.

Take into account that the costs of the Afghan War, the Iraq War, the war against ISIS, military aid to other countries, Immigration and Customs Enforcement, and veterans’ benefits are paid for out of budget line items separate from our defense budget, and you quickly discover that the vast majority of our taxes now go to defense. Yet the Department of Defense is asking for significant increases for 2015 and 2016, and it’s almost certain to get them.

One can only conclude that we are the most gullible, most paranoid people on Earth.

The True Cost Of America’s War Machine.

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President Obama just released his proposed budget for 2016. Out of a total budget of $1.15 trillion, $625.2 billion is earmarked for our military. And that doesn’t include the $70.5 billion for veterans’ benefits. That means $695.7 billion, or 60.4 percent of our total annual budget, will be dedicated to planning for war and dealing with the impact of war on our servicemen and women. In addition, the budget calls for $41.6 billion for international affairs – much of it likely dedicated to providing weapons to other nations.

Virtually all of this money will be used to line the pockets of defense suppliers and their executives. Worse, much of it will be wasted on equipment that is unwanted, ineffective and unnecessary. One need only look at the colossal waste that is the F35 fighter (which is hopelessly behind schedule and over budget), the materiel left behind in Iraq and Afghanistan (much of it now in the hands of ISIS and the Taliban), and the Abrams tanks being built over the objections of the Joint Chiefs of Staff.

By comparison, only 22 percent of our budget – $255.6 billion – will directly aid our citizens. $60.6 billion is allocated to Medicare and healthcare, $31.4 billion for Social Security and unemployment insurance, $27.4 billion for transportation, $13.3 billion for food and agriculture (including food stamps), $41.6 billion for energy and the environment and $74.1 billion for education. But the dirty secret is that much of the money for these budget items will provide large subsidies for big pharma, big agriculture, big oil, and big coal. Still more money will be used to clean up after big corporate polluters or to provide them with low-cost transportation and infrastructure.

Of course, it’s unlikely that President Obama’s budget will ever pass Congress. Teapublicans will probably increase the amount of military spending and corporate subsidies while cutting funds for the EPA, the Labor Department and education…maybe even Medicare and Social Security.

But imagine if, like in many European nations, things were reversed. What if we spent 60.4 percent of our federal budget to improve the lives of individuals and 22 percent on the military? What if all of our children could receive a world class education for free? What if no Americans went hungry or homeless? What if all Americans received healthcare? What if all Americans could comfortably retire at age 65? What if our transportation systems were, once again, the best in the world? What if, instead of subsidizing large corporations and the inflated salaries of their executives, we made them pay their fair share of taxes?

What if, instead of allocating nearly 4 percent of our GDP (the world’s largest economy) to defense, we spent only 2.1 percent like China (the world’s 2nd largest economy). Or what if we spent only 2.2 percent like the United Kingdom and France? Better yet, what if we spent only 1 percent like Canada? Collectively, the US and our NATO allies spend an amount on defense that exceeds that of our alleged enemies many times over. If necessary, NATO (even with a smaller US military) could overwhelm any possible opponent or collection of opponents.

Moreover, if we spent our money on improving lives, instead of the weapons intended to destroy them, we likely wouldn’t need such overwhelming military force.

Why Do We Have A Debt Ceiling Anyway?

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Following the Tea Party-forced government shutdown and near default, it’s worth considering doing away with the debt ceiling. It serves absolutely no purpose other than providing recalcitrant congressional representatives the opportunity to hold our government hostage in order to “negotiate” their pet issues.

Since the debt ceiling is a measure of money already spent by Congress, it has no real impact on congressional budgeting and government spending.

If we really want to limit government spending, what we need is a spending ceiling based on a percentage of the Gross Domestic Product (GDP) and an absolute deadline for the House, the Senate and the White House to agree on a federal budget. Such a law would force Congress to negotiate the federal budget without threat of our government defaulting on its debts.

It would also be far more sensible than the Teapublican-sponsored balanced budget amendment that could lead to greater dysfunction than we’re already experiencing.

A spending ceiling would allow the budget to increase along with the GDP, and presumably the population, while maintaining fiscal discipline. Moreover, Congress and the White House could be given the flexibility to temporarily override the ceiling in special or extreme circumstances, such as the Great Depression or the Great Recession, as long as there was a commitment to offset the overrides within five years. This would allow the federal government to stimulate the economy for a year or two, or to increase spending in wartime. But, in most years, the political debate would be confined to how the money should be spent. Not the amount of money to be spent.

Such a system might allow citizens to more clearly track their representatives’ priorities. It might also make it difficult for representatives to speak in broad generalities about the budget and force them to address specific programs. And, if properly implemented, it might be easier to tell if a representative favored corporate welfare over human needs; or whether or not a representative was voting in support of special interests versus the interests of his, or her, constituents.

In other words, Congress would be forced to do something unprecedented…create a budget and live with its consequences.

GOP’s Age Warfare.

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Teapublicans always whine about what they refer to as “class warfare” whenever anyone wants to level the playing field between the wealthy and the middle class. But now they are waging a war on those 50 and older by trying to privatize Social Security and Medicare. To push their agenda of destroying “entitlements,” the Tea Party says these safety net programs are unfair to millennials who have to contribute to the programs.

Would the millennials rather contribute to their parents when the safety nets fail?

Would they rather take in their elderly parents and grandparents? Would they prefer to offer them transportation, feed them, clothe them, provide elder care, track their meds, and bathe them? Would they like to cover their health care costs?

There’s a reason that most civilized nations have safety nets, such as Social Security and Medicare. It’s because most compassionate people would rather not see the elderly broke, hungry, sick and homeless. The large corporate masters of the Republican Party and its Tea Party parasites, on the other hand, only care about their bottom lines. If increasing profits hurts some people, so what? Their overpaid and overstuffed executives won’t have to worry about retirement, and neither will their parents. In most cases, they can simply send a check to help out poor ol’ Mom and Dad.

Has it really come to this? Is the new GOP strategy to pit one generation against another? Has the GOP tired of taking money from the working poor and food stamps from children? Are the elderly the last people standing between them and the tax-free government they desire?

These words may seem cynical. But that’s far better than the cynical actions of today’s GOP.

Why You Can’t Negotiate With Terrorists.

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Long ago, our law enforcement agencies learned that you can’t negotiate with terrorists, especially those who take hostages. The reason is that their demands are always unreasonable and they never live up to the negotiated agreement.

House Republicans are no different.

The President and Senate have been negotiating the federal budget for more than four years, trying to strike a fine balance between keeping our fragile economic recovery going and bringing deficits under control. Under President Obama, the deficit has dropped faster than at any time in history. And Democrats reluctantly agreed to make permanent the $70 billion in cuts to the federal budget that were part of the sequester. But after agreeing to the cuts, Speaker of the House betrayed the Senate Majority Leader by allowing the defunding of the Patient Protection and Affordable Care Act to be included in the budget bill.

When the President and Senate refused to agree to the measure, the House offered a ”compromise” by attaching an amendment that would delay “Obamacare” for one year. Some compromise.

Since House Republicans have already voted to repeal or defund “Obamacare” more than 40 times, what assurance is there that they won’t vote to repeal the law another 40 times over the coming year?

After all, terrorists seldom live up to their word. And if they are willing to take our government and economy hostage once, they’re likely to do it again. Indeed, this is at least the third time in my lifetime that Republicans have shut down the government.

Republicans and their Tea Party parasites are always quoting the Constitution. It’s time they actually read it. Not just the 2nd and 10th Amendments…but the entire Constitution. If they would, they’d find that the House is only one part of the federal government, and it doesn’t have veto power. If they want to have a bill passed, they have to find agreement with the Senate and gain the signature of the President.

Only the President has veto power.  And the House doesn’t have the votes to override a presidential veto.

That means the House terrorists have only one option – to fund the government, at least temporarily, and then demonstrate that they can negotiate in good faith.

I, for one, don’t think they’re capable of that.